The chess-playing robot that reflects SenseTime’s profit dilemma is a big move aimed at investors?

The commercial profit map of AI leader SenseTime is so incomplete that it needs to be filled with chess.

Recently, SenseTime launched an AI chess-playing robot named "SenseRobot". As a family-level consumer product aimed at raising children, it claims to combine Chinese chess culture with the latest AI technology. In terms of the population covered, this product attempts to appeal to both young and old. On the one hand, it hopes to combine education with entertainment and train children's thinking ability; on the other hand, it also hopes to break the digital divide and accompany the elderly to entertain themselves.

Based on SenseTime’s positioning of the AI ​​chess-playing robot, it is not difficult to find that this product seems to be shouldering the burden of SenseTime’s entry into the C-end market. From the perspective of product pricing, this AI chess-playing robot can be said to be a mass consumer product, and its price is only equivalent to that of a mid-range mobile phone.

However, from the product function point of view, it has nothing to say except the function of playing chess with AI. In this regard, some netizens commented that buying this AI chess robot is paying an IQ tax. Consumers can buy a smartphone at the same price, not only can they play chess with AI, but also can play a few popular games.

In fact, as netizens said, SenseTime's AI product is just a high-tech product, but it does not hit the pain points of consumers. On one side is the hot cutting-edge AI technology, and on the other side is chess, which was completely cracked by computers 30 years ago. SenseTime's chess-playing robot seems to combine the advantages of both, but in fact it is like using an anti-aircraft gun to kill a mosquito - a waste of talent.

In fact, SenseTime’s AI chess-playing robot is more like a helpless attempt to break the profit dilemma.

As a pioneer in the field of artificial intelligence in China, SenseTime has finally become a member of the Hong Kong Stock Exchange after eight years of entrepreneurship. Before its listing, SenseTime, as a unicorn in the eyes of investors, was the king of money in the primary market. It completed 12 rounds of financing before its IPO and raised US$5.2 billion. Later, it raised HK$5.75 billion as the "first stock of visual AI".

However, compared with SenseTime's strong ability to attract money, its speed of burning money is also amazing. Data shows that from 2018 to 2021, SenseTime's losses amounted to nearly 37.8 billion yuan, and it lost 17.2 billion yuan last year alone. So, why did this unicorn in the eyes of investors suffer such a huge loss?

From the perspective of the company's fundamentals, the reason why SenseTime has suffered consecutive large losses is mainly affected by the following two reasons.

One reason is that the company's R&D still needs to burn money to maintain its advantage. Data shows that SenseTime's R&D expenditure in 2021 was 3.06 billion yuan, accounting for about 65.1% of the company's total revenue. More importantly, SenseTime's hematopoietic ability is seriously insufficient.

Currently, SenseTime's main businesses include smart business, smart city, smart life and smart car. However, in terms of revenue contribution, except for the security business, the revenue contribution of SenseTime's other businesses is as small as air. In 2021, SenseTime's main revenue was 4.7 billion yuan, of which the security business alone contributed more than 90%.

On one hand, there is technology research and development that requires continuous investment, and on the other hand, there is the seemingly diverse but single-source corporate income. If it were not for SenseTime’s strong fundraising capabilities, its ability to generate more income than expenses would not have allowed it to go public in Hong Kong.

From the perspective of the growth of its main businesses, SenseTime's four major business segments cover different industries and correspond to different application scenarios. From the perspective of growth space and market potential, SenseTime's four major businesses have the potential for rapid growth in the virtuous cycle of continuous investment and commercial implementation.

However, judging from the performance of the company's main business, in addition to the more mature security business, the company still needs to continue to invest funds in incubation, whether it is the smart life business close to users or the smart car business that rides on the cusp of new energy.

Faced with such performance of its main business, SenseTime recently released an AI chess-playing robot, which is undoubtedly an attempt to improve its own hematopoietic ability. From the perspective of customer distribution, SenseTime's customers are mostly from the B-end and G-end. Although the company maintains cooperation with them, it cannot change SenseTime's hematopoietic ability in a short period of time. From the perspective of corporate development, stimulating the consumption potential of the C-end market has become the best choice for the company to get out of trouble.

In addition, AI listed companies with outstanding C-end performance often have more outstanding performance. SenseTime’s AI chess-playing robot is also like an explanation given by the company to investors in the capital market.

However, the capital market does not seem to buy into SenseTime's chess-like operation for the C-end market. At yesterday's close, SenseTime's stock price closed at 2.16 yuan, down 1.37%. From the news perspective, the reason why the new product did not turn into a positive is largely because investors are not optimistic about the prospects of AI chess robots.

Compared with early investors who believed in the business stories woven by AI, current investors have gradually seen the limitations of AI commercialization.

The main purpose of artificial intelligence is to create an acceptable model for human understanding. Therefore, before artificial intelligence moves from technology to products, it needs to continuously build corresponding models and continuously improve and perfect them through deep learning. The whole process requires continuous investment of financial and human resources. For investors who pursue returns, the development process of artificial intelligence is obviously not a good target.

Take SenseTime as an example. This company, which was once a unicorn in the eyes of investors, is being questioned by investors for its woven business story. In June this year, SenseTime's stock price crashed due to the lifting of the ban on the company's investors' shares. Although Xu Li, Wang Xiaogang and Xu Bing and other company management announced that they would not reduce their holdings, the stock price still plummeted by 40% on the same day. Some comments pointed out that the faith of SenseTime's value investors also collapsed instantly as the incident fermented. As for this chess-playing AI robot, in its seemingly funny "anti-aircraft guns hitting mosquitoes" operation, it only reflects the embarrassment of SenseTime in the face of weak revenue, just like some rumors in the market: SenseTime's chess-playing robot sells robots, but what it is thinking in its mind is a big chess game that cuts investors.

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As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.