iFlytek: The dream of a market value of 100 billion yuan is shattered? Relying on government subsidies to increase profits

Artificial intelligence has been popular all over the world since last year. Since iFlytek proposed the "iFlytek Super Brain" plan, its development vision has become more sci-fi, and its mentality has begun to expand. Liu Qingfeng, chairman of the listed company, has claimed on many occasions that the market value will exceed 100 billion yuan, but compared with the peak period, the market value has shrunk by more than 10 billion yuan. At the same time, the year-on-year growth of revenue in 2016 narrowed, and the net profit after deducting non-recurring items fell by 19.32% year-on-year. Does it mean that it relies on government subsidies to increase net profit? In addition, in the face of fierce market competition, with Baidu and Sogou in front and many innovative companies behind, where will iFlytek go?

iFlytek Super Brain's market value has shrunk by more than 10 billion yuan, despite its expansion of 100 billion yuan

There are two domestic companies that entered the field of artificial intelligence earlier, namely Baidu and iFlytek. Before 2012, Google had been using animals to train the Google Brain project and conducted an experiment to let the machine learn without inputting the concept of "cat", and finally recognized "cat". This became a well-known case in the field of international deep learning. Soon after, Baidu also proposed a plan to develop artificial intelligence and established a research institute focusing on artificial intelligence technology in 2013.

At this point, after Baidu launched the "Baidu Brain", iFlytek also launched the "iFlytek Super Brain" plan in 2014. Its development vision also began to become sci-fi, with the goal of "from being able to listen and speak to being able to understand and think". Its thinking once expanded.

1. Market value exceeds 100 billion

According to a report by Securities Star on May 10, 2013: At the annual shareholders' meeting on May 3, senior executives told shareholders present: "We are very confident about the 100 billion market value and 10 billion sales." Liu Qingfeng, chairman of iFLYTEK, has also publicly stated many times that its market value will exceed 100 billion. However, the reality is cruel. From 2013 to now, after many years, it has been further and further away from the goal of 100 billion market value. Compared with iFLYTEK's earlier market value of nearly 70 billion, its market value has now shrunk seriously, reaching more than 10 billion yuan.

It is not a dream for iFlytek to have a market value of 100 billion yuan. It may take 5 years or more to achieve it. Will the dream of a market value of 100 billion yuan be shattered? We will have to wait and see. It may take years to verify. However, after years of making bold statements, I hope that iFlytek can treat the road to commercialization of artificial intelligence rationally.

2. Surpassing Apple and Tencent

In a 2014 Sina Finance Dialogue, Liu Qingfeng, Chairman of iFLYTEK, was confident that he could beat Apple and Tencent in the field of voice technology, and beat Google, Apple, Baidu and Tencent in the mobile phone portal.

3. Science Fiction Vision

Since iFlytek launched the "iFlytek Super Brain Project", its goal is to make machines not only "able to listen and speak", but also "able to understand and think". This sci-fi vision has become the direction of iFlytek's struggle. However, as a "strong" artificial intelligence, in my opinion, it cannot be achieved in just a few years, as today's computing power is difficult to support.

So far, technology giants have focused on quantum computers. They all agree that quantum computers will make artificial intelligence software more powerful, and artificial intelligence researchers can use them to develop smarter and more sensitive computer learning systems. Many years ago, Google and NASA purchased a quantum computer from D-Wave in Canada (of course, there is academic controversy and it is not recognized as a quantum computer), and established the Google Quantum Artificial Intelligence Laboratory. In China, Alibaba also established the "Chinese Academy of Sciences-Alibaba Quantum Computing Laboratory" in cooperation with the Chinese Academy of Sciences.

Technology giants hope to make breakthrough progress in quantum computers, otherwise "strong" artificial intelligence like the "AI brain" will be difficult to achieve. In fact, Google rarely talks about the "Google Brain" anymore. Everyone's focus is on its DeepMind's artificial intelligence system AlphaGo. As for the "Baidu Brain", Baidu has repeatedly claimed that the IQ of the "Baidu Brain" is equivalent to that of a child of a few years old.

Recently, due to the resignation of Andrew Ng, "Google Brain" and "Baidu Brain" have once again become the focus of science and technology. The reason is that Andrew Ng created "Google Brain" during his time at Google, and was also responsible for conquering cutting-edge artificial intelligence technologies such as Baidu Brain during his time at Baidu. In contrast, iFlytek is still in the sci-fi vision, and continues to increase investment in the "iFlytek Super Brain" project with the goal of "from being able to listen and speak to being able to understand and think", and has made it its grand goal to enable machines to have the ability to "understand and think".

2016 year-on-year performance growth narrowed, relying on government subsidies to increase net profit

As one of the companies that talks the most about artificial intelligence, iFLYTEK's high-growth era may also be facing the end. Its 2016 annual report shows that its revenue increased by 32.78% year-on-year. Compared with the year-on-year revenue growth from 2012 to 2015, the revenue growth in 2016 is not optimistic. From 2012 to 2015, the annual revenue growth was more than 40%, while in 2016 it was only 32.78%, and the year-on-year growth narrowed.

In addition, iFLYTEK's net profit was RMB 484.43 million, with a year-on-year growth rate of only 13.9%. The net profit after deducting non-recurring items was even more surprising, with a year-on-year negative growth of 19.32%.

Although the net profit in 2016 was RMB 484.4 million, the net profit from non-recurring gains and losses included RMB 127.9 million in government subsidies, accounting for 26.4% of the total profit, and RMB 113.3 million in investment income from iFlytek, accounting for 23.38% of the total profit. The total of the two was RMB 241.2 million, accounting for 49.79% of the total profit. It can be seen that in 2016, the investment income from government subsidies and the consolidation of iFlytek contributed almost half of iFlytek's profits.

Does it mean that iFLYTEK's net profit is increased by government subsidies? The author also tried to contact iFLYTEK via email about this question, but has not received a reply as of press time.

iFLYTEK: Where is the future heading?

Some people questioned iflytek's selling educational information technology under the guise of artificial intelligence. The author checked the revenue details based on iflytek's 2016 report, and found that educational products and services accounted for 27.44% of the total revenue, followed by information engineering at 25.07%, and telecommunications value-added product operations at 12.17%. It is not difficult to see that iflytek is still a company mainly engaged in educational products and information engineering services, of which human-computer interaction products and solutions accounted for 4.82% of the total revenue, and smart hardware products accounted for 1.06% of the total revenue. Obviously, iflytek's revenue does not come from the field of artificial intelligence.

iFlytek claims that its human-computer interaction solutions and services, such as AIUI, are in the leading position in the industry in terms of technology leadership, product diversity, and personalized service levels. In 2016, it has established cooperative relationships with more than 20,000 smart hardware customers, but its human-computer interaction products and solutions only contributed 159.97 million yuan in revenue. It has established cooperative relationships with more than 20,000 smart hardware manufacturers, which means that on average each hardware manufacturer contributes 7,998 yuan in revenue to iFlytek.

Of course, iFlytek can be understood as its AI technology is applied in many industries, and its AI technology is embedded in them. If defined in this way, many companies on the market, even extremely traditional manufacturers, can be called artificial intelligence companies. After all, AI technology represented by deep learning is embedded in many products and services, including Internet of Vehicles, cloud computing, big data, smart transportation, smart hardware, smart home, industrial Internet, and many Internet services. In my opinion, many industries and many services use AI technology to improve existing products and services.

In the field of artificial intelligence, iFlytek is more focused on aspects related to intelligent voice. However, with the increasing maturity of artificial intelligence technology, a large number of participants have entered this field, including Baidu and Sogou in the past, and many innovative and entrepreneurial companies in the future. The intelligent voice industry will face more intense competition. Judging from iFlytek's annual report, its human-computer interaction solution only contributed 7,988 yuan in revenue to each hardware manufacturer on average, which also shows that the industry is extremely difficult.

Conclusion

Artificial intelligence will become the core competitiveness of enterprises in the future. It has become a consensus in the industry that winning artificial intelligence will win the future, because artificial intelligence will become an infrastructure like "water and electricity" and will be everywhere. So far, technology giants have actively laid out this cutting-edge field of artificial intelligence in recent years, and have built their own AI ecosystems through mergers and acquisitions and open source AI technology.

As a leader in domestic intelligent voice, iFlytek has been deeply engaged in intelligent voice for many years. Thanks to the advent of the artificial intelligence wave, iFlytek has quickly become known for its voice technology and is also building an ecosystem around voice as the entry point. However, the most embarrassing thing at present is that commercial implementation is extremely difficult, the new technology has not created huge profits, and the realization of forward-looking innovative projects has been slow. Where is this industry going?

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.