In order to seek listing, the fourth paradigm "sell yourself" Lenovo

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THECAPITAL

Why is Lenovo starting a new technology company with the Fourth Paradigm at this time?

This article is 3980 words and about 5.3 minutes

Author | Li Ran Edited | My people

Source | Rongzhong Finance

（ID：thecapital）

As the unicorn company with the largest market share of decision-making AI, "loss" and "difficulty in listing" have caused headaches for the fourth paradigm. On February 14, the official website of the Hong Kong Stock Exchange showed that the IPO application for the fourth paradigm has lapsed. Just 10 days later, on 23 February, the fourth paradigm submitted a listing application to the Hong Kong Stock Exchange again, which shows the urgency of listing.

Shortly after the second submission of the listing application, as an important shareholder and partner of the fourth paradigm, "Lenovo" and its PC R&D and manufacturing company "Lianbao Technology" joined hands with the "fourth paradigm" to jointly establish an intelligent technology company - Hefei Shanyue Intelligent Technology Co., Ltd.

Enterprise investigation information shows that Hefei Shanyue Intelligent Technology Co., Ltd. has a registered capital of 20 million yuan, and its business scope includes Internet of Things application services, integrated circuit design, and intelligent control system integration. The company is 51% owned by Fourth Paradigm (Beijing) Technology Co., Ltd., 34% owned by Lenovo (Beijing) Co., Ltd., and 15% owned by Lianbao (Hefei) Electronic Technology Co., Ltd.

Why is Lenovo starting a new technology company with the Fourth Paradigm at this time? In which area will their newly formed company be laid out? Will the newly formed company have an impact on the business or listing of the fourth paradigm?

01

How does the fourth paradigm hold Lenovo's thigh?

Different from the FOUR AI Tigers, the fourth paradigm aims at the construction of enterprise-level AI infrastructure, and the application of AI technology and algorithms is mainly to solve the efficiency, cost and value problems faced by enterprises in intelligent transformation, so as to improve the decision-making level of enterprises.

In 2018, The Fourth Paradigm and Inspur Group, one of the top local large-scale IT companies in China, jointly launched an AI hardware and software integrated machine called "Prophet AIO", hoping to create an end-to-end one-stop AI application solution.

"Prophet AIO" is the first AI all-in-one machine customized for ultra-large-scale data acquisition and machine learning in China. On the basis of the Inspur OpenPOWER server, combined with the fourth normal form Prophet AI system, not only can enterprises use AI as easily as using the Microsoft Windows interface, but also the overall performance of ProphetAIO can be more than 10 times higher than that of ordinary servers.

The following year, in November 2019, Lenovo Group, Together with The Fourth Paradigm, Cambrian, Shenzhen Urban Transportation Planning and Design Research Center Co., Ltd., etc., jointly established an artificial intelligence laboratory to deeply integrate software and hardware AI products, develop advanced products and solutions based on AI technology, and serve the intelligent transformation of all walks of life.

In April 2020, Lenovo and Cisco, as strategic shareholders, jointly invested in the fourth normalcy C+ round, and the post-investment valuation reached 2 billion US dollars. As a strategic investor, Lenovo Venture Capital said that it will further exert the resource advantages of Lenovo Group, such as talents, markets, supply chains, etc., and continue to help the commercialization of the fourth paradigm technology.

Two months after Lenovo invested in the fourth paradigm, the fourth paradigm officially announced a strategic cooperation with Lenovo - the fourth paradigm will serve as the intelligent software supplier of Lenovo's Android business unit, providing a full range of AI technology for Lenovo tablets in terms of content ecology, service system, human-computer interaction and other aspects. At the Lenovo Innovation and Technology Conference in October of the same year, He Zhiqiang, senior vice president of Lenovo Group and president of Lenovo Venture Capital Group, introduced that Lenovo is cooperating with the fourth paradigm to build an "AI all-in-one machine" and upgrade the AI infrastructure of new infrastructure.

In an interview, when talking about the cost reduction and efficiency increase brought by cutting-edge technology to Lenovo, He Zhiqiang said: "Lenovo DCG data center and Cambrian, the fourth paradigm of cooperation, Lenovo's server loaded with Cambrian AI accelerator, and then by the fourth paradigm to provide AI algorithm optimization and delivery to users." Originally, Lenovo might need 10 servers, but now only 3 are enough."

The fourth paradigm financial report shows that as of the end of last year, Lenovo and the fourth paradigm jointly developed AI all-in-one machines that empower finance, education and government affairs, and sales have reached hundreds of millions of yuan so far. In addition, it is particularly worth mentioning that in June last year, the fourth paradigm won the big order of the Ningde era, and Lenovo is the investor of the Ningde era.

02

Relying on Lenovo to eat manufacturing?

As the first AI startup jointly invested by five state-owned banks, the fourth paradigm has started from the financial industry, and the service field has expanded to retail, manufacturing, energy and power, telecommunications and medical care. At present, there are three main types of products that the fourth paradigm offers to customers, prophet platforms and kits, AI hardware (servers) customized with third parties, and custom development services.

Relying on the Prophet platform for AI digital construction, well-used terminal companies will open up a new cycle of business life. As it stands, the financial industry and manufacturing industry will have a relatively high acceptance of the platform because of the high degree of similarity of business, so it has become the main business area of the fourth paradigm. The Shanyue Intelligent Technology, which was jointly established by Lenovo and Lianbao Technology and the Fourth Paradigm, can undoubtedly pave the way for the Fourth Paradigm to first pave the way for the Fourth Paradigm to be the first in the manufacturing industry.

In 2016, Lenovo Group began to start a comprehensive industrial upgrading and transformation, and in 2019, it proposed the "3S Strategy" (intelligent Internet of Things, intelligent infrastructure, industry intelligence), and at the same time established Lenovo Enterprise Technology Group to participate in the national "new infrastructure" strategy, build digital infrastructure in all walks of life, and achieve transformation and upgrading and accelerate development for enterprises in all walks of life on top of advanced infrastructure.

In the process of implementing and promoting the "3S Strategy", the realization of digital supply chain and intelligent manufacturing upgrades for traditional factories is undoubtedly one of lenovo's most mature business areas at present. As an investor in the establishment of Shanyue Intelligent Technology, Lianbao Technology is not only one of Lenovo's three major P&D and production bases in China, but also a model for Lenovo's intelligent factory. Lianbao Technology has introduced a number of Lenovo self-developed core technologies and applications, including intelligent IT engine - "DynaSky", and on the new automated production line, it has adopted industrial Internet technologies such as 5G production infinity, 5G unlimited download, 5G +AR, and also imported 244 automation equipment to achieve the replication and import of automation equipment in the whole plant.

With the commissioning of two new automated production lines of Mercury Line and Nezha Line, Lianbao Technology has stepped onto a new level in intelligent manufacturing. Through the innovative application of a series of digital projects such as intelligent scheduling, IPS and flexible production scheduling system, the scheduling time has been shortened by 67% and the operation efficiency has been increased by 50%, becoming the world's leading intelligent manufacturing base.

With its own technology, experience and accumulation and precipitation in the field of digital supply chain and intelligent manufacturing, Lenovo has begun to promote smart factory solutions in traditional manufacturing factories in the past two years, accelerating its transformation into a 3S full-stack service provider.

As a Project and Partner of Lenovo, Sage AIOS developed by the Fourth Paradigm is an AI operating system tailored for enterprises and positioned at the bottom layer, which can provide comprehensive services such as data resource governance, system resource scheduling, application scenario management, etc. for enterprise AI applications, complete the whole process of AI product system solutions from AI computing power, AIOS, automated AI production to online intelligent operation, and the software and hardware optimized server designed by the fourth paradigm can achieve TCO (total cost of ownership) It is twice as low as the traditional server, which greatly reduces the threshold for enterprise AI landing and the total cost of ownership.

At present, Lianbao Technology has 70 upstream and downstream partners in the industrial chain in Anhui Province. In addition, Hefei is also an important manufacturing area, not only has Haier, Midea, Changhong, Meiling, Gree, BOE and other home appliances and electronics manufacturers; as well as Jianghuai Automobile, Giti tires and other automobiles and parts; Hitachi Construction Machinery, ABB transformer and other equipment manufacturing and including Unilever, Kao, Coca-Cola, Unity, Master Kong and other fast-moving consumer goods production plants. Hefei Shanyue Intelligent, which was established in Hefei together with Lenovo and Lianbao Technology and Fourth Paradigm, will undoubtedly help it promote its digital smart factory business to supply chain partners in the region and other large manufacturing plants, expand The Fourth Paradigm's market share in the manufacturing industry, and improve its competitive advantage in the field of manufacturing digitalization.

03

Ming wei to carry is really "selling yourself"

It seems that the fourth paradigm not only polishes and improves its own product strength by relying on the big tree of Lenovo, but also reduces its own customer acquisition costs in the manufacturing industry and shortens the customer cultivation period. In addition, from the registration information of Shanyue Intelligent Technology, the fourth paradigm is the largest shareholder, accounting for 51% of the shares, and has an absolute controlling interest in the company. But there is no free lunch in the world, and it can be clearly seen through the business and business model of the fourth paradigm: Ming Wei Lenovo helps the fourth paradigm, but in essence, the fourth paradigm serves lenovo's 3S full-stack service provider transformation strategy, "selling itself" to Lenovo.

Before we can figure out Lenovo's partnership with The Fourth Paradigm, we must first clearly understand what kind of AI company the Fourth Paradigm is. The fourth paradigm is a decision-making AI company that helps companies improve production and work efficiency with the help of AI decision-making. But the fourth paradigm does system (Sage AIOS), development tools (HyperCycle), editing tools (Sage Studio), and system applications (prophet applications) and computing power, and does not directly contact customer data, so the fourth paradigm business mainly comes from system integrators like Lenovo.

The Fourth Paradigm has publicly stated that some end users of its solutions prefer to purchase from system integrators when choosing product suppliers or service providers, in order to save the trouble of direct negotiations with a large number of different product suppliers or service providers. End users engage third-party system integrators who embed fourth-normal form solutions into their products to provide a variety of services to end users.

So what's wrong with this business model for an AI company? Is this model of cooperation more favorable to the fourth paradigm or more conducive to Lenovo?

1. Algorithms are not barriers, applications are

As we all know, whether it is AI companies or SaaS vendors, an important reason why it is difficult to replicate and scale business is that not only various industries, but also various enterprises have different requirements for systems and data services. Therefore, in the early stage of AI development, algorithms were regarded as "barriers", but with the development of AI technology and more and more enterprises entering the AI field, including Internet manufacturers, algorithm barriers have increasingly become problems that can be solved with time and money.

So what are AI company barriers? Now the promise lies in the application! In the application process, the system becomes "smarter" and more suitable for customer use through data feeding, and the accumulation of experience in different industries and customers in the process of program design, implementation, operation and maintenance has become a new path for AI enterprises to build barriers.

Baidu has invested heavily in intelligent driving, why is it difficult to open the market? The answer lies in whether car companies are willing to open their terminals to Baidu, if car companies want to grasp the driving situation and data of car owners by themselves, then they can invest in the development of intelligent driving systems.

That's the reason! The fourth paradigm of doing the underlying algorithm is like Baidu, and customers are in the hands of Lenovo!

2. The cost of research and development belongs to the fourth paradigm, and the intellectual property rights belong to Lenovo.

The prophet platform of the fourth paradigm actually provides users with a complete set of toolboxes, it seems that users can build freely according to ideas, but in fact, because of the problem of optional functions, it is limited to a certain extent. This leads to continuous investment in R&D in order to meet the possible needs of customers in this hypothetical way, so the investment in R&D in the fourth paradigm is high every year and continues to rise.

However, the fourth paradigm provides tools and operating systems, that is to say, the work of the software part is done in the overall solution, and does not provide a relatively complete digital upgrade plan, and the terminal enterprise uses the platform to model itself. This presents a secondary development copyright attribution issue.

In the process of cooperation with Lenovo, if the fourth paradigm is still only a technology supplier, then lenovo on this basis through its prophet platform tailored for customers with AI models, who should belong to the intellectual property rights?

3. The fourth paradigm makes stupid money, and the association makes smart money

In order to differentiate itself from the direct customized solutions of other SaaS vendors, the fourth paradigm changes the charging standard to the form of software licensing + hashrate so that customers can purchase on demand. However, unlike companies that directly own hardware platforms such as Alibaba Cloud, the fourth paradigm does not have a clustered data center, and at this stage, it can only lease servers from cloud service providers and then sell hashrate quotas to customers, thus reducing the profit level of the fourth paradigm.

As we all know, Lenovo has invested heavily in data centers and servers, and has invested in more than 10 chip manufacturers, including Cambrian. In the process of cooperating with the fourth paradigm, Lenovo has used its DCG data center and the project Cambrian as a supplier, and used its own hardware platform to jointly develop the project with the fourth paradigm.

In addition, although the prophet platform of the fourth paradigm has the characteristics of high modularity and standardization, making it much faster than the traditional enterprise software deployment time, this also means that the fourth paradigm does not earn engineer on-site service fees in the process of deploying software. As a full-service solution provider for customers, Lenovo can also obtain benefits in a full range of services such as consulting, implementation, and operation and maintenance in addition to software and hardware.

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