Wen | Zhao Yanqiu
Editor| Zhou Luping
As a benchmark, Huawei has been the object of learning for many enterprises over the past many years. However, Digital Intelligence Frontline learned that in the past two years, those companies that have learned Huawei have been learning Hikvision, including Huawei itself.
Hikvision is considered a security company, and the cameras on the road, the surveillance in the community, and the monitors installed by the network cable in the village may be related to it. However, Hikvision's own defined route is a company that innovates around the spectrum.
According to the september 2021 Preview Network, Hikvision's global market share is 29.8%, ranking first, while in the Chinese market, Hikvision's share is 36%. According to the latest report released by Omida in July 2021, Hikvision's share of the global intelligent video surveillance market will reach 53.5% in 2020.
Image credit: Omdia Report
Hikvision has also been called "Little Huawei" by Ren Zhengfei. Despite its outstanding performance, with a market value of nearly 400 billion yuan, ranking among the best in A-shares, Hikvision's fame is not loud, and there is no management and success in the market. So why do companies that are more famous than it learn from it?
01 A hot post sparked a big debate
At the beginning of 2022, Huawei launched a major online debate on the security business, and the Voice of Hearts community replied to the issue with thousands of replies.
Digital Intelligence Frontline learned that the debate stemmed from an internal critical article on Huawei's Anping business (the name of the business unit). It is said that the article is very sharp, mentioning "anxious customers" due to huawei product quality, not doing a good job of making a camera business that is bigger and can't make money, losing hundreds of millions of yuan in large orders due to the lack of sinking partners, and consuming a lot of R&D resources but dragging the organization into the abyss of customization.
In fact, some of Huawei's products, such as chips and storage devices, have entered the security market very early, but it was not until 2017 that Huawei officially established a special department - Anping Business Department, and released an intelligent security business strategy in 2019, so as to be able to do security business more systematically.
Huawei's entry triggered a huge response in the industry at that time. Some media headlines are very impactful, saying "Huawei's security fire protection is fully open, and it is necessary to bulldoze three mountains", that is, the top three companies in the security market - Hikvision, Dahua and Univision. For a time, the security industry felt precarious. Many people believe that with Huawei's technology and wolf nature, it will quickly crush the old sea Conways.
But after a few years, Hikvision is still sitting firmly in the first position, and the gap between other companies and it has not only not narrowed, but also increased.
On April 15, Hikvision released its 2021 annual report. The report shows that in 2021, the company's global revenue reached 81.42 billion yuan. "This revenue scale is only a little less than the revenue of Huawei's enterprise business." A Huawei person told Digital Intelligence Frontline that the enterprise business is one of Huawei's three major businesses. "Huawei's entire enterprise business line is only more than 100 billion yuan, all markets are included, but Hikvision can have so much revenue in a vertical track." Another employee sighed.
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Not only Huawei, but also the second oldest in the security market, Dahua, also felt uneasy. "Hikvision is our full line of benchmarking, its revenue plate is already very large, but it can still maintain a growth rate of nearly 30%." A senior Dahua employee told Digital Intelligence Frontline, "If it maintains this growth in 2022, it means that 'one Dahua' will grow, and we are very nervous." ”
A person from megvii technology, an artificial intelligence company, told Digital Intelligence Frontline that after seeing Hikvision's financial report, the direct call was really too powerful. "It can do a 165% increase in net profit, and it's doing a product with such a thin profit."
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Today, whether it is Huawei, or companies such as Dahua and Megvii that have learned Huawei in the past, they have also opened the road to learning Hikvision. So, what makes Hikvision withstand the wave of shocks from Huawei, security companies, and artificial intelligence companies, and open the way to learn it?
02 Hikvision did the right thing
In an article titled "Roosters Watching the Countryside: Is Surveillance Installed in Your Home?" In the article, the author depicts a small scene recorded by his own camera in a mountainous village in Hubei Province: a weasel grabbing the neck of a chicken in the evening; in the middle of the night, a person encounters a snake on the steps and screams...
This monitor was given away when the local telecom installed the network cable, and you can view the monitoring screen by installing an App in the mobile phone. There are 20 households near this household, and 7 of them are monitors that are installed "incidentally".
These monitors are also used by villagers: neighbors at construction sites in the field can monitor their left-behind children and the elderly, and can say a few words, because these monitors also come with a call function; the lady owner of the convenience store in the village, in the operation of the Pinduoduo community group purchase, through monitoring to confirm that the goods everyone gets are not wrong; pig breeders on the mountain, install monitoring on the pigsty, once someone appears in the monitoring range, an alarm will be issued...
In these scenarios, security is no longer security in the traditional sense, it has become a mixture of consumer, enterprise and government markets. Even the government-led "Skynet Project" that focuses on urban governance and the "Xueliang Project" concentrated in the countryside have become an extremely fragmented market because of the many "urban counties and townships".
In 2018, Hu Yangzhong, general manager of Hikvision, described the essence of this market for the first time in response to Huawei and artificial intelligence unicorns entering the security market: the security market is a small market, and this "small" is reflected in the fact that the market is very fragmented - users are scattered, applications are scattered, products are also scattered, and customers are customized a lot.
Because of this, players in the market "want to obtain customers in countless small areas, relying on a single sales and pushing, and sales cost control is an extremely important part", and to establish a system to meet fragmented demand development and rapid delivery, "is a very complex project".
Hu Yangzhong Image source: Hikvision official website
The above-mentioned senior Dahua person told Digital Intelligence Frontline that because it first realized the essence of the "fragmentation" of the security market, Hikvision has gradually established two core capabilities of service fragmentation: one is an extremely sinking channel; the other is an algorithm open platform that gathers fragmented applications and users.
"You see that Huawei's distribution channels are mostly concentrated in the municipal level or above, and Dahua has also wavered in direct sales and channels." The above-mentioned person said, but Hikvision's "channel is king" strategy has been very firm.
In the security distribution market, there are three types of groups, large, medium and small. There are large enterprises such as Hisense and Yihualu, as well as medium-sized enterprises with certain integration capabilities, as well as computer shops, office supplies stores, and even no shops to help people install network cables. "Hikvision's channel has sunk to the contractors." A Huawei source told Digital Intelligence Frontline that the contractor foreman held the drawings and installed the network cable while installing the monitoring.
According to an industry insider, Hikvision currently has 800,000 channel sales.
Hikvision's second strategy is to create an open platform for artificial intelligence, which is also closely related to the first strategy. In 2018, Hikvision launched the AI Cloud open platform. At that time, it was in the climax of artificial intelligence investment, "but the Hikvision platform is very pragmatic, and we now slowly realize its role." Dahua seniors said.
For example, he now requires all takeaway stores to install monitoring to achieve "bright cooking stoves". Which group of people are serving these delivery shops? It could be the local computer shop or the contractor team. But now that the price of the camera is very transparent, customers will ask, what is sold for 200 yuan on JD.com, why do you sell it to me for 1,000 yuan? At this time, the contractor will tell the customer that he still has this algorithm.
People can upload photos or videos to Hikvision's AI Cloud to train a model. For example, a fish farmer can train a model that specifically counts the bubbles of the fish, and the number of bubbles can know the health status of the fish.
"These scenarios are very fragmented, but it is through such a group of people, and through the AI Cloud open platform, these scenarios have been revitalized." The above people analyze that once they get used to its model training and benefit from it, they will become very loyal users. And those very small channel players have also taken the initiative to register on this platform and earn money through this platform.
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But a coin also has both sides. Most of the customers contacted by security companies such as Hikvision are still small security orders. And in the current digital transformation, Hikvision front-line employees often feel that there is nowhere to start, and salespeople do not understand digitalization and do not understand the cloud. Like Huawei and Ali, the common denominator is that they have a top-level design, can provide a base, and are good at making a large platform. Security companies such as Hikvision will also pick up tens of millions of large projects to do the role of the total set, but due to capacity problems, the number is limited, such as in the field of transportation, such projects are only about a few per year, and no amount can be received.
03 The fragmented market cannot make quick money
Digital Intelligence Frontline learned that in order to adapt to the fragmented play of the security market, Huawei China Government and Enterprise Affairs launched a strategy to further sink channels last year, covering more than 200 prefectures and counties, including the top 100 districts and counties, and seeking cooperation with local distributors, integrators, engineers and customers.
"Increasing cooperation with channel providers can not only solve the problem of high employee costs and difficult to sink, but also be more adaptable to the flexible playing style of various places." An industry insider analyzes.
In terms of employee costs, although Hikvision general manager Hu Yangzhong did not name names, he also told the outside world bluntly: "Taking the communication industry company as an example, the operating cost is much higher than that of security, and the high-cost manpower of the communication industry is used to run security, just like taking a rifle to fight flies, and the input and output are very mismatched." ”
Digital Intelligence Frontline Note: Dahua's 2021 annual report has not yet been released
Digital Intelligence Frontline counted the average salary of Huawei, Hikvision and Dahua employees in the past 5 years and found that the salary level of Huawei employees was 2.6 times that of Hikvision. Even Dahua, the second oldest in the security market, has an average salary of 1.5 times that of Hikvision.
In the industry, just like Tencent's "Goose Factory" and JD.com's "Brother Factory", Hikvision was ridiculed as a "decent factory", which comes from an entry PPT of Hikvision, which reads "Working in Hikvision may not be rich, but it will be decent." However, this decency also caused Hikvision employees to have a large turnover in some departments.
Several Hikvision and former Hikvision sources told Digital Intelligence Frontline that the main reasons for the company's low average salary are: the management sets the salary, but the salary does not count the equity income; the recruitment of fresh graduates is more; the average salary of factory employees is relatively low; in the provinces, municipalities and counties have their own sales teams, but the income of employees at the county level may pull down the average salary.
But in any case, most of the projects in the security business are not economies of scale. There is a saying that the average security is 20,000 yuan per single, which is not suitable for holding high. "It's like countless sandbags hanging from the ceiling, with one or two hard fists alone, which can only shake individual sandbags, but can't eat them all, can't form scale." Hu Yangzhong said.
The relatively low-cost operation is also suitable for the "human flesh operation" of the security business. In addition to cameras and storage in the security market, there are also back-end software platforms, and dahua and Hikvision currently have a high market share in this area. This platform is not a grain production area, may not sell tens of thousands of dollars, to dock multiple parties, there are a large number of customized needs, after the end of the project in order to stabilize, but also to do "human flesh operation and maintenance". In this way, the cost is too high, and it is not easy to calculate the account. This is also a software platform for Huawei's internal reflection.
In addition to channels, Digital Intelligence Frontline observed that from around 2017, the startups of artificial intelligence algorithms, SenseTime, Megvii, and Yitu, are all moving towards a "combination of soft and hard".
Last week, at Megvii's Enterprise Business Partners Conference, Co-founder and CEO Yin Qi said that the recombination of software, hardware and algorithms poses a higher challenge to companies like Megvii and other AIoT practitioners.
Megvii is also more tortuous on the road to exploring hardware. Industry observation, Kuang regarded as doing hardware, once "three into Hangzhou", trying various models. In the company's summary of the tenth anniversary last year, Yin Qi also confessed the difficulty of doing hardware, saying that he should stick to it. Yin Qi himself visited Hikvision's Hu Yangzhong last year.
At last week's conference, Megvii launched the first fully self-developed IPC (network camera product) and entered the low-end camera market through acquisitions.
Yin Qi talked about strategy at the Megvii Enterprise Business Partner Conference
Cameras are also "representatives of fragmentation", and there are thousands of cameras in Hikvision and Dahua. An industry veteran told Digital Intelligence Frontline that the average target control cycle of a camera on the market is generally only 8 months, and the update is extremely fast.
In this market, we can not only seek high-end explosive models, but also have a reasonable product portfolio and form a scale to make money. For example, Hikvision and Dahua occupy the waist market, with Hikvision shipping about 160 million units per year and 80 million Huawei; while the market below 100 yuan is occupied by companies such as TP-LINK.
Megvii is also working on mass production of algorithms, and one of the key goals is to expect partners to use them at a low threshold, like Hikvision.
In addition to channel and product strategy, in the eyes of industry insiders, Hikvision's style is down-to-earth. Even former employees who left, when referring to the company, said that it was the most attractive place for talent.
"Hu Yangzhong is a very worried person, belonging to the kind of CEO who goes directly to the field." A former Haikang employee told Digital Intelligence Frontline, "He doesn't sit on top and only listens to reports." The person said that his pressure is transmitted to the next level, which will also make the next level very proficient in the business, "everyone is doing things in a down-to-earth manner."
A person who had visited Mr. Hu said he had arrived with a school bag "like a student."
In the external ideological elaboration in 2018, Hu Yangzhong said that the development of an industry has its own ecology and laws, which requires funds, time, talent accumulation, and team culture precipitation. "Cook the rice in a hurry, and cook the soup on a low heat."
"The security market needs to be worked hard, which is the mentality of making slow money." The above-mentioned Dahua person finally said.