Why Are Internet Companies Obsessed With Hardware?

It has become normal for Internet companies to develop hardware and there are still lots of Internet companies staying away from hardware. Why is it so? If one day, WeChat, Momo and K Bar reach towards the hardware, what would they do then?

(Chinese Version)

A few years ago, it was uncommon for Internet companies to develop hardware, for those companies were supposed to mind their own online businesses. Today, “crossover” has become a buzzword for the Internet industry and it seems that all of a sudden, every online company is reaching towards traditional industries such as real estate, medication and manufacture by putting on their advertisements. Most people believe that putting key words such as “recruitment”, “trade” and “medication” online is what we called “crossover”. In fact, it’s more like “trans-boundary” for online marketing.

Taking the impetus of line crossing, Xiaomi launched its smart phone but self-claimed to be an Internet company. Since then, hardware and Internet companies have become an inseparable part. On Xiaomi’s press conference, its founder Lei Jun was wearing just like Jobs did, and people suddenly realized that Apple was actually an Internet company, while a decade ago, people tended to refer to it as a technology company. Now it seems that IT companies and Internet companies have switched their identities. One reason might be that the surge of mobile Internet has given rise to the popularity of smart Apps, which is a money tree for many obscure App developers and BAT. In one word, today every Internet company loves hardware.

Why are Internet companies obsessed with smart hardware?

Developing smart hardware is a strategy for many internet companies because it is believed to have a promising market. There are quite a few reasons accounting for the rise of smart hardware:

Traditional online business is losing popularity. Combining the Internet with offline businesses is the new fashion and smart hardware can be a perfect bridge.

Cell phone is the most popular smart hardware today but the market is saturated, which explains why most internet companies refrain from developing smart phones and why LeTV and 360 insist in doing so.

The need from traditional industries might be another reason. Because of limited technology and marketing strategies, many traditional enterprises are seeking cooperation with Internet companies. One example is the “new glass” developed by Lenovo. Actually, Lenovo didn’t take the initiation but a factory asked Lenovo first if they could develop a new glass.

Besides, using the Internet to spread traditional products is a fast way to penetrate existing markets.

What does hardware mean to Internet companies?

Unlike many Apps that face competition from similar products, hardware could “monopolize” its own users who are ardent supporters for their own platforms. Besides, the reform of an industry usually starts from a product and smart hardware can be viewed as the upgrade of traditional one. Today, connecting traditional industries with the Internet is the basic model of entrepreneurship.

Networking involves big data, cloud calculation, artificial intelligence and sensors. Since the collection of data depends on sensors, it is an inevitable trend to incorporate sensors into hardware products. Though cell phones are widespread, they cannot be applied to every industry. Thus in certain areas where cell phones are not applicable, hardware products are needed to collect and transfer data. Intelligent products could transfer data, connect to the Internet and recognize voices and gestures.The industry 4.0 and the future manufacturing require factories to be intelligent, interactive, modular and inter-connecting, which will definitely generate more intelligent hardware.

Why many Internet companies didn't develop hardware yet?

The following reasons explain such phenomenon:

First, online business can support the development of many companies such as DSP Advertisement and news reading Apps that can collect users though an App. They don’t have to own hardware.

Secondly, some Apps push their content through terminals on cell phones and computers. They don’t need other compatible hardware either.

Thirdly, though many Internet companies didn’t develop their own Apps yet, they already had lots of cooperation with hardware companies.

Fourthly, There are many online platforms that connect users with sellers. Their business model doesn’t require hardware.

Last but not least, it might be that some Internet companies are laggards.

The development of mobile Internet, combined with the policy of “Internet Plus”, are pushing forward the combination of online and offline enterprises. No matter O2O or other business modes, they will eventually get involved into offline business. The connection between online and offline business can generate many intelligent hardware. As for those companies that stay away from hardware, they might want to make their business simple. Probably most of them are still on the rising track and don’t bother to change.

If these companies do hardware one day, what products will they build?

Even though all the Internet companies start to build hardware, there remains some online businesses, which explains why some Internet companies, though capable of developing hardware, stay with their online business. That said, they might want to stretch their hands towards hardware in the future. It those enterprises do hardware, what products will they build?

Let’s talk about WeChat first. Today, WeChat has more than 400 million users all over the world. It is built on the idea of changing people’s lives, that’s why WeChat has developed many functions for the convenience of people’s daily activities, such as payment, purchase, remote control and entertainment. In my opinion, WeChat might extend its business into QR Code and POS machine. It might also develop game helmet with Tencent. Since people are in constant touch with house apparatuses, WeChat will probably enter such field. In fact, with the help of WeChat, many cell phones have become super intelligent hardware.           .

Momo, a social software, has survived from the pressure of WeChat and surprisingly went public。Momo connects people based on interests and communities. Given such feature, entertainment industry might be suitable for Momo. It could develop media players, camera, bicycle and mobile medication products. Of course, Momo could also build a topical hotel, where it strength lies.

K Bar is a very interesting app. First it transferred KTV to online platforms and accumulated a lot of users. Then it eventually built its own KTV. K Bar has exploited almost every corner of Karaoke business and even expands to celebrities.

If K Bar is going to develop its hardware, then KTV, celebrities and players are great subjects. It could build smart audios, smart instruments and other hot intelligent hardware. For amateur users, K bar could record, mix and compress input and output devices. It is reported that K Bar is going to put forward its microphone and as it develops more input and output devices, K Bar could establish a chain of musical devices. If our guess is correct, K Bar could have its offline music studios for both ordinary people and celebrities. Once it has gathered some celebrities, K Bar could further expand its business into clothing, bags and luxury goods.

Of course, besides the above three companies, hardware is open to all Internet companies. They could expand, shorten or simply connect the industry chain with other fields.

In a word, the connection between Internet enterprises and hardware is the future of business and hardware will be an important bridge between online and offline businesses. It will also generate more opportunities for Internet enterprises to cross different fields.

 

[The article is published and edited with authorization from the author @Wang Jiwei, please note source and hyperlink when reproduce.]

Translated by Jackie Jia (Senior translator at Echo), working for TMTpost.

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