This article is reproduced from Industrial Technology
Since the beginning of this year, the fire of large AI models has continued unabated and has now spread to the education field.
On July 26, NetEase Youdao held a press conference on the application results of the "powered by Ziyue" education large model, launched the first domestic vertical large model in the education field "Ziyue", and released a large model based on "Ziyue" in one go Six major applications of R&D. Half a month later, NetEase Youdao announced the implementation results of "Ziyue" at the hardware level and launched Youdao Dictionary Pen X6 Pro.
NetEase Youdao's ambition to enter the "thousand-model war" has long been foreshadowed. Since February this year, NetEase Youdao has begun to preview and reveal information about the development of the "Zi Yue" large model. Until the official announcement was made in July, the progress was slightly slow, but in the education large-scale model track where the overall pace is slower, NetEase Youdao's actions are not far behind.
Data from iResearch shows that China’s smart education hardware consumption market will reach 43.1 billion yuan in 2022, a year-on-year growth of more than 20%. Parents have a positive attitude towards smart education hardware products and are expected to maintain double-digit growth in the next four years. AI Education The market prospects are very broad.
Technical reserves are preemptive, and scenario demand continues to grow. When the AI engine with large models as the core is placed in the learning service and intelligent hardware business, NetEase Youdao's performance decline is expected to be reversed.
At the performance level, NetEase Youdao has been stuck in the dilemma of "increasing revenue without increasing profits", and its performance in the first quarter of 2023 suffered a further decline. The test scores are getting worse and worse. NetEase Youdao is in urgent need of a "learning artifact" to solve the dilemma, and the large AI model is the "artifact" that has high hopes.
Judging from NetEase Youdao's strategic drive, it also hopes to use the "Ziyue" large model to generate new revenue increases.
Performance fluctuations have not slowed down
NetEase Youdao relies on AI technology to create a series of learning products and services around learning scenarios, including software and hardware learning tools such as Youdao Dictionary and Youdao Dictionary Pen, as well as online learning platforms such as literacy courses, university and workplace courses. Currently, Youdao’s full range of products has more than 120 million monthly active users.
In 2016, NetEase Youdao entered the online education track, vigorously accumulated educational content and channel resources, integrated internal education platforms, such as merging NetEase Cloud Classroom, China University MOOC, Kadu Programming and other internal NetEase education platforms, while recruiting famous teachers, purchasing High-quality courseware and question banks, and expanded school cooperation channels.
The large-scale tilt of resources has caused the performance of the K12 education scene to surge, allowing NetEase Youdao to experience the fastest development in 2019 and 2020. However, the high sales and marketing expenses caused the revenue to grow while the net profit did not rise but fell.
Judging from the financial reports of the past five years, NetEase Youdao has been in a state of loss for a long time. From 2018 to 2022, its net profits were -289 million yuan, -602 million yuan, -1.753 billion yuan, -996 million yuan, and -727 million yuan respectively. ; And there have been net operating cash outflows for five consecutive years.
However, with the gradual implementation of the national "double reduction" policy, the chaos in the education and training market has been cleared up. NetEase Youdao, which has not yet achieved a turnaround, is facing a situation where its growth rate is slowing down and its revenue is gradually hitting a bottleneck.
From 2018 to 2022, NetEase Youdao's operating income was 732 million yuan, 1.35 billion yuan, 3.168 billion yuan, 4.016 billion yuan, and 5.013 billion yuan respectively; the year-on-year growth rates were 60.53%, 78.36%, 162.34%, and 58.93% respectively. and 24.84%. The overall growth rate is gradually shrinking, and NetEase Youdao's hematopoietic ability is weakening.
After experiencing a record-high net income in the fourth quarter of 2022, reaching 1.45 billion yuan, a year-on-year increase of 38.6%, and achieving positive operating profits in a single quarter for the first time, NetEase Youdao did not usher in the dawn, and its performance took a sharp turn. It ended four consecutive quarters of gains.
The financial report shows that NetEase Youdao achieved revenue of 1.16 billion yuan in the first quarter of this year, a decrease of 3.1% compared with 1.2 billion yuan in the same period of 2022, and a month-on-month decrease of approximately 20%. Net profit attributable to the parent company was -204.4 million yuan, compared with 95.4 million yuan in the same period last year. The loss expanded 114% year-on-year, setting a new low in three years.
In terms of business composition, of the total revenue in 2022, the learning service business revenue is 3.08 billion yuan, a year-on-year increase of 26.3%; the intelligent hardware business revenue is 1.26 billion yuan, a year-on-year growth of 28.2%; the online marketing service business revenue is 670 million yuan, A year-on-year increase of 13.2%.
Among them, the fastest-growing smart hardware business has a growth rate of 82% in 2021. Although its growth rate is higher than other businesses in 2022, the growth rate has dropped significantly, and by the first quarter of 2023, the revenue of this business will be A year-on-year decrease of 16%.
The top priority is that NetEase Youdao must find new growth engines and open up new incremental markets. NetEase Youdao has officially announced that starting from 2022, its business focus will shift from after-school tutoring to its original four business segments of intelligent learning hardware, quality education, adult education and education informatization.
AI-powered intelligent learning hardware is regarded as a bet business by NetEase Youdao, ranking first in the growth pillar strategy, and shouldering the incremental burden after forced transformation.
Can AI empowerment break the situation?
The large investment in research and development of intelligent education hardware, high technical threshold, and long research and development cycle have resulted in the delay in traditional education and training transformation enterprises to successfully enter the track. In contrast, NetEase Youdao is not a pure online education company.
In addition to having long-standing roots in the education field and accumulated learning data and materials for all stages from children to adults, NetEase Youdao has also accumulated certain basic capabilities in collaboratively building AI, providing important information for self-developed AI large models and intelligent hardware innovation. driving force.
As a base model, the "Ziyue" large model supports many downstream tasks. It puts scenarios first and provides basic capabilities such as semantic understanding and knowledge expression to all downstream scenarios. It has large language model LLM translation, virtual spoken language coaching, grammar lectures, AI composition guidance, AIBox, document Q&A, six major application functions.
It is reported that after the launch of the "Ziyue" large model, it will be the first to be installed in NetEase Youdao's flagship AI learning machine and flagship dictionary pen. It strives to empower intelligent hardware through large models, comply with the new trend of the education industry of "AI + Education", and grasp AI large model technology and intelligent education hardware market opportunities.
Currently, among NetEase Youdao's diversified intelligent hardware matrix including Dictionary Pen, Hearing Treasure, Learning Machine, Translator King, Super Dictionary, and Printers, Dictionary Pen is the only flagship product with more than 100 million monthly active users. No. 1 in the domestic dictionary translation market.
The leading position of Youdao Dictionary Pen is due to the first domestic statistical machine translation online engine, Youdao Neural Network Translation (NMT), which was independently developed and launched by NetEase Youdao as early as 2008. After 15 years of technology iteration, NMT Become a technology-leading product in the vertical field of the industry.
After the "Ziyue" large model empowers the flagship dictionary pen, NetEase Youdao's position in the dictionary translation market will be further consolidated.
However, NetEase Youdao's sales performance in the field of learning machines is somewhat unsatisfactory.
Referring to the sales situation of "Youdao Smart Device Flagship Store" on an e-commerce platform, as of August 11, the three items with the highest sales volume in the store in the past 30 days are all dictionary pen series, with the highest sales volume of 3,000+, and the two learning products The sales volume of the combined dictionary pens was less than 30 units; within 30 days of the “Youdao Dictionary Pen Flagship Store”, the sales volume of a single dictionary pen exceeded 10,000+, but only one learning machine was sold.
At present, products in the field of learning machines are highly homogeneous. Learning machines of various brands differ very little in terms of basic textbooks, graded reading, picture books, etc., and the AI capabilities they are equipped with are also similar. Consumers’ negative comments on different brands of learning machines also focus on similar issues such as “teaching materials are not synchronized in time”, “only suitable for primary school level”, “single function”, “AI function is useless”.
In order to widen the technological gap with similar products and focus on differentiated competitive advantages, mainstream learning machine manufacturers in the market have also begun to look for breakthrough solutions, and large model empowerment has become one of the solutions.
For example, iFlytek's T20 series of learning machines, newly launched this year, are empowered by large cognitive models and have functions such as "human-like essay correction" as selling points. Even though the price is close to 9,000 yuan, they have still succeeded in impressing the parent community and have become the best-selling machine. Frontrunner.
After the "Ziyue" large model empowers the flagship learning machine, "Ziyue", as a large model in subdivided professional fields, has been able to achieve 98% answer accuracy in the English scenario, making the Youdao learning machine better It can effectively solve problems in professional fields, provide more personalized, more diversified and more technological solutions, and help more users learn efficiently. This also opens up space for NetEase Youdao to develop more competitive hardware products.
The field of education has higher requirements for the accuracy of large AI models, and the more vertical a product is in a professional field, the lower the fault tolerance of consumers. This is undoubtedly a challenge for a comprehensive learning machine brand, but it is also an opportunity for NetEase Youdao, which has a large amount of industry data and an in-depth understanding of users in the education field.
NetEase Youdao can rely on its outstanding advantages in hardware, AI algorithms, and content to accurately understand user needs and polish AI large-model products, thereby realizing the implementation of large-model products. NetEase Youdao can not only maximize its advantages in the education field, but also has lower research and development costs for vertical professional large models than general large models. NetEase Youdao faces relatively less pressure on technology investment.
At present, the field of large-scale educational models is also involved in involution. Mathematics large-scale models are a direction that all major manufacturers want to invest in. However, even if it is as powerful as ChatGPT, there is still no substantial progress in mathematics subjects that require stronger logical thinking and reasoning abilities. .
NetEase Youdao can make some choices and tilt its current resources towards more advantageous vertical fields, which is a wise move. Moreover, compared with smart educational hardware such as dictionaries and pens, learning machines have a higher unit price and higher gross profit margins. As a new addition to NetEase Youdao, the profit margins are higher.
According to iResearch's forecast, the size of my country's educational intelligent hardware market is expected to exceed 100 billion yuan in 2024, with a compound annual growth rate of 26%. Frost & Sullivan data also shows that China's intelligent learning equipment has a compound annual growth rate of 17.1%, and it is expected that the total market size will reach 145 billion yuan by 2026, and there is still considerable room for future development.
From this, it can be predicted that the application of large models to products will add new selling points, consolidate the inventory of intelligent educational hardware dictionary pens, and expand the increment of learning machines. NetEase Youdao's approach to solving the performance dilemma through AI empowerment is worth looking forward to. .