Bohu’s finishing touch: The most urgent thing for DJI right now is to find a new field that is large enough and has enough room for imagination to achieve a breakthrough in its own revenue.
Over there, Huawei, the big brother in communications, has just announced that it has entered a new car manufacturing track; here, technology rookie DJI has cooperated in depth with SAIC-GM-Wuling to launch the new Baojun KiWi EV. At the Shanghai Auto Show that opened yesterday Officially unveiled.
This can’t help but make people sigh, car manufacturing is about to start “human-to-human transmission”! No matter what industry they are in, the giants seem to be scrambling to squeeze into the "window" of smart cars.
However, it is understood that DJI’s car-making routine this time is actually the same as Huawei’s. The so-called "deep cooperation" actually means that the new Baojun KiWi EV is equipped with DJI's intelligent driving system. The cooperation between the two parties is not conducted in the form of parts procurement.
But compared to the question of "how DJI and Wuling cooperate", what puzzles Bohu Finance even more is that this "big brother" of drones who is used to "flying in the sky", Why not "fly" this time and choose to "run" on the ground? What direction will DJI develop in the future?
01
Once you reach the “top” drone market
When it comes to DJI, drones are inseparable; when it comes to drones If you have a machine, you can’t do without DJI.
Fifteen years after its establishment, DJI has jumped from a private house in Lianhua Village, Shenzhen to a business worth tens of billions. Even the Wall Street Journal, which rarely praises Chinese technology companies, took the initiative to label DJI " The first Chinese company to become a pioneer in the world's major technological consumer product fields" label.
Who is DJI?
Back in 2006, a student who had just graduated from the Hong Kong University of Science and Technology and barely got a C in his graduation project was recommended by Li Zexiang, a professor of robotics at the school, and was able to continue his two-year postgraduate studies at the school. .
During his graduate studies, he and two classmates took the 2 million Hong Kong dollars they raised and rented a house to start a business in Shenzhen. In the end, because he often missed classes, he took a full five years of the two-year graduate course. Just got my degree.
He is Wang Tao, the founder and CEO of DJI.
DJI was just a small studio at the beginning. It had no business model and just made drone accessories. For more than two years, DJI operated like a small workshop.
The person who gave Wang Tao the idea of ??building a complete drone was actually a New Zealand agent. In 2010, he told Wang Tao the fact that he could sell 200 DJI gimbals a month, but 95% of his customers installed the gimbals on multi-copter aircraft. This made Wang Tao reflect on the development direction of DJI: Should we continue to sell accessories or make complete machines? If you want to make a complete aircraft, will it be a fixed-wing, helicopter, or multi-axis?
In the end, Wang Tao decided to follow his heart and chose to do multi-axis, "I am a product maker. I just want to make the product good and let more people use it."
By 2012, relying on the mature technology accumulated in the past few years, DJI gradually had all the elements needed for a complete drone: software, propellers, brackets, gimbals and remote controls. Finally, the "DJI Phantom" was released in January 2013, successfully leveraging the civilian drone market. Subsequently, DJI basically achieved the same speed as the mobile phone industry in terms of product iteration speed. It released products every year. "Phantom 2" and "Phantom 3" were released successively, and the "Inspiration" and "Mavic" series were widely praised.
Today, DJI has occupied 80% of the global consumer drone market, holds more than 70% of patented technologies, and is valued at more than 166 billion yuan.
Ranked seventh in the "2020 China Unicorn List TOP100", DJI is also the only Chinese technology giant that monopolizes the global market. It is even often compared to China's "Apple" by the industry, and it can compete with this "Apple" The opponent still hasn't appeared yet.
Similar to Huawei's experience, DJI was once included in the so-called "entity list" by the United States on the grounds of "protecting U.S. national security" and "controlled" the company's imports and exports to the United States. However, in the face of US sanctions, DJI directly increased the tariff by 13% and transferred it to consumers in the North American market. But even so, DJI's sales in the North American market have increased instead of falling, and even the U.S. military is still using DJI drones.
Indeed, no one can shake DJI’s leading position in the drone market, but problems arising from its leading position have begun to surface.
To this day, drones are still a niche market. Because for most consumers, the demand for drones is not that strong, and coupled with their low practicality, only a small group of people will become drone users. Although DJI has successively launched mini drones that are more affordable and more convenient to carry in recent years, it is still unable to stimulate the growth of consumer demand from the root.
Being invincible is indeed a lonely thing. Since DJI has no comparable competitors, this has also led to the road to popularization of drones gradually reaching a bottleneck.
According to IDC’s 2018 forecast, the global market size for consumer and enterprise drones is US$9 billion, with an expected average annual growth rate of approximately 30% in the next five years. According to this calculation, the overall size of the drone market in 2020 will be approximately US$15.21 billion. In Gartner's forecast, this number drops to US$11.2 billion, of which at least 50% are industry-level drones. This means that the market for consumer drones is further compressed.
Wang Tao, who has been deeply involved in the field of drones for many years, seems to have had a premonition. In an interview in 2016, he said that the drone market is close to saturation, and DJI’s revenue will reach its peak at 20 billion yuan.
02
Survival is not easy due to internal and external attacks
In fact, in addition to the "ceiling" crisis in drone sales, DJI is still a "sandwich biscuit."
On August 17, 2020, news that DJI was laying off 14,000 employees spread across the Internet, and DJI fell into the center of public opinion.
Later, DJI’s public relations director Xie Qidi said in the circle of friends: “Considering that DJI has 14,000 employees, according to this statement, the company has no one. I suggest letting the bullets fly for a while. "It turned out that the misunderstanding was caused by an incorrect translation by the self-media. The original statement was, "The company is considering a 'downsizing' for all its approximately 14,000 employees, rather than laying off all 14,000 people.
But the truth about DJI’s layoffs is by no means groundless. Some laid-off employees revealed that DJI has made considerable efforts to "downsize". The corporate sales and marketing team at the Shenzhen headquarters has been reduced from 180 to 60 people, and the consumer market team has also experienced similar layoffs. In addition, DJI's video production team has been reduced to three people, and South Korea has laid off its six-person marketing team.
"To be specific, I started sorting out the work a year ago and eliminated some redundant people. For example, there were two people doing a certain job in the past, but if this job can actually be done by one person, If you want to do it, you will consider laying off one of them, but there will be fewer layoffs in R&D, because R&D work is already highly saturated and difficult to compress."
DJI informed employees that the reason for layoffs was the COVID-19 epidemic. Impacted sales.
In addition to this reason, DJI also realized in 2019 that its structure had become unmanageable. According to industry insiders, the root cause of large-scale layoffs is chaotic management. Everyone in this circle knows that DJI’s management is really a mess and inefficient. In particular, the major corruption incident in 2018 further exposed DJI’s regulatory loopholes in the supplier introduction decision-making chain.
This incident also caused DJI to suffer a loss of 1 billion yuan.
During the epidemic, DJI founder Wang Tao once said that the company is facing greater risks and challenges: First, more than 90% of passenger flights have been cancelled, and the supply of all cargo aircraft is tight. The monthly freight cost has increased by 8 million; secondly, due to the impact of Sino-US trade friction and the epidemic, the company's overseas suppliers have an increased risk of supply interruption.
But as a Chinese technology company, does DJI really have such a big impact on overseas markets?
DJI once revealed that 80% of its sales occur offline. The company’s product sales in overseas markets and the Chinese market account for as high as 8:2, of which the North American market accounts for 40%. It can be seen that Dajiang Xinjiang relies heavily on offline and overseas markets.
Although the domestic epidemic situation has gradually stabilized, the epidemic situation abroad continues to be severe. Stores are closed, outdoor entertainment is suspended, and the unemployment rate is soaring. Drones are mainly used in film and television, tourism, outdoor and other scenes. The magnitude of this wave of impact on DJI can be imagined.
In addition, since DJI was included in the "Entity List", the US government has been wary of DJI for a long time. In January this year, the Pentagon banned the DJI drone fleet due to security concerns. DJI also stated that this decision was due to political reasons rather than software vulnerabilities. Even earlier, DJI was caught off guard by the sudden suspension of supply by Silicon Valley drone technology suppliers.
The reason why DJI is compared to a "sandwich biscuit" is because in addition to overseas trade being impacted by the epidemic and politics, DJI has also hit a wall domestically and within the company.
Although last year, drones were listed as one of the key national strategic development directions. However, our country has always had no clear legal provisions on the use and management of civilian drones, and most areas have implemented interim regulations.
On the one hand, in contrast to the rapid growth of the industry, regulatory policies are relatively backward. Drones break into public buildings and sensitive areas without permission, fall accidentally, affect the normal takeoff and landing of passenger planes, and collide with high-rise buildings. "Black fly" incidents such as construction incidents occur frequently. Therefore, more and more cities have begun to delineate "fly-restricted areas", and these areas are getting larger and larger, and the restricted flight height is basically only about 120m.
On the other hand, DJI once created a Mavic Mini drone that weighs only 249 grams in order to allow drones to "fly" into ordinary people's homes and lower the threshold for aerial photography. Because according to the regulations of the Civil Aviation Administration of China at the time, real-name registration was required for drones weighing more than 250 grams. But just last November, the Civil Aviation Administration of China adjusted the regulations for this type of drone, requiring that the micro-unmanned aircraft should have a take-off weight of less than 250 grams, a flying height of no higher than 50 meters, and a speed of no more than 40km/h. h. In other words, the weight of the Mini UAV meets the requirements, but because the flight height and speed exceed the requirements, it cannot be regarded as a micro UAV. It is considered a light UAV and still requires real-name registration.
Under the attack from inside and outside, if DJI does not stop its losses in time, the snowball will only get bigger and bigger. Today, DJI’s revenue has already exceeded 20 billion yuan. In addition to the drone business, DJI is also actively arranging other businesses, such as imaging system equipment and educational information consulting business, but neither of them can support the drone's valuation of 166 billion yuan. The most urgent thing at present is to find Go to a new field that is large enough and has enough room for imagination to achieve a breakthrough in your own revenue.
03
There is more room for imagination on the ground than in the sky
Unlike other new car-making forces, DJI has always been steady and low-key, "it exists as soon as the poster is released." The style is also applicable to this entry into smart cars.
As early as six years ago, DJI became a hot topic for its successful poaching of Tesla’s head of autonomous driving, Darren Ricciardo. And since then, news about DJI entering the field of autonomous driving and developing unmanned vehicles has continued to appear.
However, DJI has kept a tight lid on this matter over the years.
Later, netizens discovered that it was testing unmanned vehicles at a "secret base" in Shekou, Shenzhen, which further supported this rumor: DJI will use its accumulation of machine vision in previous years to cooperate with OEM manufacturers to enter the autonomous driving market. .
At present, the new car-making forces can be divided into OEM and ODM in terms of vehicle production. Among them, OEM production is commonly known as OEM production, that is, brand producers do not directly produce products, but use their own core technologies to design and develop new products, control sales channels, and entrust specific processing tasks to other manufacturers of similar products through contract ordering. Production. ODM production means that after a manufacturer designs a certain product, in some cases it may be favored by other companies and require the latter's brand name for production, or slightly modify the design for production.
Obviously, Huawei and DJI are entering the automotive track using the OEM production model.
As mentioned in the above section, DJI urgently needs to find a new field to support its huge size. At present, autonomous driving naturally has more room for imagination than the drone market. According to estimates, the autonomous driving market size will be 84.4 billion yuan in 2020 and will reach 225 billion yuan in 2025. And this number is only for the domestic ADAS (Advanced Driving Assistance System) market. There will be greater possibilities in the L4 level autonomous driving field with a broader "money" path.
More importantly, DJI has a certain first-mover advantage compared to other players. Technically speaking, the perception part is still the most difficult problem to solve in today's autonomous driving. In the past research and development of drone products, DJI has accumulated rich experience in visual recognition. Technologies such as automatic hovering and intelligent obstacle avoidance have been used in drones for many years. By migrating to driverless application scenarios, you can overcome technical difficulties faster than your opponents.
In recent years, DJI founder and CEO Wang Tao has been secretly working hard to change DJI’s positioning. When the "Phantom 4" drone was released in 2016, the title was "Welcome to the era of computer vision", and then the description of DJI was changed from "Flying Camera" to "Flying Robot". Wang Tao does not limit DJI to the field of drones. He hopes that DJI will become an "artificial intelligence company."
Throughout the development history of DJI products, they generally start with subsystems and then gradually develop into finished systems. Whether it is a flight control system to an aerial photography drone, or from an aerial photography suspension gimbal to a handheld gimbal, based on existing system products, Bohu Finance predicts that DJI will most likely start manufacturing complete vehicles in the future. However, as a "little Huawei", DJI is expected to wait and see for three years like Huawei.
04
Conclusion
In the past, the car company Xpeng wanted to "go to the sky", and then DJI, which built drones, wanted to "land". One is to tell new stories, and the other is to continue telling stories.
However, judging from the current form of car manufacturing, not everyone can stay in the automotive field with high risks, long cycle, low fault tolerance rate and high risk. Although Chinese consumers have great demand for new energy vehicles and the prospects are very good, there is still a "Matthew effect" in consumers' perception of new energy vehicle brands. In short, they are only familiar with the top brands. . At this time, Internet-based cars have entered the market one after another, and traditional cars have been transformed into new energy vehicles. For a time, the market can be said to be crowded, and no one wants to get off, so they can only be squeezed out. Jia Yueting’s LeTV and Dong Mingzhu’s Gree are examples of this.
As for whether DJI will eventually succeed in making cars? Bohu Finance is not sure yet. However, intelligence and electrification will be the major trends in the future, and DJI should be able to seize a place in the market with its excellent strength.
Reference news:
1. Yiou.com: DJI: "Hard-sharpening" unmanned vehicles
2. Venture capital meeting: Wang Taohe His DJI
3. People vote for each other: Under US sanctions, DJI drones counterattack beautifully!
4. Qubits: Exclusive | DJI’s unmanned vehicle was exposed for the first time, and the executives poached from Tesla resigned