Recently, LeTV took out the “hardware free†cold meals two years ago and said that the hardware is free, but only “$0†is required to “buy a member.†Let’s know what LeTV said by comparing the terms and prices of its bundled members. "Free" is actually playing a word game. For example, if a LeMAX is to be bundled with LeTV Sports Members for 5 years and 2 months, how long is the usage period of an Android device?
This "free" is extremely insincere. However, this is not the point.
Going back to "hardware free" itself, this is not really a new concept. For example, if you pay for a mobile phone, many people should be familiar with it.
Hardware is widely used for free applications, in addition to contract machines, organic top boxes, and broadband home routers, in fact, they are some kind of "contract machine": you use my equipment, the next year We need to use the services of our family for three years. Usually forced to need.
What are the common characteristics of these free hardware?
First, although it is "free" to consumers, for equipment manufacturers (such as contract machine manufacturers), their goods are normally sold. It is not the consumer who pays but the operator.
Second, manipulating "hardware free" is an undeniable oligarch, and only oligarchs such as cable TV operators, broadband operators, and telecom operators have the financial resources to cope with the consumption of cash flow brought by "free" (real In many cases, operators have also passed this part of the pressure to different equipment manufacturers through "on sale", and only after the goods are sold are settled. The financial pressure does not have to be self-determined.
Third, there are more value-added services on the product and users can continue to find charges. For a contractor with a two-year deadline, if you use it for half a year, you do not want to use it and you have to pay it for two years. Needless to say, what else does the manufacturer do for free? Does it give warmth to consumers for humanitarian care?
Fourth, on the device itself, free routers, free set-top boxes, free contract machines, have a common feature: no design at all, and the user experience is poor, often just just use it. The reason will be mentioned below.
In summary, the "hardware free" case does exist, but there are some factual monopolies, there is a follow-up value-added service industry. Outside these areas, the "hardware free" model is in doubt.
Someone calculated an account for "hardware free":
"As a hardware company, you can exceed 100,000 shipments, and it's quite good. You can basically rank in the top 10 in the country. We now assume that you ship 1 million, like Nest, so big companies sell it. One million units, so 1 million units is a very large quantity.If the hardware does not make money, charge service charges, assuming 100 million people are willing to pay 100,000 service fees, assuming 10 yuan a month, monthly income also barely 100 Million, but how much you can make a product to achieve 1 million shipments? And more importantly, very few start-up companies can achieve such a large amount of sales without any profit. You can only rely on investment, otherwise it is impossible to live."
Forcing hardware to be free and lucky enough to survive, the products are in the hands of consumers, and most of them are unable to withstand meticulous scrutiny. The poor experience of routers, set-top boxes, and contract machines is not determined by the aesthetic level of the process designer or project manager, but is determined by this free model (KPI can also be said). The market decision is rational. If the hardware itself has no return, it does not need to consider the return, and it can accomplish the task of “can useâ€. From the perspective of economics, no one has the motivation to spend time and energy to design the product better.
And LeTV's approach is completely different, and its rival Xiaomi TV has spent a lot of effort on the ground to polish the hardware. As Wang Chuan said: “... At present, millet TV has not yet been able to use domestic-funded manufacturers. At present, we use It is still a foreign-funded manufacturer, mainly because there is still a big gap between quality. We can only use the top few manufacturers in the world to produce television.
Today, we and the foundry companies do not think that we need alliances at the capital level, because the entire production capacity is an excess state, not a state in short supply. Therefore, we are completely free to choose the best foundry. It is just a matter of price. The best foundry is high cost and high price. â€
To put it plainly, it means picking up factories, picking craftsmanship, picking materials, and then saying that it is a lot of money. From the first-generation 47-inch, second-generation 49-inch, and third-generation splits, millet TVs have seen a significant increase in quality, sound quality, performance, craftsmanship, and appearance. Under the condition of loss, more than 10 million users have been developed. The overall situation is a very healthy development. "Hardware Free" clearly cannot support this situation.
A benign transaction should be a non-zero-sum game that creates value for the user and then shares the benefits from it instead of slashing it. The iPhone occupies more than 90% of the profits of the entire mobile phone industry. The Beats headset has a profit of over 1000%. The price of Bose speakers is still high. The Leica cameras, Nest's environmental sensors, and electronic products that we see are known for their quality. Almost all are high margin, and only high margin can motivate manufacturers to continue to invest in R&D and design, so that “excellent†can become a sustainable quality.
In addition, Xiaomi TV has a sober border for what it wants to do. “Xiaomi has the ability to make the best hardware and the best software, but we don’t think we have the ability to do a good job,†Wang Chuan said yesterday. This was mentioned in a speech to the outside world. In other words, in the future, Xiaomi TV will only put most of its energy on the TV product itself. Products beyond the product will be realized through partners. If you don't do your own content, you can become friends with all people who do content. This is what Lei Jun called “the play of ecological chains, and the emphasis is on music and musicâ€.
Specific to the level of millet TV, Xiaomi focused on products, and the content level reached a deep strategic cooperation relationship with iQIYI. The cooperation between iQIYI and Xiaomi is incomparable to other TV brands, and the exclusive and iQIQI Promotional resources are first given to Xiaomi, Xiaomi TV member and Iqiyi member account are open, Xiaomi members can cover all IQIYI PC, mobile content resources, and in addition to IQIYI own member content, the millet will also According to the specific purchase of some content exclusively for millet TV and millet box users.
Millet TV launched a billion-dollar plan last year. Almost all of the money was used to invest in content-related producers, distribution channels, and video sites. These investments have already begun to bear fruit, and the development of Xiaomi TV content will accelerate this year. As the potential of Xiaomi TV's own products becomes stronger, it will create greater synergy with these content partners.
So if I were to make a choice between "free" LeTV and paid millet TV, I think I would choose Xiaomi. In comparison, the quality of goods and follow-up services for charging are more reliable, the trust costs that users need to pay and The opportunity cost is less. After all, no business is really giving you free products for humanitarian reasons. If you don’t need to pay, what do you need to pay? Think carefully.
In a word, free is always the most expensive.
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