iFlytek's Smart Hardware Platform: How Should the Smart Home Business Be Conducted?

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The IoT ecosystem still needs time.

Written by | Sun Ran

The market has been waiting too long for the IoT explosion, but it remains a slowly progressing business, especially for platform service providers in the ecosystem.

In the past year and a half, iFlytek’s finished hardware platform, the MoFei smart microphone, has gone through two generations of iterations. Its purpose is to lower the technical barriers for partner manufacturers to access the iFlytek platform. iFlytek claims that compared to traditional API and SDK technical invocation methods, this palm-sized, round soft and hard combination solution is clearly more effective—indoors, whether placed on walls, ceilings, or counters, a single MoFei can support voice interactions within a 5-meter range, allowing you to place them throughout your home.

In an interview with 36Kr, Zhang Chen, General Manager of iFlytek’s Smart Hardware Platform, revealed further plans—simply placing the MoFei module directly into every smart device, enabling each device to have voice interaction capabilities and communicate data in the cloud. The system can choose in real-time which device will respond to commands based on its proximity to the user.

Clearly, this bold plan requires extensive support from many hardware and software manufacturers.

Thus, a new plan is being implemented at iFlytek’s Smart Hardware Platform: iFlytek hopes to establish a full industry chain open ecosystem centered around MORFEI, which includes a “marketing platform + smart hardware ecosystem + device suppliers + offline channels and services,” rather than just relying on the MoFei hardware or earning money through technical service fees (i.e., traditional licensing business).

This will be a marketplace facilitating transactions among various parties. The advertising marketing platform responsible for generating profits for iFlytek is already in operation, and earlier, iFlytek established a data middle platform to achieve data connectivity.

In terms of developing first-party hardware, iFlytek does not have a strong obsession; choosing to develop its own hardware is likely due to market needs that other manufacturers cannot currently meet, such as translation devices.

Unlike BAT (Baidu, Alibaba, Tencent), it aims to create a platform that gathers numerous manufacturers using iFlytek technology.

“iFlytek’s approach is to connect, allowing professionals to handle specialized tasks, respecting the value of each link, rather than pulling others into your ecosystem and erasing their brand, turning them into manufacturers and OEMs. We should consider how both parties can better unite their brands and maintain each other’s brand premium,” Zhang Chen told 36Kr.

Although the consumer market, aside from smart speakers and children’s products, is lukewarm, two emerging B2B channels are worth noting—procurement from telecom operators and real estate developers. Platforms like BAT and iFlytek are most likely to attract these traditional customers, as they are cautious and inexperienced with new technology products, needing a reliable platform to act as their advisor.

Besides residential applications, these giants have already started embedding their hardware devices in hotels, long-term rental apartments, and even commercial properties.

36Kr and other media interviewed Zhang Chen, General Manager of iFlytek’s Smart Hardware Platform. The dialogue is as follows, slightly edited by 36Kr:

Q: What stage is the IoT hardware market currently at?

A: Since 2014, iFlytek has been following this, and during this process, we have seen many innovative companies rise and fall. Although there are national policy directions at the macro level, the real growth of this market depends on consumers and whether they see value in these products. Currently, we feel that we have not yet reached a stage where consumers are particularly motivated to purchase innovative hardware. For speakers and children’s toys, we are at the stage of owning the first unit, although the volume is still too small. Most are purchased as gifts, stimulating users with the concept of buying a high-tech product for just over a hundred yuan, leading users to think that if it doesn’t work well, it’s not a big loss to throw it away. I believe this is not very healthy; we have not yet reached a stage that can truly stimulate users. If we compare the development stage of IoT to the mobile phone market, it should be before the era of counterfeit phones.

Q: The competition for AI open platforms is becoming increasingly fierce, with companies like BAT and Xiaomi also entering the field. What are the barriers to entry for iFlytek’s model?

A: Indeed, many entrepreneurs in various sectors are also building platforms, and those building platforms are also engaging in sectors, but the business model within IoT is still in the exploratory stage. The traditional manufacturing ecosystem is well understood, with upstream and downstream procurement and sales channels, but in IoT, it has become clear that one company cannot handle it alone due to the numerous links involved. iFlytek’s first task is to ensure that the technology is the best and remains leading, so that it can guide the industry and make users willing to pay. After that, it’s about platform thinking; it’s hard to say which company has the correct understanding of platform thinking. iFlytek’s approach is to enable partners to effectively utilize our technology and promote their products. I believe the core of building a platform is to be fully open and share, at least to acknowledge others’ value, rather than building a platform to exploit others’ data and brands. Additionally, when creating a product involving ten or twenty parties, how do you ensure that they all fairly enjoy the benefits?

Q: iFlytek has recruited a large number of product-oriented employees. Specifically, how do you “empower” customers? How do you ensure a balanced distribution of benefits within the ecosystem?

A: For example, when traditional manufacturers upgrade to smart products, they certainly require iFlytek to provide the best service and core technology. However, this is quite challenging because there are many technical hurdles, and these manufacturers’ platforms are not mature. At this point, we need to think about how to meet their needs as much as possible within our controllable cost and expense range. There is a misconception in the market that iFlytek has the highest prices and the worst service. A few years ago, we supported a partner and charged over a hundred thousand yuan in engineering fees, but in fact, our final cost for that project was two million yuan, including labor, travel, etc. The reason for such a high expenditure was due to a basic error made by the partner’s technical engineer. Not all companies are willing to incur costs for such collaborations.

Q: Is the reusability of early collaboration projects high, and will costs decrease in the future?

A: Yes, as we undertake more projects, we will definitely form standardized products. For example, we aim to standardize acoustic services rather than starting from scratch for each company. Another example is why the initial investment is small; we have collaborated with many chip platforms to embed technology into their chips, creating standards together, so when they promote to customers, they can simply include chips using iFlytek technology.

Q: You mentioned that the smart home ecosystem platform aims to connect hardware manufacturers, system service providers, real estate developers, and other roles. What is the form and operational model of this platform?

A: We hope to create a marketplace that facilitates transactions, and we are still exploring this. However, real estate developers currently have relatively little experience in understanding technology. They want to provide their customers with high-end, stable, and better experience products, but with the myriad of smart home solutions available, they do not know whom to trust. At this point, they hope iFlytek can help them vet and connect downstream partners’ products to form a reliable closed loop.

Q: How is the market for selling to real estate developers performing, and what is the cycle like?

A: The smart home market only started to pick up at the end of last year. Currently, the entire real estate sector is looking for such solutions; you will find that everyone holds potential leads and opportunities, but the actual implementation may take one to two years. Now, senior executives from real estate companies visiting internet startups are also concerned; they see that the internet company has only twenty employees, while the real estate project cycle is long, and by the time the house is built, will the internet company still be around? Additionally, in the procurement of real estate developers, the procurement amount for smart home devices is still less than that for wallpaper, which can reach twenty to thirty million, while smart devices may only be two million.

Q: How will the issue of the lack of established protocol standards in smart homes be resolved in the future?

A: There are two paths: one is to find a standard that everyone can adhere to, but that is very difficult and usually only achieved in the final stages. The other is the current approach of MoFei, which builds a method for everyone to quickly solve problems. In the mobile phone era, there were over a hundred phone brands, possibly with a hundred different operating systems, and even different charging interfaces. It wasn’t until later that Android unified everything. We also hope to become the Android of this industry, but everyone is still in the early stages of development, and each link must gradually penetrate upstream or downstream. We should not focus on the standards themselves; Wi-Fi became a standard because it was widely used. If a platform has many users, the more stable the product, the communication protocol will naturally become the industry standard.

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