Written by | Lanxi
In 1995, Bill Gates made a prediction in his book “The Road Ahead”: “In the near future, homes without smart home systems will be as out of place as homes without internet access.”
More than 20 years later, with the continuous advancement of emerging technologies such as artificial intelligence, big data, and the Internet of Things, smart technology is gradually permeating and transforming all aspects of people’s lives. The pursuit of a high-quality life enhanced by smart technology is driving the rapid development of the smart home industry.
In fact, among the four essential areas of human needs—clothing, food, housing, and transportation—housing, due to its relative complexity, has become the last area to fully embrace smart technology, compared to new retail for clothing, local services for food, and mobile transportation for travel.
Market data vividly illustrates the hot prospects of the smart home industry. According to the “Market Outlook and Investment Strategy Planning Report for Smart Home Devices” released by the Forward Industry Research Institute, it is estimated that the market will maintain a compound annual growth rate of 21.4% over the next three years, reaching a market size of 580 billion yuan by 2020, with a trillion-level market prospect within reach.
01
Smart locks and the smart home industry face a new round of reshuffling
The considerable imagination space of the smart home industry indicates that it has become a battleground for many players. Not only are internet giants like Alibaba, Huawei, and Xiaomi making comprehensive layouts, but traditional home appliance manufacturers like TCL and Haier are also transforming and entering this field. The competition in this area is becoming increasingly fierce, as evidenced by the intense competition in vertical sub-industries.
For example, in the security field, which is currently recognized as having the most successful technology implementation, there are over 1,500 smart lock companies and more than 3,000 smart lock brands in the entire market. Behind this vast array of players, the industry is facing challenges in technology, supply chain, installation, and after-sales service, necessitating a reshaping of the market environment.
On the other hand, after several years of market education, smart locks, as a fundamental product in the smart home field, have gained recognition and favor from consumers due to their high usage frequency, strong user loyalty, and superior safety and convenience compared to traditional mechanical locks. It is foreseeable that as the Chinese smart lock industry enters a phase of explosive growth this year, it will undergo its first round of reshuffling.
Similarly, new entrants in the entire smart home field not only have to face the intense competitive landscape but also confront pain points such as a lack of technological patent breakthroughs, leading to severe product homogeneity due to the direct use of existing technology models for development, and high barriers to supply chain control and channel operations caused by over-reliance on offline channel agents.
Therefore, for new players, while ensuring continuous advancement in technology research and product implementation is crucial, the ability to manage the industrial chain and build a comprehensive service team has become another key point for breaking through.
Among them, the smart home company Youdian Technology, which recently acquired Changhuxi Technology, serves as a noteworthy case.
△ Signing ceremony for Youdian Technology’s strategic acquisition of Changhuxi
Left: Mr. Peng Jinzhao, President of Smartisan Technology Right: Mr. Liu Jiangfeng, Chairman of Youdian Technology
02
How to Become a Well-Rounded Smart Home Company
Firstly, it is necessary to point out that, unlike traditional manufacturing companies or pure internet companies entering the smart home field, Youdian Technology is composed of a cross-industry talent team.
This team includes employees from traditional manufacturing companies such as Huawei, ZTE, Midea, and Skyworth, as well as members from internet companies like Xunlei, Tencent, and Baidu, along with a group of industry talents with years of experience in smart home product research and production. This has helped Youdian Technology maintain a balance between product technology research and development, supply chain control, and channel operations from its inception.
In terms of service teams, Youdian’s smart locks boast over 330 agents and 5,000 installation personnel nationwide, providing standardized after-sales service processes to ensure a high standard and consistency in user experience.
Based on this, Youdian Technology entered the market with smart locks and, within a year, launched a series of popular products tailored to different application scenarios and needs—such as the Youdian M2, which raised over 11 million yuan in crowdfunding in just 14 days, ranking among the top three in the smart lock industry’s crowdfunding performance for the entire year of 2018—ensuring its advantageous position in the core business area of smart locks, and quickly replicating and expanding into more fields such as smart living rooms, bathrooms, and kitchens to create product differentiation competitiveness.
△ Youdian M2 crowdfunding conclusion
On the other hand, externally, Youdian Technology actively collaborates with industry and non-industry partners, including China Mobile, Dixin Communication, Suning, Xiaomi, and Red Star Macalline, to build a comprehensive sales channel that spans both online and offline.
A more intuitive example is that through collaboration with Suning, Youdian Technology not only reached an agreement with Suning for online channels but also entered over 500 offline stores nationwide, promoting the establishment of industry benchmarks for smart home scenario experiences and products, with expected annual sales exceeding 100 million yuan from the partnership.
In addition to acquiring Changhuxi Technology, Youdian Technology has also strategically acquired several smart home brands, including Xiamen Zhima Cloud, Dingdong, and Zhidai, continuously expanding its business boundaries and improving the construction of a smart home ecosystem platform.
It is evident that a diverse internal talent team, sound corporate operational strategy, and external collaboration to build channels and create an open ecological platform not only help Youdian Technology become a truly well-rounded smart home company but also provide a solid foundation for it to focus on “user experience” and enhance service to user groups across technology, quality, service, platform, and brand.
Today, just two years after its establishment, Youdian Technology’s products have won multiple awards, such as the Youdian M2 smart lock, which won the iF Design Award, known as the “Oscar of product design,” and have garnered support and popularity among users.
03
Hardware Plus Services: A New Lifestyle is the Future
The broad prospects of smart homes depend on the fact that this field differs from other internet industries; its demand does not arise from thin air—every household has a necessary demand for lighting, refrigerators, and door locks. Smart technology essentially represents an elevation of people’s demands for quality of life and a trend of consumption upgrade, which constitutes a trillion-level imagination space for the smart home industry.
However, merely adding an app to a smartphone to allow users to operate home products is a form of so-called “smart technology” that only combines interactivity and electrification, and does not truly provide users with a smarter, more convenient, and more humanized experience.
Looking at the current smart home industry, the concept of “smart home” has either become a gimmick for some brands to package products and increase prices or has devolved into a simple assembly of technologies, becoming an illusion under excessive idealism.
As MIT professor Nicholas Negroponte said, “Innovation in the Internet of Things era should be like putting a chicken in a microwave, and the microwave knows how to cook the chicken, rather than just being able to turn on the microwave with a smartphone.”
In fact, for the smart home industry, merely having technological innovation is not enough. The advancement of technology itself is one aspect; the popularization and diffusion of new technologies is another. The former concerns only the technology itself, while the latter involves integrating the supply chain, educating the market, persuading users to purchase, and many other aspects, including improving infrastructure, establishing unified technical standards, and enhancing user acceptance.
△ Youdian Smart’s smart home products integrated into life scenarios
As Liu Jiangfeng, Chairman of Youdian Technology, stated, “Smart homes need to achieve interconnectivity, and true interconnectivity requires good backend services. These hardware products, when combined with services, may form a new lifestyle. Youdian Technology is currently focused on smart home products, and in the future, it will further expand hardware and services to enhance the overall experience using new technologies and materials.”
This new lifestyle formed by the integration of smart hardware and intelligent services may be the future of the smart home industry.
As of today, the penetration rate of the entire smart home category is still less than 10%, and the industry landscape is far from determined. New players like Youdian Technology, who are steadily advancing, have already forged a new path and uncovered more possibilities in this field.
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