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The inside story and survival rules of Shenzhen's AI headset industry, revealing the truth of the industry.
Core content:
1. The rapid rise of the AI headset industry and market promotion
2. The different survival culture and work logic between Shenzhen and Beijing
3. The innovation iteration and market education of Huaqiangbei supply chain
Yang Fangxian
Founder of 53AI/Most Valuable Expert of Tencent Cloud (TVP)
In early 2024, Penny resigned from her engineer position at an autonomous driving company in Beijing and returned to Shenzhen to take over her family's headphone factory.
At that time, the concept of "AI headphones" began to emerge, and Penny took advantage of the new wave of technology. She witnessed and participated in how the category, which was regarded as the next hot spot, was pushed into the market at an astonishing speed.
Here, the dialectic of survival and innovation becomes naked and clear.
The business model is not clear? The software function is not perfect? It doesn't matter, just sell it first, there is no time to wait. ——This is the survival culture she saw, which is completely different from the workplace in Beijing.
While international brands are still discussing what "AI native" hardware is, Huaqiangbei has already completed market education at home and abroad with orders for millions of sets.
"Although I haven't thought it through completely, it doesn't stop me from selling it."
Everyone here understands the survival rule on the delivery list: "Get in the car first, and watch as you go."
She felt that technological life needed to reproduce wildly rather than be nurtured delicately, and whoever could help it occupy the market faster would be able to reap the dividends of evolution.
When young people complain that the dividends of the times are almost disappearing, there are still some upward channels for ordinary people here.
Penny has seen a software solution team of two or three people who bought luxury cars in one year by making apps for a headphone brand and selling them overseas. In Penny's own factory, "some of our college graduates made 30,000 yuan a month in commission because of the popularity of a certain AI headset."
The white-collar logic of Beijing’s big factory offices is not followed here. Penny is also adapting to the new rules of “grassroots”.
A sample of an AI sleep headset manufactured by Penny's factory "Kaichuanghui Acoustics" | Image source: Penny
"Some suppliers directly laid their cards on the table: Either accept defective products, or I will refund your money and resell your design." This almost rogue game has forced a unique balancing act - you have to stick to the bottom line of the product, while also learning to calm down your anger. After all, the 100,000 headphone shells waiting to be assembled on the assembly line cannot withstand the delay of finding a new supplier.
More changes are also happening.
In the past, people would say that Huaqiangbei often copied big brands, but now big brands are increasingly influenced by Huaqiangbei. For some categories, some domestic big brands have just started to enter the market after Huaqiangbei's supply chain has been iterated for two or three rounds. The industry has changed and is no longer transmitted from top to bottom as before. It can be said jokingly that the speed of Huaqiangbei's production line changes is faster than the PPT pages in the offices of big factories.
The mad rush of countless grassroots factories is weaving a giant network to support the "next DJI".
However, the AI wave has brought new wealth, but also brought crisis to traditional manufacturing. "Many of our peers may be swept away by this wave of AI," Penny observed.
AI technology is not easy for the older generation of factory managers to understand, whether in terms of technology implementation or business model. However, Penny believes that AI will play an increasingly important role in hardware products, and the impact of AI on the hardware industry has just begun.
She is also thinking about the significance of AI technology, how to establish new business models, and how the manufacturing industry can seize the AI wave instead of watching the industry being weakened.
From Beijing to Shenzhen, after more than a year of struggling in the market, Penny provided us with an insight into how new technologies can reach the public from the perspective of the source factory.
The following are Penny 's 10 feelings about making AI headphones , which we present from a first-person perspective:
AI headsets are popular, and young people are making a comebackHere in Huaqiangbei, it is very difficult for us to recruit someone who is a graduate from an ordinary first- or second-tier university, or someone who has passed the CET-4 or CET-6.The quality of personnel in our industry is not as competitive as that in the technology and Internet industries. Anyone with a little bit of ability will develop very quickly in it.We had a supplier before, and the molds they made were far from meeting our requirements. The supplier then laid it out directly, “Either accept the defective product, or I’ll refund your money and resell your design.”It was really infuriating, but what we should do now is not to claim compensation. The time cost is much higher than the monetary loss. If the new product is released two weeks late, it may be flooded by similar products in the market. Therefore, we can only learn to swallow our anger and continue to polish with the other party.If you can make the work connection clear, everyone will think that you are already a very good practitioner in the industry. For example, some of our colleagues who graduated from ordinary colleges a few years ago were responsible for connection after the customer placed an order. It happened that a model of headphones he connected sold well, and his commission was more than 30,000 a month. The customer was very satisfied with him because he could connect and implement the tasks clearly.Factories are not very attractive to young people, but for ordinary people, there are indeed opportunities for grassroots counterattack.Get in the car first and look around as you go.Small brands in Huaqiangbei, like big brands, are accumulating data and exploring how to adapt to the AI consumption habits of current users.AI headsets are very popular now. Some small brands have launched AI headsets with AI assistants on the App, claiming that they support free use by users. For example, they will preset several hundred minutes of free AI assistant voice usage time. However, the token of the AI big model needs to be renewed after it is used up. How to renew it is something that many brands may not have figured out yet.Although I haven’t thought it through completely, it doesn’t stop me from selling it.Many brands get on board first and look around as they go.Maybe this incident has no impact on them, maybe the user just doesn’t renew the subscription after using up the free AI assistant time. Some manufacturers are also betting that the user may throw away the headset within a year and replace it with a new one; or maybe they will give users a new pricing plan in the future according to the changes in model traffic costs.Everyone has the same style: run first and don’t wait.Huaqiangbei’s thinking is fast and flexible, with almost no rules to follow. The salesperson’s goal is not to complete the task, but to get the customer.For example, when we send samples to customers or suppliers, we place great emphasis on efficiency. If we ship in the morning, it must arrive in the afternoon; if we ship in the afternoon, it must arrive the next day. If the courier cannot deliver on time, we will even use a rideshare to deliver it directly.Once, a colleague urgently needed to ship goods to a customer, but the packaging customization had not been completed. So he took a bus to the factory 60 or 70 kilometers away to urge expedited production, and after waiting for the factory to complete it, he asked Huolala to bring the samples back.There are no rules in this industry. You can't expect colleagues or partners to contact you on time by sending emails like white-collar workers do. As long as you can get the client, it's fine.AI headsets are fast-moving consumer goodsWe are in the hardware business. In our opinion, whether it is called AI headphones or headphones, it belongs to the headphone market. AI headphones are a marketing concept.Just like before there were smart speakers like Xiaomi and Xiaodu, speakers have always existed and have been sold. Later, when AI capabilities improved, AI functions were added. The same is true for headphones. The industry will regard them as fast-moving consumer goods.Mainstream AI headset group portrait: If you want cheap, use it firstSome high-end AI headphones are expensive, costing more than 1,000 yuan. However, when the user's budget for buying headphones exceeds 1,000 yuan, the profile of this user group will become very different. They may have higher requirements for sound quality and other aspects, and are not sure whether they are willing to pay for AI.Judging from the shipment volume of high-end AI headsets, only a few people are willing to pay for AI at present.But that doesn’t mean consumers have no desire to try. Many mid- and low-end AI headsets sell very well and are better than ordinary Bluetooth headsets.The mainstream user groups in this market want to own the product first. Many people want to pay only 1/10 of the price of big brands to try out the functions first. They don’t need the product to have great effects, they just want to use it first.Just like many people have never used Apple headphones, they may not know what the so-called difference is.Every penny is important to the factory.Shenzhen people like to talk about costs. Previously, a supplier from Beijing came to us and said that they had made some algorithm improvements with some universities in Beijing. But what they avoided talking about was cost. Manufacturers here don’t like to talk to them because they don’t talk about cost. What’s the point?If a very expensive chip is used right from the start, no factory can afford it. We ask them what hardware requirements this product has, how much will my cost increase, and how much will it cost.They don't want to talk about these things, they like to talk about grand narratives, citing cases of their cooperation with universities, and talking about their team background.We don't want to hear any of this.Every penny of cost is important for the highly inward-looking factories in Shenzhen.If the team in Beijing could consider the business dimension more, I think their technology would be implemented faster .A corner of the production line at the source factory of "Kai Chuang Hui Acoustics"｜Photo source: PennyBig brands define products, Huaqiangbei education marketBig brands play a role as models in the market. They launch new products and lead market trends through publicity and traffic promotion. The headphone industry needs such leaders.The followers often don’t consider the significance of a function or interaction. They just follow the trend and make similar products to catch new gimmicks.The role of many low-end small brands is to use lower-cost materials and software solutions to replicate the latest products of big brands, and use low prices to make more consumers willing to try them.The logic behind low-end brands making products is to reduce the functions of mature products from big brands, first realizing the core functions that users need most, and then considering whether to add other functions based on the costs of batteries, chips, packaging, etc.If the price is reduced by 10 times, the sales volume may increase by 100 times, 1,000 times or even more. It can be said that big brands are defining products and the Huaqiangbei education market.The market needs AI headset leadersIf the AI headset market wants to grow, it needs a leader. Just like the iPhone to smartphones, AirPods to wireless headsets, and Amazon Echo to smart speakers, they will drive the development of a market.An inappropriate analogy is that, for example, AI glasses, only Apple can take the lead, and the market will be good. If Samsung takes over, the market may not even take off. Everyone is waiting for Apple to do it, and that's probably what it means.Just like some small brands that imitate the shape of AirPods can sell 100,000 or 80,000 sets of headphones in one order and ship them directly overseas. If you use headphones with other shapes, even if the quality is better and the price is lower, the sales may not be good.At present, the leader in AI headphones has not yet appeared .The shadow of Huaqiangbei appears in the big factoriesIn the past, small brands in Huaqiangbei did what big brands did.Now, the iteration of small brands in Huaqiangbei is even ahead of the big manufacturers. For example, after the clip-on earphones became popular abroad, Huaqiangbei immediately followed suit. After the supply chain had gone through two or three rounds of iterations, some big domestic brands just started to enter the market.For example, several well-known mobile phone manufacturers have launched ear-clip and ear-hanging headphones, which are like this.In the past, people would say that Huaqiangbei often copied big brands, but now there are more and more traces of Huaqiangbei on big brands.Some Huaqiangbei brands started out with low-end products, but after they became wealthy, they categorized their products, launched mid- to high-end product lines, and invested in R&D. Two years ago, they were probably still selling ordinary products, but now, the products they see are of high quality, and they have moved from OEM to independent brands.The industry has changed. It is no longer transmitted from top to bottom as before. Today, the market no longer waits for big brands to take their time to warm up. If there is a slight delay, the competitors will have already iterated three or four generations and quietly seized the opportunity.AI software is reshaping the marketJudging from the iteration of headphone products, there does not seem to be many breakthroughs in technology and product form in recent years.Judging from consumer feedback, people care more about apps. Without a certain function, it seems that they are much weaker than others. Therefore, brands will also pay more attention to the construction of apps.Especially in segmented scenarios, such as AI sleep headphones, the appearance of the sleep headphones is very small and convenient to wear when sleeping, but its core is on the App. It needs to realize white noise, sleep monitoring, sleep suggestions and other functions through the App.Small AI sleep headphones | Image source: PennyConsumer channels have changed a lot now. With the rise of live e-commerce, many needs will be unlocked. Many people may realize "I really need it" after watching live broadcasts. AI sleep headphones are one of them.We were surprised by the popularity of this product. The sleep scenario is small, but our domestic shipments are around 100,000 sets per month.Therefore, the upgrade of AI for segmented scenarios may also be a trend in the future.
