Research on Haier Smart Home: What is the name of AI and the fate of home appliances?

Written/Liu Lanhe

Editor／Wan Tiannan

"You can connect to other brands. Through the agreement, it only needs a 485 interface."

"No! Other brands are not compatible!"

Beijing Ms. Zhang never expected that two clerks at the Haier Smart Home Experience Store would give completely opposite answers to her same question.

Ms. Zhang is renovating a new house and plans to take advantage of the 618 sales to stock up on home appliances. Haier brand is one of her options.

For this reason, in late May, she specially came to the Haier Smart Home Chengshousi Road experience store for consultation. What she was most concerned about was whether different brands were compatible.

A clerk replied with a slight hesitation: "It should be enough to support the 485 protocol. We need to give specific products and let's check it out." Then he reassured Ms. Zhang, who was slightly doubtful, "Most brands use the universal 485 protocol. of."

At this time, another store clerk who looked like a leader suddenly spoke up and stopped the clerk with a cold face, "Even if it is compatible at the beginning, you will encounter many problems later, such as it will no longer work after upgrading. Don't mess around. Promise will bring us a lot of after-sales trouble."

Ms. Zhang was confused. From the initial "can contact", to the subsequent "check", to the subsequent "not compatible", in 5 minutes, she got three answers in the same store.

The confusing behavior of the Haier clerk also exposed a common pain point in the smart home industry: At this stage, smart home players are all competing for interests and choose to "capture" users into their own homes in an "exclusive" way. In the ecosystem, the formation of barriers seems to be able to harvest more leeks, but it also discourages many potential users.

"I no longer consider Haier," Ms. Zhang told "Financial Stories".

Today, the home appliance market has entered a stage of saturated competition. In order to maintain its status in the world, Haier, the traditional home appliance giant, assessed the situation and shifted its course in the direction of "intelligent" and "scenario-based". In September 2020, the official release of "Three-Winged Bird", which claimed to be "the world's first scenario brand", carried Such a mission.

Two or three years have passed, and Haier Smart Home has indeed made a breakthrough.

As of April 2023, Haier has launched 1,773 experience stores, including 37 experience centers, 738 flagship stores, and 998 scene stores; in Q1 2023, it has delivered 1,353 scene delivery orders, with complete sets and large orders increasing by 25%. wait.

But the pain points are also obvious: there are insufficient smart home categories, interconnection and interconnection are still disconnected, "intelligent" and "scenario-based" are difficult to implement smoothly, insufficient "intelligence" becomes "mentally retarded", and user experience needs to be improved urgently.

In addition, companies such as BAT, Huawei, and Xiaomi have entered the smart home market with traffic and capital. Although it has won the title of No. 1 in retail sales of global large home appliance brands for 14 consecutive years, Haier's "smart home" transformation The road was not as smooth as expected.

"Interconnection": still holding the pipa and half-hiding the face

What does a smart home look like? After "Financial Story" visited Beijing Haier Smart Home No. 001 Experience Store in early June, we had a personal experience:

When you get up, the curtains will automatically open and play music; when you get home, the lights will turn on from the entrance, and the temperature and humidity in the room will automatically adjust to a suitable mode; when cooking, the refrigerator will automatically recommend recipes... It can monitor air quality, and Provides health management with a sense of technology.

However, it is not easy to realize a true "smart home". It requires the integration of Internet of Things, cloud computing, and artificial intelligence technologies, and then systematic and centralized management of home equipment in the space to achieve intelligent interaction between people and scenes. .

Image source: iResearch's "China Smart Home (AIoH) Development White Paper in 2023"

To be smart, first be connected.

According to the "Thousands of People, Thousands of Faces, Unsense Intelligence: China's Whole House Intelligence Industry Research White Paper" released by iResearch in March 2022, the current whole-house intelligence networking solutions are mainly divided into wireless technology solutions and wired technologies. Among the wireless technology solutions, Wi-Fi, Bluetooth and ZigBee are the most widely used, and among the wired technology solutions, the RS485 protocol and KNX are the main ones.

Wired cabling solutions generally use bus methods. Single node failures do not affect network transmission. The stability and anti-interference ability are far better than wireless systems. However, they need to be wired before decoration. The planning is relatively complex, and later modification and expansion are more difficult. Slightly less flexible; wireless systems are limited in power, transmission distance, and transmission rate, but are cost-effective and convenient for users to make changes to the system later.

"Financial Story Collection" learned at the Haier Experience Store: Haier Smart Home currently uses a "wireless and wired" method for networking. For example, most Haier home appliances and gateways are connected mainly through WiFi, while central air conditioners and other devices use 485 The protocol leverages strengths and avoids weaknesses through a combination of wireless and wired methods, and will be adjusted in application based on the intelligent scenarios selected by customers and the actual situation of the user.

Obviously, for Haier, whose main category is home appliances, the clerk’s statement at the beginning, “485 (agreement), most of them are universal” is not accurate. Employees have little knowledge of Haier’s smart products, which inevitably makes people have doubts about Haier’s smart home solutions and implementation services.

Back to Ms. Zhang’s question at the beginning: Can Haier Smart Home’s ecosystem accommodate other brands?

"Financial Story Collection" called Mr. Jin, the person in charge of all categories of Haier's Beijing Casarte home appliances. His answer was very firm, "To achieve the effect of whole-house intelligence, if you use other brands of home appliances, For those who cannot connect, the effect can only be guaranteed if they all buy Haier."

Looking back in December 2019, Haier and Tuya Smart officially announced their cooperation at Haier University, claiming that in the future, Haier Smart Home’s smart products will be interconnected with more than 90,000 smart products of different brands and categories, and users will only All you need is the Haier Smart Home App to control it easily.

Now three years have passed, the "Haier Smart Home APP" in this grand blueprint has been created, but the "interconnection of smart products" has not been realized. Why?

In fact, from a technical perspective, it is not difficult to achieve interconnection and interoperability between different brands. As long as they are connected to a unified underlying protocol and produced according to a unified communication protocol and interface standard, it can be easily achieved.

On Zhihu, officially certified as "an excellent answerer on five topics including the automotive industry, smart home, and electric vehicles" xinhesun explained the communication principles between different smart products:

The communication between smart items and between items and gateways adopts many different methods such as ZIGBEE, Z-WAVE, radio frequency, Bluetooth, etc. Under the communication methods, there are different communication protocols. For example: If smart components and gateways are compared to adults, the communication method is language and the protocol is code. Some speak English, some speak French, and some speak Chinese. It is definitely impossible to communicate between different languages. Even if the same language is used, that is, the same communication method is used, everyone's code (protocol) is different. Then why do you need to set a password? The function of the password is to ensure that only one of you can control the smart component. This is a basic security measure.

But why is the answer from Haier sales "cannot connect"?

If it is not impossible to connect, it is actually unwilling to connect. The manufacturers' "self-management" is to maximize their interests.

As Shen Wan Hongyuan pointed out in his "Smart Home In-Depth Series II: Midstream Chapter: Product-driven is in the ascendant, and the inflection point of whole-house intelligence is imminent" released in September 2022: Intelligent interconnection has entered the second stage, which starts with Product competition is the main focus. The barrier to interconnection is not technology, but that each manufacturer produces according to customized communication protocols and interface standards. Systems between different products cannot interoperate, and manufacturers are unwilling to interoperate.

Haier is no exception.

But such a retreat is not in the interests of users. The choice of smart home was originally for convenience, but as a result, N APPs need to be controlled to manage home appliances. Where does intelligence start?

According to a survey by Guanyan Report Network in July 2021, among the factors hindering consumers from using smart homes, "poor brand compatibility" has become the primary constraint, accounting for 57.6%.

Some manufacturers have realized the "rigid needs" of users and have taken the initiative to make changes.

For example, Xiaomi can now support brands such as Midea, Fotile, Hisense, Dyson, Oaks, Ecovacs, and Philips to access its own ecosystem, including of course Haier.

Baidu Encyclopedia shows that Xiaodu currently has more than 200 million IoT smart home devices that can be connected, covering more than 70 categories.

Huawei released Whole House Intelligence 4.0 in May. So far, more than 2,200 brands have settled in HarmonyOS homes, and more than 5,600 smart products can be connected.

Although the current situation is still far from the imagined "Internet of Everything", at least many companies have shown an open mind. If Haier insists on continuing to "retreat", it will be somewhat inappropriate.

The "three-winged bird" is still young, how can it fly high?

The "Three Winged Bird" brand, which was launched three years ago, can be called the face of Haier Smart Home.

In May 2022, Sanyiniao released the “1 3 5 N” whole-house smart full-scenario solution, “1” smart home brain screen, “3” whole-house professional system solutions, and “5” great wisdom Spatial solutions and "N" scenario-based experiences.

Haier Smart Home hopes to rely on Three-Winged Bird to make a leap from "selling products" to "selling scenes."

In this leap, from the perspective of the external environment, opportunities and challenges coexist; when looking at ourselves, the advantages and disadvantages are equally highlighted.

External Opportunities: Golden Track

Smart home has been regarded as a golden track in the past 10 years.

IDC predicts that China’s smart home device market shipments will exceed 260 million units from 2022 to 2026 to 530 million units.

The home appliance category has been declining. AVC online market monitoring data shows that the global household air conditioner market sales in 2022 will be 164 million units, down 3.6% year-on-year; the "Global Refrigerator Freezer Industry and Market Annual Research Report" released by Industry Online in March shows that in 2022 Global sales of refrigerators and freezers totaled 198 million units in 2018, down 6.3% year-on-year.

The downward traditional home appliance market and the upward trend of the smart home market are moving in opposite directions.

At present, the penetration rate of smart homes in China is unsatisfactory, which means there is vast room for future growth. Statista data shows that the smart home penetration rate in the Chinese market in 2022 will be about 15%, while the smart home penetration rate in the UK is as high as 45%, the United States is 43%, and the penetration rate in many European countries also exceeds 20%.

External Challenges: Strong Enemies Surrounded

The sweet cake attracted players from all walks of life, and Haier was surrounded by powerful enemies.

The first type of players are Internet companies such as Baidu, Alibaba, Tencent, and JD.com. They rely on smart speakers as the entry point to master the interactive entrance, focusing on the competition for platforms and ecology.

The second is mobile phone hardware companies represented by Huawei and Xiaomi, which focus on intelligent interconnection and whole-house intelligence, and have strong system interconnection attributes.

The third is traditional home appliance companies, such as Haier, Gree, Midea, Hisense, etc., which mainly build home systems with rich products, and naturally have brand barriers and channel advantages.

The three types of enterprises each have their own advantages.

Take Baidu as an example, its focus is on the competition for platforms and ecology. Xiaomi is known for its cost-effectiveness and has established a smart home ecological chain through investment.

The Internet camp began to lay out around 2010, and Xiaomi also began to penetrate "all things OTA" in 2013. Traditional home appliance companies including Haier are relatively slow.

However, Haier also has its own advantages.

One of its own advantages: the integration of smart home scenes and high-end brand "Casarte"

According to the 2022 financial report of Haier Smart Home, in the Chinese market, Haier has achieved coverage of high-end, mainstream, and market segments through the three brands of Casarte, Haier, and Leader.

The target group of Three-winged Bird is also the mid-to-high-end customer group, so the combination of Three-winged Bird and Casarte is a natural fit.

Li Huagang, President of Haier Smart Home, said in a public interview in June 2021: Tri-Winged Bird is the platform and Casarte is the carrier. The perfect combination of the two is equivalent to quickly integrating into users' lives.

Therefore, we have seen that many "Casarte" stores are now transformed into Three-winged Bird smart life experience stores. According to Haier’s official announcement, as of now, Sanyiniao smart life experience stores have expanded to 1,773 nationwide.

The integration of the two has a complementary effect.

According to Haier’s 2023 Q1 financial report, the retail sales proportion of Casarte in Sanyiniao stores increased by 2 percentage points, and the proportion of retail sales of front-end products such as air conditioners, kitchen appliances, water and electricity, and water appliances increased by 3 percentage points. .

According to Li Huagang's introduction, in the product era, the high-end brand Casarte has already achieved a unit price of 10,000 yuan; once a set of smart home solutions is completed, the unit price will increase to 70, 80,000 or even 100,000 yuan; When it came time to promote the Three-winged Bird smart home, the unit price of Casarte's Shanghai experience store reached 220,000.

It can be described as a strong alliance.

own advantage two: multi-year industrial chain layout

Haier Smart Home uses brand barriers to lay out the entire industry chain from design, construction, installation, whole-house intelligence, etc. to provide users with one-stop services and promote the conversion of potential users.

According to Haier’s official data, there are currently 2W designers, 3W home appliance customers, 1,000 home decoration companies, 1,000 home ecology, and 14,000 complete service butlers on the Sanyiniao platform, which lays the foundation for one-stop service.

"We have our own panel factory for 20 years. We do cabinet customization and whole house customization. Many young people don't know about it, but many old customers know that we are just relatively low-key." Haier Smart Home No. 001 Experience Li Ting (pseudonym), the person in charge of the store’s interior decoration, said so.

In April this year, at the second Tri-winged Bird Customer Summit, Haier Tri-winged Bird showed its performance: 1,353 orders were delivered in the Q1 scenario of 2023, with complete sets and large orders increasing by 25%.

In the first quarter of this year, Haier’s revenue was 65.07 billion yuan. In the third quarter of 2020, this figure was 58.68 billion yuan. Two years and two quarters after the “Three Winged Bird” brand was incubated, Haier’s revenue An increase of 11%.

However, the challenges of Haier Smart Home are also obvious.

Self Challenge 1: Insufficient categories, difficult to form a closed loop

Smart home is an all-inclusive ecosystem, rather than a single or a simple combination of several smart devices.

Judging from the categories currently listed on the Haier Smart Home APP, they are mainly concentrated in the fields of large appliances such as refrigerators, washing machines, and air conditioners. Although other small appliances are involved, there are fewer SKUs.

"Financial Story Collection" searched in the JD Haier Smart Home flagship store and found that Haier Smart Home's online categories are still mainly large appliances such as refrigerators, washing machines, and air conditioners. When searching for the keyword "smart door lock" in the store, "Sweeping Robot", it shows "No related products found". These relatively niche categories for Haier, "Financial Stories" only saw them in experience stores and Haier Smart Home APP.

Let’s see our friends again.

Xiaomi’s smart home brand Mijia includes major appliances, small appliances, smart speakers, smart lighting, smart security and other categories. Previously, relevant media reported that Xiaomi ecological chain companies Lumi Technology and Yunmi Technology, the former has more than 30 categories and more than 700 SKUs, and the latter has more than 30 categories and more than 170 SKUs.

In a closed ecosystem that is unwilling to communicate with other brands, Haier Smart Home still needs to work hard on the richness of categories if it wants to achieve multi-scenario whole-house intelligence.

Self Challenge 2: “Intelligence” faces the test

Haier has always been famous for its after-sales service in the field of home appliances, which it is good at. When "Financial Stories" randomly selected products on the Haier Smart Home APP and JD.com official flagship store, most of the praise rates were above 98%.

But when Haier labeled itself "intelligent", the results were not satisfactory.

The latest evaluation area of ​​the "Haier Smart Home" APP in the Apple App Market has been filled with negative reviews. User complaints mainly focus on the many advertisements, difficulty in connecting smart devices and APPs, cumbersome APP functions, slow response, poor compatibility, etc. The wording is also quite sharp - "The worst service I have ever encountered, the software is very "Difficult to use", "Haier's smart devices are a joke", "really bad", many users ruthlessly gave low scores of 1-2 points.

Coincidentally, in the oppo app market, the latest comments from users are full of sharp complaints. Poor network and partial functional failure after connecting to smart devices are the main drawbacks, so words expressing strong dissatisfaction such as "junk" and "broken stuff" appear frequently.

The "intelligence" performance in "intelligentization" is directly reflected in the employees' pre-sales consultation, which is the lack of confidence in the smart home business, so there are different answers to the same question from Ms. Zhang at the beginning. Some people are prevaricating, and some are avoiding it. After all, it will "bring about a lot of after-sales trouble."

Self Challenge Three: Difficulty in implementing “scenario-based” implementation

Xu Meng, vice president of Haier Smart Home and general manager of China, believes that the reason why Haier Smart Home vigorously incubates the three-winged bird is its judgment that the home appliance market will evolve in three major directions in the future: First, home appliance products will evolve from single products to Complete sets of products are then transformed into whole-house customized products; second, the sales channels of home appliances, home furnishings, and building materials are closely integrated; third, the home appliance industry is transformed into smart and scenario-based products to create a lifestyle that meets the pursuit of consumers.

"Series of products" and "scenario-based" are keywords that Haier has repeatedly emphasized since September 2020. It’s just that the reality is a bit skinny.

The sales and ratings of single products and scenarios on the Haier Smart Home APP are very clear.

When you click on the washing machine in "Financial Story Collection", the washing machine products displayed on the page all have a 100% positive rating; When you switch to the "Scene" interface and select the "Unbounded* Whole House Water Solution", you cannot see any According to the sales data, the low score of 2.8 is very eye-catching. The full score is 5 points and the passing line has not been reached. It seems that the so-called "scenarioization" is not easy.

The data performance in Haier’s financial report seems to illustrate the problem.

According to the financial report, Haier’s smart home business in China will achieve revenue of 126.379 billion yuan in 2022, of which the refrigerator/freezer business, washing machine business, and kitchen appliance business accounted for a total of 62.2%. The specific description of these businesses in the financial report focuses more on individual units. products, such as "the offline retail sales share of gas water heaters increased by 1.9 percentage points year-on-year to 22.2% during the period", rarely mentioning the business performance of the "set of products" or "scenario-based solutions" that Haier originally hoped for. .

Coupled with the problem mentioned above that Haier’s intelligent scenarios are not compatible with other brands, Haier’s transformation path from “selling appliances” to “selling scenarios” is far from reaching the standard.

However, Haier’s “smart home” attempt still shows us the desire of an old brand to transform and upgrade, but it is still far from the goal.

Increasing revenue does not increase profits, but we must work harder on research and development

Although the wings of the three-winged bird are not strong enough, Haier Smart Home still achieved revenue of 65.07 billion yuan in the first quarter of this year, a year-on-year increase of 8.02%, which is higher than the year-on-year growth rate of 6.27% for Midea and 0.44% for Gree. The gross profit margin It also topped the list with 28.7%. During the same period, Midea and Gree accounted for 24% and 27.4% respectively.

However, what cannot be ignored is that Haier Smart Home’s net profit margin is at the bottom at 6.2%.

What’s the reason for increasing revenue without increasing profits? You can get a clue by looking at the sales expense ratio of Haier Smart Home.

In the first quarter of this year, the sales expenses of Haier Smart Home, Midea Group, and Gree Electric Appliances accounted for 13.6%, 8.7%, and 7.3% of revenue respectively. The lowest net interest rate corresponds to the highest sales expenses. Haier is really ruthless in marketing.

When "Spring Festival Gala" was broadcast on January 29, 2023, Haier brought the Three-Winged Bird Kitchen to the show, showing a smart cooking scene to the national audience and moving the family banquet to the scene; a similar scene , will also be staged during the 2021 Spring Festival.

Haier does not hesitate to spend a lot of money in order to build its reputation.

However, in stark contrast to its generous efforts in sales and marketing, Haier’s investment in R&D is somewhat stingy.

In Q1 of 2023, Haier’s R&D expenses were 2.74 billion, accounting for 4.2% of the annual revenue. It is on par with Gree and Midea, which are still struggling with traditional home appliances. The R&D expenses of the latter two in Q1 2023 accounted for 4.3% and 3.4% of revenue respectively.

Looking at the more than two years since Haier Smart Home released Tri-Wing Bird, although the proportion of R&D expenses has increased slightly, it has always hovered within 4%, and it was not until the first quarter of this year that it slightly exceeded 4%. After Haier Smart Home deployed its smart home business, the proportion of R&D expenses has increased, but not significantly.

Compared with Huawei, Xiaomi, Baidu, etc. who are also deploying smart homes, this investment seems a bit "shabby".

For the whole of 2022, Huawei and Baidu’s R&D investment accounted for 25.1% and 22.4% of revenue respectively.

Let’s compare the educational composition of R&D personnel.

As of the end of 2022, Haier Smart Home has 24,647 R&D personnel, accounting for 22%. Among them, doctoral students account for only 0.1%, master's students account for only 3.7%, and undergraduate students account for 11.4%. The total of the three is just over 15%.

Looking at Huawei, by the end of 2022, there were 114,000 R&D personnel, accounting for 55.4%; in terms of academic qualifications, master's degrees accounted for 46%, bachelor's degrees accounted for 41%; doctors and above accounted for 4%, and others accounted for 9% .

Haier's "spending money" model illustrates a problem: the shift to "smart homes" in more than two years has not completely changed Haier's background of focusing on marketing and neglecting R&D.

Although Haier Smart Home officially claims that there are currently 10 N R&D centers in the global market, Haier may as well continue to work hard in terms of R&D investment.

Li Jun (pseudonym), a dealer from Henan who has been operating a Haier franchise store for 5 years, told "Financial Stories", "In fact, when people buy home appliances, they only look at advertisements and brands. When you talk about intelligence, , how many ordinary users can understand it before purchasing?"

This is probably one of the reasons why Haier spends a lot of money on marketing.

However, Haier has already stepped into the door of "smart home". The leadership of technology giants, the encirclement and suppression of home appliance peers, and the eager eyes of other friends have left Haier with no way out. Technological innovation It is imperative.

Smart family is definitely a good story, and Haier also has multiple advantages. Haier, which has brought many surprises in the past, can it soar into the sky with the "three-winged bird" this time and reach the end of whole-house intelligence?

Story to be continued...

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