Chapter 41 6. The hardware industry — an unusual path

In the next 10 years, the hardware industry will not decline as expected by some experts. On the contrary, it is even very likely to usher in a new wave of climax. However, opportunities do not belong to everyone. An enterprise, the winner in this future business game, must go through an unusual path. From a commercial point of view, the hardware industry will still be an industry full of profits. Although the situation of the hardware industry may change every day, as long as we can get to the bottom of its laws, it can be predicted that there will be an international market in China. A high-level hardware company will not only stay in the imagination on paper.

Topic introduction: The illusion that floats in front of our eyes - whose money is earned by the hardware industry - the key to winning If we make the conclusion here: in the next 10 years, the hardware industry engaged in the production of computers and telecommunications equipment will still be a profitable industry, and many people will definitely object to this. In the eyes of many people, due to the impact of product cycle, price competition, technological progress and other factors, the living environment of the hardware industry has become extremely difficult. The most important point is that due to technological progress and price competition, the largest block in the hardware industry The interests of the industry have been transferred to the hands of consumers to a considerable extent, rather than those companies that create products.

A very typical phenomenon is: In the past ten years, computers have gradually changed from unattainable high-end equipment to ordinary household appliances on the same level as TV sets. However, all of this is just an illusion floating in front of our eyes. What we want to reveal here is that in the operation of the hardware department, there are factors that we cannot see, and it is these factors that help the hardware industry in the future. In the past years, it still has a strong upward momentum. From the perspective of the external trend of the industry, in the next ten years, all developed industrial countries will increasingly shift their economic focus from manufacturing to service industry, and the hardware industry is included in it. Then, the hardware industry abandoned by developed countries, Where did it go?

The answer is low-cost underdeveloped countries. Among these countries, China, which has abundant natural resources and cheap labor resources, is naturally the first choice for industrial transfer. From the perspective of the internal laws of the industry, the symbiotic relationship between software technology and hardware technology also constitutes the upward momentum of the hardware industry. We all know that if there is no software available on our computer, then the computer will be a useless shell, and it is precisely because of the continuous advancement of hardware that more and better software can be used for us. services; in turn, the emergence of new software creates a place for powerful hardware to be used, thereby creating demand for the hardware industry.

Based on these two iron-clad laws, we can make the conclusion that at least in the next 10 years, the hardware industry will not decline as some experts expected. On the contrary, it will even It is very likely to usher in a new wave of climax. However, opportunities do not belong to every enterprise. The winners in this future business game must go through an unusual path. In many people's minds, having advanced technological advantages is the key to hardware companies winning in industry competition. We cannot deny the importance of technology, however, if any enterprise regards this as the golden rule, then what awaits it will most likely be a tragic failure.

For this industry, technology itself cannot constitute a competitive advantage. Even those companies with first-class technology are likely to fail. Conversely, many companies have mediocre technology, but rely on good sales, so Take advantage of the industry. The best examples in this regard are Intel Corporation and IBM Corporation. In all fairness, the competitive advantages that these two companies have established are not first-class technology, but relying on good sales channels, unparalleled large-scale production, and various Diverse product portfolio. Moreover, for this industry, technology is not a difficult threshold to overcome, and very few companies can maintain their technological leadership for a long time.As far as handheld computers are concerned, at the beginning, PALM was unique in this regard. However, after a short time, large companies like Sony and Microsoft quickly narrowed the distance technically, and relying on Its strong sales network and production capacity have eroded the last technological advantage of PALM.

So, for a hardware company, what can help them make money the most? The answer is: low cost, regular customers, intangible assets. In the current business era, saving money means earning money. The saved money will not be labeled with a specific label because of its origin. On the contrary, in the company's annual financial report, this Money will become part of the profit. In this regard, Dell is the best example.The reason why it can rank among the first-class hardware companies is largely due to its low-cost strategy. According to the data, Dell purchases the largest quantity of raw materials and semi-finished products in the same industry, which means that it can obtain a much lower price than its competitors.In addition, there is another reason that few people know, that is, as the largest manufacturer of home computers, many of Dell's material suppliers can allow it to defer payment and are willing to provide Dell with the most flexible supply methods.

For a business, this convenience means relatively low inventories and better cash flow, which combine to create a huge competitive advantage—Dell can pay for material supplies Suppliers receive payment in advance, and cash flow can be applied where it is most needed, thereby reducing operating costs and creating a very high return on capital. In addition, Dell's "direct sales" model is also the key to its profitability. When a customer selects the configuration he is satisfied with and confirms the order through the network or telephone, Dell's factory will assemble the accessories into the computer that the user needs, and deliver the computer directly to the customer. This is Dell's iconic "Direct sales" model.

Relying on this sales model without intermediate links and its strong execution, the gross profit margin obtained by Dell is much higher than that of competitors in the same industry. For many companies, having regular customers may not be a very important factor, but for a hardware company, this significance is extraordinary. In the past 10 years, Chinese hardware equipment manufacturers such as Lenovo, Tsinghua Unigroup, and Peking University Founder Group have all benefited from this. Among their basic customers, there are companies like China Unicom, China Mobile, and China Telecom. Customers with very conservative purchasing habits, and these customers often operate quite large and complex networks, and in their purchases, they must be familiar with the newly purchased equipment and must be perfectly connected to the operating network enter.

Based on the above reasons, hardware companies such as Lenovo can maintain relationships with customers for 10 years or even longer. During these 10 years, the amount of each order is quite a lot. For hardware companies, the most important intangible assets are brands and patents. We don’t need to repeat the precious value of a famous brand. In today’s information age, the meaning of patents means the protection of proprietary technologies. It means that competitors need to pay high usage fees to obtain the qualification for use. In addition, the knowledge and experience of engineering and technical personnel in the enterprise should not be underestimated, because potential competitors may take a long time , to be able to accumulate sufficient reserves in this regard.

In contrast, in the past 10 years, no matter in the world or in China, successful companies in this industry have occupied at least one of these three aspects. From this, we have found the way to win in the hardware industry , when other people are still fighting endlessly for how to survive, to understand this winning way in advance means to stand on a greater height. When we understand the key to success in the hardware industry, all we need to do is to find a set of effective strategies. Only in this way can we remain invincible in the future competition within the industry and games between industries. In the next ten years, the following three points are what a hardware company must grasp. First: Stable market share and consistent profitability. In fact, this is not only the case in the hardware industry. For any industry and any company, a stable market share and strong profitability are powerful weapons against fierce competition. Perhaps a company does not occupy a certain market share in a certain product market. However, as long as it occupies a stable market share, and as long as the market is still in the process of rapid growth, then this enterprise must be able to obtain a fairly stable return on capital. Second: Strong business model and marketing. For hardware companies, it is necessary to have a clear strategic direction. In other words, never waste money and time on businesses that are not good at or suitable for. When the strategic direction of the company is focused on one point, it can be clear. How to accurately guide the following factories to produce new products, how to make annual financial budgets, and how to use cash flow to purchase new technologies and new enterprises. Third: a resilient financial position. If you want to do a good job in a hardware company, you must work hard on capital and time planning. In this industry, a major feature is the variability of demand. For consumers, they may have such a preference today, but they will have that preference tomorrow. When restricting production capacity, it means reducing the risk to a minimum. If we can implement these three points in the next ten years, then from a commercial point of view, the hardware industry will still be a profitable industry, although the situation of the hardware industry may change every day However, as long as we can get to the bottom of the law, it can be predicted that the emergence of international-level hardware companies in China will not only stay in the imagination on paper.