Huawei Cloud’s WeLink, Dingtalk, WeChat Work … the forces of all parties have turned to remote mode as coronavirus spreads

文/国泰君安通信团队

来源:国泰君安证券研究(ID:gtjaresearch)

In 2003, Polycom, the king of global video conference in that time, probably didn't expect that its biggest order came from China.

In the spring of that year, when SARS broke out in China, government departments and ministries required government employees to work at home and do not have a business trip. But the coordination work of the whole country cannot be interrupted.

Taking advantage of Polycom's hardware and its own network advantages, China Unicom has established the first video conference operation network in China, the Polycom video conference network.

In 2003, the Ministry of Health completed the layout and communication work for SARS through this video conference network. SASAC, other ministries and government departments also completed the work arrangement in a special period through this network equipment.

Polycom's revenue in China increased by more than 70% in that year, and all channels of equipment were sold out, and the supply was in short supply. This year is also regarded as the first year of China's SOHO (Small Office, Home Office).

Today, 17 years later, is the first day after the end of the Spring Festival holiday, and also the first day when many companies start to return to work.

In order to continue to do a good job in epidemic prevention and control, many companies choose to open a remote office mode for their employees.

Many manufacturers that provide remote office tool services have also heard the news: Tencent Docs free of charge releases the remote cooperative office function; WeLink opens free product service function; ByteDance's team co-op platform Feishu also opens all remote cooperative office services for free.

If SARS sounded the first clarion call for remote work, then today, with the maturity of technology, and the catalysis of this epidemic, is it possible for remote work to usher in explosive growth and be accepted by more companies and employees and adopted for a long time?

This week, Guotai Junan Research launched the topic of "Online Economy", focusing on those industries that must be paid attention to under the epidemic.

Now, we are sharing with you the first topic - "remote work".

1. Reply 2003

Although Polycom won a large order in China in 2003, the high-speed network has not been fully popularized. At that time, Polycom equipment needed to operate based on the dedicated network, and the application scenarios were limited to conference rooms, so they were unable to provide external services. In addition, the equipment debugging is complicated, which requires special operation and maintenance. Therefore, Polycom has not achieved subsequent success.

In 2016, Polycom was privatized and delisted, and in 2018, it was merged into the Canadian giant Mitel.

Nevertheless, Polycom's status as a hardware equipment provider remains the same - Polycom currently has 70% of Microsoft Skype for Business / Microsoft Lync seamlessly integrated telephony devices on the market.

Polycom, meanwhile, has gradually transformed from a software service provider to an audio and video hardware equipment provider.

2. The forces of all parties into the remote office market

The two technological revolutions in history gave birth to the development of the video conference industry.

The first time: the transfer of Internet communication from narrowband to broadband.

The so-called "narrowband" refers to the network with the transmission speed below 4M, while "broadband" refers to the network with the transmission speed above 4M.

The birth of broadband makes video calling possible.

The second time: the transformation of remote video from traditional private network communication to cloud video.

Based on the cloud service model, the cost of video calls has dropped to 1/10 of the original, which greatly reduces the threshold for customers to use.

Enterprises no longer need to purchase expensive management system equipment. They only need to sign a contract with a unified communications service provider and pay monthly usage fees to enjoy unified communications services.

The sinking of costs quickly opened up the market for customers in multiple industries. Remote office services have gradually become more open and popular from closed systems built by large enterprises and closed systems for internal communication only.

According to the data of research institutions under China software network, the market scale of China's intelligent mobile office was about 19.4 billion yuan in 2017, and about 23.4 billion yuan in 2018, up 20.8% year on year.

With the participation of small, medium-sized and micro enterprises (SMEs) and individual users, the remote office market has become a competitive place for all forces to rush in. Only by types, we can roughly divide the players in the market into three categories:

(1)Equipment and hardware giants are moving towards software and hardware integration.

(2)Internet giants move from C-end to B-end.

(3)Telecommuting service providers in emerging verticals.

3. Software and hardware integration giants: Cisco, Huawei

• Cisco WebEx

Cisco is as famous as Polycom in terms of video devices, but facing the rise of Google, Amazon, Facebook and other vendors in the field of cloud services, Cisco has also started the transformation of cloud video services.

Since 2011-2016, Cisco has acquired a number of audio and video services companies, the most important of which is WebExz, which many people are familiar with.

In many large companies in the United States, "Let's do a WebEx" is almost the same as "Let's Google it", a common communication saying.

On March 14, 2007, Cisco announced that it had acquired Webex for $ 3.2 billion in cash. With this acquisition, Cisco has also perfectly implemented a software and hardware integration solution and has become a remote video office giant.

At present, Cisco has gained 53% of the global network conference market share, and about 7.1 billion people participate in the network conferences every month. It is a well-deserved leader in the network conference platforms.


▼The income of Cisco Unified communication business is high, and its international market share is leading in the world

Data source: Bloomberg, Guotai Junan Research

• Huawei Cloud's WeLink

Huawei is also working hard in the field of software.

Different from Alibaba-backed Dingtalk and WeChat Work, the main purpose of Huawei Cloud’s WeLink is to aggregate multiple Huawei services on one platform to achieve integration between various office tools. In this way, Huawei can completely say goodbye to the experience inconsistency caused by the parallel operation of multiple chimney mobile apps.

According to data from Huawei's official website, since the launch of WeLink in 2017, it has withstood the office inspection of all 190,000 employees of Huawei, with 520,000 global link teams, 2.1 billion connections per year, 700+ business connections. What’s more, it has improved 30% of overall staff collaboration efficiency.

4. The To B road for Internet giants: Microsoft, Alibaba, Tencent

• Microsoft Teams

In 2009, with the decrease in revenue and market share of the stand-alone office products in the global market, Microsoft released the office 365 platform. The subdivided core function of it is the enterprise-level collaborative communication function represented by Skype for Businesses. And then it further derived the Teams products.

▼The market share of Microsoft teams has increased significantly in the past two years

Data source: Microsoft official website, Guotai Junan Research

As a product of in-depth integration of the Office 365 cloud platform, Teams have been given an important mission to counter office collaboration software such as Slack and Google hangouts, ensuring Microsoft's leading position in the field of office. At the same time, it also reaped important traffic support from Office 365 and the commercial version.

▼The rapid growth of Microsoft teams has surpassed slack in 2019

Data source: Microsoft official website, Guotai Junan Research

According to the data from March 2019, more than 500,000 institutional customers use teams products, an increase of more than 150% over the same period in 2018. Among them, more than 150 customers have more than 10,000 users, 91 of the top 100 global fortunes use teams. In terms of large customers, Microsoft has an absolute advantage in the industry.

• Alibaba-backed Dingtalk

In 2013, under the premise of Alibaba all-in wireless, the former head of Taobao's search business, Chen Hang gathered the team to be responsible for the development of personal communication products. But unfortunately, he failed in the process against Tencent WeChat.

In 2014, the team found communication problems in the office work during the cooperation with the merchants. The team turned the overall work focus back to the B-side, and created a product “Dingtalk” with the goal of “building a pure working environment”. Version 1.0 can serve customers with team communication tools including toll-free calls, corporate groups, and more.

In terms of the number of active users, in April 2018, the number of active users in Dingtalk ranked first in the industry, which exceeded the sum of the number of second to tenth active users. As of October 2019, there were 200 million end users in Dingtalk. Among them, the number of active users has reached 70 million, which has basically formed a duopoly in Chinese market and corporate WeChat.

WeChat Work

In 2016, Tencent released version 1.0 of WeChat Work. As of 2019, Tencent's WeChat Work has been updated to version 2.8.5. In addition to video functions similar to WeChat, it also integrates a number of functions such as announcements, attendance, leave, reimbursement, approval, corporate payments, and other functions, which are benchmarked with Alibaba’s Dingtalk.

In December 2019, Tencent Cloud released "Tencent Conference", a SaaS-based remote office product, as its leader in entering the B-end enterprise communication market.

In terms of practicality, Tencent meetings can be dialed in directly through mobile phones, computers, telephones, WeChat applets, corporate WeChat and other methods. In terms of technology, it provides a variety of practical functions including video beauty, dark scene enhancement, noise reduction, etc. In terms of cross enterprise meetings, it provides convenient operation methods, including screen sharing, online document operation, etc.

In terms of hardware, Tencent Conference selected Yealink, XYLink and Polycom as hardware partners to provide them with a variety of office collaboration hardware including conference room systems.

• ByteDance's team co-op platform Feishu

After seven years of development, the fast-expanding ByteDance has realized the global business layout. However, with the expansion of the company's size and business scope, ByteDance's internal communication and collaboration are facing great challenges. This challenge is manifested in three aspects: employee network increased complexity, increased cross-regional and cultural communication, and increased number of internal systems. The company has tried various communication tools successively, and finally chose to develop its own Feishu products.

Feishu is a new generation of creation and communication platform. On the basis of IM, Feishu provides audio and video conferences, cloud disks, smart calendars, documents for online collaboration and so on. At the same time, it also provides an open platform that enables users to integrate with business systems based on it, and quickly build their own applications. Users can also make full use of third-party ISV applications. The core functions of Feishu include: corporate address book, smart calendar, corporate cloud disk, online documents, audio and video conferences.


5. Players in the vertical field

• Zoom - SMEs and education

Zoom was founded by a departure and entrepreneurial team from WebEx. It started from the SME and education vertical industries. It adopted the Free + Prime mode in the early stage to cultivate user habits and accelerate penetration into the B-end market. Later, it adopted an independent account to determine the model, which can increase the number of participants and time to improve the frequency of complex meetings in large enterprises.

Users can buy an account at the price of $ 15 / month, and can conduct video conferences online. It is simple and convenient to use, which has been rated as the most satisfied company by customers in North America for many years.

• Vidyo - medical field

Vidyo, although not a telemedicine company, has been working closely with the medical community.

Unlike other cloud video vendors, Vidyo's video communications are encrypted and comply with HIPPA standards, so they are favored by the medical community. They have established cooperative relationships with Philips, the California Telemedicine Network, Messi Health, and the Mayo Clinic.

On April 26, 2016, Alibaba-backed Dingtalk announced that it has chosen to establish in-depth cooperation with Vidyo,becoming a multi-party video conference partner of Dingtalk with embedded high-definition image quality and click-to-join.

• XYLink - education, medical treatment field

XYLink is the leader of cloud video conference in China, focusing on innovative intelligent hardware and cloud platform services.

Founded by the former Polycom team, the company focuses on the "cloud" + "end" mode. Its core competitiveness is high-performance, low-cost cloud services, providing solutions such as teleconference, cloud assistance, hardware video conference, enterprise level live broadcast, etc. At the same time, it serves vertical fields such as video conference, distance education, telemedicine, telefinance and telegovernment.

XYLink has the technical advantage far beyond the traditional private network video. It uses AI technology to achieve classroom identity, behavior recognition, and after-school data analysis.

Based on the behavior recognition of students in the classroom and the use of clickers to answer questions, the teacher judges the effect of the classroom, including the degree of concentration, participation, and mastery of knowledge points. When a large area of data is abnormal, the teacher can adjust the teaching method in time.

• BizConf Video - education field

The advantage of the integration of BizConf Video Terminal + Cloud Platform + Industry Solutions is outstanding. The core competitiveness of technology-leading peers is strong, and it has developed rapidly in dual-teacher classroom education and other subdivided fields.

Compared with other manufacturers in the remote office field, the main competitive advantages of BizConf Video lies in good product stability, strong reliability, large platform capacity and relatively low price.

• Suzhou Kedacom - government information service

Suzhou Kedacom has decades of industry experience in the field of network video conference. The company has built two end-to-end complete product lines for video conference and video surveillance, focusing on industry solutions in the four areas of public inspection and law enforcement.

In addition, the company also established a public cloud-based "Movision" operating platform. The company uses "server + software" to build a central platform based on "cloud computing" in a carrier-grade computer room, which can support the access of multiple operators such as telecom, Unicom and mobile.

6. What is the trend of remote work in the scuffle ?

Taken together, we believe that several major trends deserve attention.

First, the trend of Chinese product substitution is obvious.

Since 2002, China's video conference has been mainly through the purchase of Polycom and Cisco equipment. Later, due to the requirements of confidentiality and information security, the government gradually deleted the procurement plan for foreign manufacturers in the field of remote office system procurement.

March 2015: the government adjusted the procurement list and deleted the procurement plan for Cisco video conference.

2016-2017: the government intensively released policies, and network security rose to national strategy.

After 2017, the remote office solutions used by the government were mostly produced for Chinese enterprises.

Judging from the ten projects with the largest bids in 2018, the successful bidders are all Chinese companies. The special requirements of information security and confidentiality have brought broad prospects for Chinese manufacturers, which have hindered foreign video conference manufacturers.

Second, China's telecommuting office market is characterized by high definition, and enterprise-level users still contribute to the size of the telecommuting market.

In 2014, China's remote office market officially ushered in the era of high definition. The size of the high definition market exceeded exceeded that of standard definition market, reaching 51.5%.

The high-definition remote office brings a better live experience, with a rate of 76.8% in 2018. The development of new technologies has gradually made it possible to meet the needs of video fusion, with the highest proportion of high-definition video content reaching 84.7%.

Government-level user needs are concentrated in large-scale, high-quality, and price-insensitive.

With the advancement of video communication technology and the rise of software video conference, the demand of enterprise-level users continues to rise, especially the demand of SMEs. Demands in the medical and education fields need to be further developed.

Third, the forces of all parties are relatively clear in the Chinese competition pattern.

As far as Chinese enterprises are concerned, we believe that the Internet giants will focus on the general-purpose application market, that is, provide standardized products and services for a large number of small and micro enterprises.

The original cloud video manufacturers will focus on industry-level application scenarios, that is, to provide more customized products and services for large enterprises. Companies with core technologies and in-depth industry-level solutions will stand out in the remote office market.

This an article from WeChat official accounts Guotai Junan Research (ID: gtjaresearch), translated by Chris Yuan.