Electrical Equipment / Components & Telecoms

Foreword: If there is no product thinking, operators will have no chance. Because operation thinking is one-time construction and eternal service, product thinking is one-time delivery and continuous delivery, operation is to build a siege of marriage, and products are to create a stage for love. Operators are accustomed to the siege, and they are still not used to falling in love with their customers.

In such an industry, the revenue for the first quarter of 2021 is 1,903 billion yuan, a year-on-year increase of 26.5%. The revenue of the telecommunications industry in the first quarter was 360.1 billion yuan, an increase of 6.5% year-on-year. What's more interesting is that the industry's entire industry realized a total profit of 237.1 billion yuan.

If the time scale is enlarged to one year, it is even more enviable: the revenue in 2020 is 8161.6 billion yuan, which is 6.63 times the annual revenue of the telecommunications industry (1.36 trillion yuan). It is such a large-scale market that has been quietly existing next to intelligently transformed telecom operators for so many years and has been neglected!

It is indeed unbelievable and unbelievable. This is the software industry.

1

Let's take a look at the data first.

Looking deeper, this industry is divided into four areas: software products, information technology services, information security products and services, and embedded system software. Among them, software products and information technology services account for the largest proportion, about 30% and 60% respectively. Among them, innovative applications of new-generation information technologies such as industrial software, cloud computing, and big data are the largest ones, accounting for 8.78 and 15.0% respectively in the first quarter of 2021.

In 2021, industrial software products will achieve revenue of 197.4 billion yuan, an increase of 11.2%, and cloud services and big data services will achieve a total revenue of 411.6 billion yuan, an increase of 11.1% year-on-year.

Of course, such a large-scale market is also a highly fragmented and competitive market. In 2020, there will be more than 40,000 enterprises above the designated size in the software and information technology service industry across the country. That is to say, in the software industry, the industry concentration is still relatively low. The effect of industrial agglomeration is obvious in the region. The eastern region, especially Shenzhen, Nanjing, Hangzhou, and Guangzhou, are the top four in terms of revenue growth of software business in the top ten central cities in 2020. It is very interesting that Beijing is absent.

The above data shows that the software industry is a promising industry with large scale and scattered competition.

2

Let's look at the trend again.

There are several interesting trends in the software industry, which show that my country's digital underlying logic is undergoing fundamental changes on the demand side.

First, embedded software has become a key driving technology for driving intelligence. The original statement of the Ministry of Industry and Information Technology Communiqué is: Embedded system software has become a key driving technology for the digital transformation of products and equipment and the intelligent value-added in various fields.

Second, the digital transformation of manufacturing continues to drive the growth of the software industry. In the first quarter of 2021, the revenue of industrial software products expanded to 47.9 billion yuan, a year-on-year increase of 20.9%, an increase of 2.5 percentage points from January to February.

Third, the accelerated application of cloud data innovation has promoted the growth of the software industry. New innovative applications such as cloud computing and big data had revenue of 170.6 billion yuan in the first quarter, a year-on-year increase of 26.6%.

Fourth, information security has accelerated from hard to soft, and there is huge potential for future growth. The state has issued a series of standards in the field of network security, the market has accelerated its regulation, and security demand and supply have entered a new pattern.

3

We continue to look at logic.

Telecom operators all regard digital and intelligent transformation as their basic strategic direction. The so-called transformation has two basic modes.

One is vertical integration. Relying on existing resource advantages and industrial advantages, extending to the upstream and downstream of the industrial chain, telecom operators are currently expanding from the network to the cloud, big data, and artificial intelligence. This is the logic. So how is this effect? Looking at the data: "The three basic telecommunications companies are actively developing emerging services such as IPTV, Internet data centers, big data, cloud computing, and artificial intelligence. In the first quarter, they completed a total of 55.7 billion yuan in business revenue, an increase of 27.2% year-on-year, and accounted for telecommunications business revenue. The ratio is 15.5%, driving a 3.5% increase in telecom business revenue."

It should be said that the effect is still very obvious, but this is just a vertical comparison with itself, and there is still a big gap between the horizontal and the software industry, which is not in the same order of magnitude.

The second is horizontal diversification. Relying on brand advantages and user scale advantages, it provides services around user scenarios and enters multiple fields across borders. At present, Xiaomi's car manufacturing basically belongs to this logic. Some people say that operators should also build cars, because it acts on one billion users and should make a fortune even by selling mineral water. Obviously, the software industry, as a key part of the vertical integration of the digital and intelligent transformation of telecom operators, should not be ignored or ignored. Because only software is the shortest path to the user's heart.

4

We look at the last chance.

So does the operator have a chance?

I think it depends on two basic logics:

First, the operation thinking of telecom operators can be switched to product thinking. Strictly speaking, these are two completely different thinking. Operational thinking is one-time construction and eternal service, product thinking is one-time delivery and continuous delivery, operation is to build a siege of marriage, and product is to create a stage for love. Operators are accustomed to the siege, and they are still not used to falling in love with their customers.

The second is talent. The scale of talent inflow to a field is mainly attracted by the industry's prospects. In the first quarter of 2021, the average number of employees in the software industry in my country was 6.97 million, a year-on-year increase of 6.2%. The attractiveness of the industry can be seen from the rate of wage growth: the total wages of employees increased by 10.6% year-on-year.