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In the 2023 annual report, Kingsoft Office had a total of about 4,539 employees. When the 2024 semi-annual report was disclosed, Kingsoft Office had about 4,601 employees. In an environment where profits are guaranteed by means such as "reducing costs and increasing efficiency", Kingsoft Office still achieved growth, which is "not easy".

Text｜Han Xiang

WPS crashed, and many workers were very anxious.

On the morning of August 21, some netizens reported that "WPS software crashed", and the related topic also became a hot search on Weibo. At 11:41 a.m., @WPS Customer Service released a message saying, "This morning, WPS experienced a service failure, which affected some users. It has been gradually restored."

That night, after resuming service, WPS released a compensation plan. From 0:00 to 24:00 on August 22, all users can receive 15 days of membership for free.

Coincidentally, two days before WPS crashed, NetEase Cloud Music App also crashed. The official reason for the crash was attributed to service failure. However, many analysts believe that the core reason for the crash of NetEase Cloud App was that "layoffs hit the main artery" and it was caused by cost reduction and efficiency improvement.

However, according to the "Digital Intelligence Research Society", Kingsoft Office, the main body behind WPS, has not carried out any substantial layoffs. In the 2023 annual report, Kingsoft Office mentioned that "there are 3,087 R&D personnel, accounting for approximately 68% of the total number of employees." A simple calculation shows that the total number of employees is 4,539. In the latest disclosed 2024 semi-annual report, Kingsoft Office stated that "there are 2,991 R&D personnel, accounting for approximately 65% ​​of the total number of employees." A simple calculation shows that the total number of employees is 4,601. Although the number of R&D personnel has decreased slightly, the total number of employees has increased instead of decreased. In other words,Kingsoft Office has not yet come up with a big strategy to "reduce costs and increase efficiency."

The failure to use the "cost reduction and efficiency improvement" trump card does not mean that Kingsoft Office will have an easy time. The semi-annual report data shows that the revenue in the first half of the year increased by 11.09% year-on-year, and the net profit attributable to the parent company increased by 20.38% year-on-year. Both the growth performance and the first quarter showed a slight decline.

In the secondary market, Kingsoft Office fell more than 3% to 185.17 yuan per share today. This price not only hit a new 52-week low, but also a new low in the past two years. From the perspective of 2024 alone, the decline has exceeded 40%. As of now, Kingsoft Office's market value is 87.3 billion yuan.

Personal subscriptions support half the sky

Of the total revenue of 2.413 billion yuan in the first half of 2024, domestic personal office service subscription business contributed 1.53 billion yuan. Total revenue increased by 11.09%, and personal subscription increased by 22.17%.

From this point of view, the personal subscription business is both the core source of income and the main force of growth. But even so, WPS still crashed, leaving hundreds of millions of workers crying in the toilet, because the documents they were about to submit were suddenly gone.

In addition to personal subscriptions, the 2.413 billion yuan also includes institutional subscriptions, which only accounted for 443 million yuan in the second quarter, and the growth rate did not outpace the total revenue growth rate. The other two businesses, institutional licensing business and overseas advertising business, although they accounted for a small proportion of revenue, both showed negative growth.

This further highlights the importance of personal subscription services.

After Kingsoft Office "cut off" its domestic advertising business in December 2023, it is not easy to maintain such a growth rate in 2024.

But upon closer inspection, many problems have been exposed in the personal subscription business that supports half of Kingsoft Office. For example, it has been repeatedly exposed to violate user privacy. In November 2023, the WPS privacy policy mentioned that the basic materials for AI training will be used after user data is desensitized. Soon, WPS responded and apologized to users.

When it comes to violating user privacy, Kingsoft Office is not a first-time offender.

In addition to violating privacy, Kingsoft Office's "Matryoshka" charging method has also been questioned by many.

Among them, Xinhua Daily Telegraph published an article on May 10 titled "Member, Super Member, Super Member Pro, AI Member, Premier Member... Kingsoft Office WPS is accused of "Matryoshka-style charging", which directly pointed out the charging problem of Kingsoft Office products and the irrational price increase after becoming the "dominant company".

On May 13, the commentary department account of the People's Daily, "People's Daily Commentary", published an article titled "Another "Matryoshka-style" charging: deceiving users is equivalent to self-destruction of reputation | People's Commentary". The article pointed out incisively that "small packages are included in large packages, and small packages are charged separately. All kinds of calculating behaviors are similar to the routines of some audio and video websites and clients, which is to harvest users through innovative charging items and forms."

It is worth noting that the article did not directly mention the name of "Kingsoft Office", but the picture accompanying the article used the membership list of WPS.

In the article, the People's Daily Commentary added, "Especially those operators with a dominant market position should pay more attention to respecting users and work hard to tap their own potential, rather than relying solely on making money from users. Tricking users is equivalent to destroying their own reputation."

According to the Digital Intelligence Research Society, as of now, Kingsoft Office's main products have more than 602 million monthly active users, but there are only 38.15 million annual paying individual users. In this way, Kingsoft Office still has great potential to continue to "earn money" from individual subscribers.

AI is not fully developed yet

In December 2023, after Kingsoft Office announced the closure of its domestic advertising business, the "Digital Intelligence Research Society" believed that this was Kingsoft Office's determination to cut off its own retreat and bet all its efforts on AI.

As an "antique player" that has experienced the PC era, mobile Internet era, and cloud computing era, Kingsoft Office did not hesitate when facing the surging wave of AI.

The "AII in AI" strategy is highly anticipated. In April 2023, Kingsoft Office launched a generative AI application with large language model capabilities, code-named "WPS AI". At that time, Yao Dong, vice president of Kingsoft Office, also announced the three future development directions of WPS AI: AIGC, reading comprehension and human-computer interaction.

However, after more than a year of development, the three seemingly promising directions and the functions that many subscribers can complete are still at the first stage. The second stage requires a lot of data model training, and Kingsoft Office has some unspeakable reasons for the privacy policy issues last year. For the third stage, technology is not the most important, and it is not possible to implement it before policies and regulations are implemented.

It is not yet certain what WPS AI will develop into in the future, but what is certain is that many heavyweight players have already squeezed into this field, including Feishu, DingTalk, Notion, Evernote and other products are all planning products based on generative AI.

DingTalk AI focuses on office scenarios, Evernote AI emphasizes the intelligence of collaborative experience, and Feishu AI focuses more on enterprise services. Each has its own focus, but each company has encountered almost the same problems.

For example, the increase in computing power under the support of accurate data has brought about an increase in capital costs. At the same time, in terms of compliance issues such as data leakage and personal privacy protection, no consensus or unified standards have been formed. If you blindly pursue commercial success and ignore security issues, you will inevitably suffer the consequences in the end.

"Digital Intelligence Research Society" found from the 2024 semi-annual report that AI was mentioned in many places, but it did not make it clear what new changes and new variables the development of AI has brought to Kingsoft Office over such a long period of time.