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"Xueersi's Olympiad mathematics course costs more than 4,000 yuan for one semester, but with this learning machine, you can learn all the contents for free for the same price, and you don't have to sign up for any cram school..." As the summer vacation comes to an end, Xueersi's Douyin live broadcast room is still very popular, and the anchor is frantically outputting the selling points of the learning machine at 1.25 times the speaking speed.

In the official flagship store of Xueersi, which has over 2.4 million fans, the number of people online in the live broadcast room exceeded 1,000.

Photo/Xueersi Douyin live broadcast room

At an offline sales point of Xueersi in Hebei, a salesperson revealed to "Jiemian News·Entrepreneurship Frontline" that during the summer vacation, more than a dozen learning machines can be sold in a month.

From the early old-fashioned learning machines, children's watches, eye-protection street lamps to today's AI learning machines, educational hardware has always been hunting for parents' wallets. But after the "double reduction" and the crazy hype of the AIGC concept, educational hardware has truly become the "hope of the whole village" in the eyes of major manufacturers.

The former offline education and training giant TAL Education Group (the parent company of Xueersi) relied on teachers and content. In addition to turning to quality-oriented education, its transformation to smart hardware was also very smooth.

But it’s not just education companies that are preying on parents these days.

At present, traditional hardware manufacturers such as BBK and Reading Boy have accumulated a large number of users, while Internet giants such as iFlytek and NetEase Youdao have strongly crossed over to the education circle by leveraging their technological and big data advantages.

In the competition of technology, content, channels and price, what are the chances of Xueersi, an "academic school", to win? How far does the AI ​​learning machine have to go to help users go from "spending money" to "saving money"?

1

Relying on hardware to "extend life"

In the recently concluded fiscal year 2024, TAL Education Group delivered a good report card. (Editor's note: The fiscal year 2024 is from March 1, 2023 to February 29, 2024.)

During the reporting period, TAL's net income increased from US$1.02 billion in the same period last year to US$1.49 billion, a year-on-year increase of 46.2%; its net loss was US$3.573 million, compared with US$136 million in the same period last year, a significant narrowing of the loss.

In the first quarter financial report of fiscal year 2025 disclosed on August 1, TAL Education Group continued its trend of business recovery.

The financial report shows that as of May 31, 2024, TAL Education's revenue was US$414 million, a year-on-year increase of 50.55%; its net profit was US$11.402 million, compared with a net loss of US$45.037 million in the same period last year, a year-on-year increase of 125%, turning losses into profits.

In fact, as the impact of adjustments to TAL's traditional education and training business subsided, its revenue growth rate has turned positive since Q1 of fiscal year 2024: the company's total operating income in Q1, Q2, and Q3 was US$275 million, US$412 million, and US$374 million, respectively, with year-on-year growth rates of 23.0%, 40.0%, and 61.0%, respectively.

In the past year, Xueersi took the lead in launching its first smart model "Xueersi Learning Machine Classic Edition 2023", and then launched two new products, xPad2 Pro and xPad2 Pro Max, at the end of the year.

Photo: Xueersi JD flagship store

It was also from the launch of the smart learning machine that Xueersi turned losses into profits for the first time in Q2 of fiscal year 2024 in 12 quarters since the implementation of the "double reduction" policy.

The 2023 Douyin Mall "Double Eleven" Goods Festival list shows that among the top ten best-selling key products, learning machines occupy two, among which the Xueersi smart learning machine ranks fourth.

In fact, before this, Xueersi had already tried out many educational hardware products, such as study lights and lecture machines. The idea of ​​transforming the company's positioning from an education company to a technology company was just a prototype at the time.

After the introduction of industry policies, the group's transformation set three major directions: learning services (including quality education, one-on-one high school teaching and large online classes, international education, etc.), learning content solutions (paper books, smart hardware, etc.), and learning technology solutions (live broadcast, AI solutions and other toB businesses).

It is not difficult to find that the traditional ceiling of online teaching business is obvious. Good Future can quickly deploy through its standardized product capabilities, which is the company's comfort zone;The AI ​​service business requires good school resources and the cost pressure brought by the continuous updating of product systems.

In comparison, the one-time sales model of hardware products obviously has better cash flow, and with the continuous iteration of AIGC technology and the launch of the "100 Model War", almost all products in the education industry can be remade with AI.

Intelligent learning machines equipped with large models and AI technology also seem to have better business prospects.

In addition to video recorded course resources, the learning machines currently on the market are generally equipped with large AI models, featuring AI precision learning functions, which can help primary and secondary school students find and fill in the gaps, which is equivalent to the students' AI teachers and private tutors.

Image/Photo Network, based on VRF protocol

“I won’t enroll my child in any classes during the summer vacation. He will mainly use a learning machine to review at home, which doesn’t cost me a lot of money.” A parent revealed to “Jiemian News·Entrepreneurship Frontline”.

Peng Zhuangzhuang, president of TAL Education Group, also revealed that the growth of Xueersi learning machines was driven by increased sales and higher average selling price.

Currently, Xueersi learning hardware has also become a key contributor to the group's content solutions business.

2

AI cannot compete with teaching and research

In fact, domestic educational hardware has gone through 30 years.

Traditional hardware companies are represented by Subor, BBK, Wenquxing, Xiaotiancai, etc., and have a large number of fans in the traditional hardware track due to their strong offline channel capabilities.

In 2008, iFLYTEK launched the language subject teaching product "Changyan Intelligent Voice Teaching Aids". Subsequently, a large number of comprehensive companies with stronger technological attributes, such as New Oriental, Yuanfudao, and Squirrel AI, started to make educational hardware.

If technology companies' hardware development is just a routine business expansion, then the concepts of AIGC and artificial intelligence have truly changed the educational hardware circle.

In 2022, the golden age of educational smart hardware officially begins, and New Oriental has also accelerated its exploration of educational hardware.

In June 2022, Future Education launched the Xiaohou Smart Learning Lamp, which supports learning content, learning tools and other functions, and positioned itself as an "eye-protection lamp that understands learning better"; in September, Xueersi released the "Pa Pa Lecture Machine", which focuses on the function of taking photos for self-study.

In February 2023, Xueersi's first learning machine, Xpad, was launched, providing free self-developed courses and an AI lecturing robot. In December, the Xpad2 flagship learning machine was launched, and this year the more cost-effective 2024 version of the learning machine was launched.

Photo: Xueersi JD flagship store

It is worth noting that driven by the AI ​​wave, many technology companies have announced the launch of hardware products equipped with large language models this year.

In November 2023, Xueersi avoided the general big model route and independently developed and launched the Jiuzhang Big Model (MathGPT), which focuses on problem-solving and explanation algorithms. It also has the ability to solve and explain problems in subjects such as mathematics, Chinese, English, physics, chemistry, and biology.

At present, functions such as solving math problems and AI intelligent essay grading have been applied to brand learning machines.

“Based on the AI ​​precision learning function of the learning machine, students’ mastery of knowledge points can be tested through test questions.Taking unit testing as an example, this function can determine the difficulty of the next question by testing the time and accuracy of the questions. The questions that each person answers can be said to be "different for each person." Xueersi offline sales staff told "Jiemian News·Entrepreneurship Frontline".

She also mentioned that after the learning machine detects weak points through AI function, it can directly jump to the video course content to help children improve their learning efficiency and fill in the gaps.

Figure/Xueersi Learning Machine

At present, most of the technology giants that have launched big models on the market focus on liberal arts big models, tending to practice foreign language speaking. For example, iFlytek's Spark Cognitive Big Model also focuses on building English oral training capabilities, and NetEase Youdao's Ziyue Big Model has launched a private oral tutoring function.

In addition to precise learning, the Xueersi learning machine also provides AI dialogue learning, math questions at any time, and 10 major AI-assisted tools: AI word lookup, AI fingertip translation, AI composition assistant, AI dictation, AI recitation, AI mental arithmetic practice, AI mental arithmetic correction, AI Xiaosi practice, AI encyclopedia Q&A, and AI picture book reading.

But compared with the ever-changing AI functions, parents seem to value Xueersi’s reserve of teaching and research content more.

"In the past, Xueersi's offline teaching and research capabilities were too strong. Now people choose their products for the teaching and research purposes, as they have courses at all different prices. In comparison, iFLYTEK's learning machines have strong AI capabilities, but their teaching and research capabilities are relatively poor," said a parent.

If we compare the two mainstream AI learning machines on the market, what parents need is probably the key to their choice. Compared with parents personally tutoring their children, learning machines are more "mother-saving" to a certain extent.

“Xueersi’s content is more suitable for younger primary school students, with two sets of courses: in-school and gifted courses. iFLYTEK is more suitable for middle school students and above, with some physical and chemistry experiments that allow you to watch experimental videos, as well as real test papers from major prestigious universities.” Another parent told Jiemian News·Entrepreneurship Frontline.

However, some parents have reported that there are many free resources for recorded courses online, and one learning machine may not meet the learning needs of their children. A family may even buy multiple learning machines to use in combination. AI learning machines have become an electronic consumable.

3

Betting on big models

In the current environment, big models have almost become the new guiding light for the education industry.

OpenAI founder Sam Altman is particularly optimistic about AI's ability to empower the education industry, especially AI personalized one-on-one tutoring.

This summer, the large number of large models released has made the education track particularly lively.

On May 6, iFLYTEK held a press conference to publish the results of the "iFLYTEK Spark Cognitive Big Model", launching the big model + AI learning machine, claiming that the AI ​​can correct essays like a teacher and conduct real-life conversations like an oral teacher. It has since undergone many updates and iterations.

On May 15, the Beijing Internet Information Office announced new progress in artificial intelligence registration, and Yuanfudao's Kanyun big model passed the big model registration.

On July 26, NetEase Youdao launched the first vertical model in the field of education in China, "Zi Yue", and released six innovative applications developed based on the "Zi Yue" model - "LLM Translation", "Virtual Oral Coach", "AI Composition Guidance", "Grammar Lecture", "AIBox" and "Document Q&A"......

Looking at the large-scale model products on the market, most manufacturers extend the application of large models in their own vertical fields of advantage in an attempt to differentiate themselves.

iFlytek and NetEase Youdao have technical and big data advantages in voice translation and recognition, so their products equipped with large models have derived AI interactive functions such as oral teachers.

Image/Photo Network, based on VRF protocol

Yuanfudao has extended its services to scenarios such as homework grading based on resources such as Xiaoyuan Question Search and YuantiKu, while Future Education's MathGPT focuses on the field of mathematics and is superior in mathematics and scientific reasoning.

By telling new stories with new technologies, many large companies have received positive feedback in terms of performance and stock prices.

On July 16, iFLYTEK wrote in its investor relations activity record that its AI learning machine sales increased by more than 100% from January to May this year, and its user net recommendation value continued to rank first in the industry.

Since the release of the "Spark Cognitive Big Model" in May this year, iFLYTEK's stock price has risen by as much as 111.24% since the beginning of the year, with the highest increase in the period even reaching 149.77%.

In addition to launching the Zi Yue large model, NetEase Youdao has also launched innovative applications such as Youdao Xiao P and virtual oral coach HiEcho3.0.

According to data released by NetEase Youdao, in the first quarter of 2024, its AI subscription business revenue had reached 50 million yuan, a year-on-year increase of 140%; its online marketing service business was nearly 500 million yuan, a year-on-year increase of nearly 126%.

But one thing that cannot be avoided is that the integration of AI functions and learning machines is still in its early stages, and the commercialization path is limited, which also leads to the relative homogeneity of both the products themselves and AI functions.

According to observations by "Jiemian News·Entrepreneurship Frontline", the main functions of most learning machines on the market are concentrated on AI precision learning, one-on-one oral training, homework grading, essay grading, AI error books, etc. Although there are differences in details, there is still a lack of innovation overall.

Figure/ iFLYTEK learning machine

The big models from all the major manufacturers are in close combat, but there is no absolute “killer” product in learning hardware yet.

According to data from Luotu Technology, in the first quarter of 2024, the top five brands in domestic online learning tablet sales were Xueersi, Xiaodu, Xiaoyuan, Zuoyebang and iFLYTEK, with shares of 14.2%, 13.5%, 12.2%, 10% and 10% respectively, and their market shares were very close.

According to industry insiders, vendors with educational backgrounds have advantages in resources and personalized services, while Internet giants often have more solid technical capabilities. Although each has its own strengths and positioning, vendors are undoubtedly working hard to make up for their shortcomings.

This also means that learning machines have shifted from the early "reading machine" era of competing in hardware, channels, and marketing to the 2.0 era of competing in technology and content.

At present, manufacturers can still occupy their own market, but for Xueersi, before the “winner takes all” of AI learning machine brands comes, in addition to the content advantage, it may need to find a second competitive advantage to attract users as soon as possible.