Chapter 440 This Is Really a Dead End
New Jingwei Company was first founded by Zhao Yuntao and Liu Xiaohan, two technicians who came from state-owned research institutes. The only product was a set of very crude "Huaxia CAD", which could not sell a few sets a year, so that Zhao, The two of them had to help people install computers in Yibin Building to earn their own living expenses.
Later, Li Kejia took a fancy to the potential of this product, resigned from Tuao China Company, and joined New Jingwei Company. He also attracted Tang Zifeng to inject capital into New Jingwei Company, and jointly found a new business direction for the company, making the company rapidly There is improvement.
At that time, the most popular product in the domestic market was CAD from the American Tuo Company, but due to its high price, few domestic users could afford it. In order to monopolize the Chinese market, Tuao Company has acquiesced in the proliferation of pirated software, leaving domestic software like Huaxia CAD with no place to survive.
Tang Zifeng and Li Kejia saw this and persuaded the relevant state departments to crack down on pirated CAD software, forcing domestic research institutions and industrial enterprises to purchase genuine versions. Since domestic enterprises are generally short of funds and unable to purchase the expensive Tuo CAD, this gives the cheap Huaxia CAD an opportunity to develop.
Over the years, Huaxia CAD has gone through several rounds of upgrades, the software performance has been greatly improved, and it has also gained a high reputation in the domestic market. However, even Li Kejia has to admit that compared with Tuao CAD, Huaxia CAD still has many shortcomings, that is, it has an advantage in price, so it can tie with Tuao CAD.
"In the past, we mainly relied on price advantage to win. In recent years, domestic research institutions and enterprises have become rich, and they can afford a set of software worth 10,000 to 20,000 yuan. Especially for universities, the education funds provided by the state Special funds are required, and a large part of them is for the purchase of IT-related products. These universities have endless funds, so buying a few high-priced software is nothing. Instead, it is our Huaxia CAD, because the price is too cheap, and others still I don’t bother to buy it.” Li Kejia said depressedly.
"Isn't it? It's very painful if you can't spend the money. You have to understand them." Tang Zifeng teased with a smile.
If the funds of a public institution cannot be spent in full, the financial department will have to recover them at the end of the year. Moreover, if you have sufficient funding in the first year, the finance department will think that you do not need so much funding, and will reduce the funding for you when preparing the budget for the next year.
The evaluation of public institutions is related to the amount of funds. If you can get 1 billion in funding a year, it means that your company is of high standard and has strong capabilities. On the contrary, if you only have tens of millions of funds a year, and you have to reduce it every year, everyone will wonder if you are not good enough, and why you can't spend the money you gave you.
It is for this reason that when preparing budgets, various public institutions will desperately pile up projects in order to obtain more funds. After these funds are in place, each unit must find ways to spend the money without leaving any money behind.
There is something important about how you spend the money given by the state. When you prepare your budget, you say that you will spend 10 million yuan to purchase software. Then the money can only be used to purchase software and cannot be used for other things. At the same time, the software you buy must also be related to actual needs, and you cannot buy a bunch of software that you cannot use.
As a result, expensive foreign software has become the first choice of these institutions. If you buy 10 sets of Tuao CAD, you can spend 300,000 to 400,000 yuan, but if you switch to Huaxia CAD, you can only spend 70,000 to 80,000 yuan. Everyone still has You have to find a way to use the remaining money. Isn’t this asking for trouble?
Of course, there are some differences between Tuao CAD and Huaxia CAD in terms of performance and user experience. If you were using your own money, you wouldn't spend a few extra dollars just for such a small difference. But what is being used now is fiscal money, and it is the kind that cannot be used without spending it. Why not buy better things? As for cost-effectiveness, who_care?
"If it doesn't work, you should also raise the price." Tang Zifeng suggested, "Huaxia CAD's pricing is really too cheap. Now that everyone has money, if you raise the price, you can still sell it. It's cost-effective In terms of performance, it’s still much higher than Tuor, isn’t it?”
"This is really a bit difficult." Li Kejia said, "Our product has no problem in terms of functionality, but in terms of user experience, it is much worse than Tuao. There is no way, Tuao's R&D investment is more than 10 times more than ours. Although the labor cost of foreign programmers is higher, they have invested so much, and if we want to compete with them, we still can't compete with them.
"Now some users choose Huaxia CAD because it is cheap, with a set costing only 7,000 to 8,000 yuan. If we increase the price to 15,600 yuan, the price gap between it and Tuao will not be obvious. They are willing to spend a An organization that costs more than 10,000 yuan won’t care about spending more.”
"This is really a dead end." Tang Zifeng said, patting his head.
Tuo CAD started early and has a monopoly position in the Western market. The per capita income in Western countries is high, and a few thousand dollars for a piece of software is nothing to ordinary companies. Tuo Company can continuously obtain high profits from the market, and supporting a huge R&D system is not a problem.
Huaxia CAD has always been sold in the Chinese market. The price is only one-fifth or sixth of Tuao CAD, the sales volume is not as good as Tuao CAD, and the profit level is only a fraction of Tuao CAD. If profits are not enough, R&D investment cannot be guaranteed. It is not easy for New Jingwei Company to persist to this day without being pulled too far away by Tuo.
The problems encountered by New Jingwei Company also exist in Linji Group. Linji Group's machine tool products are mainly concentrated in the mid- to low-end, and its profit level is only a fraction of that of its foreign counterparts such as PATEO, Dawes, and McClung. Foreign machine tool companies such as PATEO can invest hundreds of millions or even billions of dollars a year in technology research and development, but can only invest more than a billion yuan when the opportunity arises, which is already considered high among domestic peers.
Linji Group is luckier than Xinjingwei Company in that the machine tool users are all industrial enterprises and value cost-effectiveness very much. Compared with foreign machine tools, the user experience of Linji's machine tools is also poor, and the appearance is not as flashy as others. But how can industrial companies care about this? Buying a machine tool is not a Simmons. Who cares whether it is comfortable or cool?
Precisely because users pay more attention to practicality, Linji Group's machine tools are selling very well in the country. In the mid- to low-end machine tool market, they have basically squeezed out the expensive Japanese and German machine tools. Now they are entering the high-end market, and they are also entering the high-end market. Something has been gained.
In addition, users in some developing countries are also very fond of cheap machine tools from China. The per capita income of these countries is lower than that of China and they are more price-sensitive. The price advantage of Chinese machine tools is enough to make up for the shortcomings in user experience.
The software market is different from the machine tool market. Those who use the software have some say in the unit and are not as easy to bully as the workers in the workshop. These people care very much about the user experience of the product and will raise comments if it is not used smoothly. As for whether the company has to spend several times more money to make it comfortable for them, they don't care.
"What did you want to say when you called me here?"
After figuring out the various joints involved, Tang Zifeng asked Li Kejia. At least so far, he can't think of any way to break the situation, and I'm afraid he will disappoint Li Kejia.
Li Kejia said: "These days, I have had many discussions with Zhao Yuntao and Liu Xiaohan, and everyone thinks there is nothing we can do. Tuo CAD's domestic market share is steadily increasing. If we don't have a good way to stop it, In a few years, it will monopolize the domestic market and we will be squeezed out.
"To stop Tuo's expansion, a price war will definitely not work. We can only significantly improve our products. But to do this, we need to invest a lot of money, which we cannot afford."
"Is there absolutely nothing you can do?" Tang Zifeng asked. He knew that Li Kejia called him here not simply to complain to him, but because he had some ideas and wanted his evaluation.
Sure enough, Li Kejia changed the subject and said: "There is a way, but it is very risky."
"Wealth can be found through danger. Sometimes, taking risks is also necessary." Tang Zifeng said.
Li Kejia said: "This method was actually proposed by a senior executive unintentionally. At that time, we all said that there was no point in starting a price war with Tuao, so the senior executive said angrily that we should just give it away for free. It doesn’t cost a penny, I don’t believe the customer won’t accept it.”
"Free gift?" Tang Zifeng was stunned, then thought of a word and blurted out: "You mean, open source?"
As soon as these words came out, Li Kejia was surprised. She looked at Tang Zifeng and said, "What, you also know about open source software?"
"You don't really want to do open source software, do you?"
"If you really can't do it anymore, I'm afraid I can only give it a try."
"Awesome! You guys are so awesome!" Tang Zifeng raised his thumbs up and said sincerely.
The so-called open source refers to open source code, which means that all software codes are made public, allowing users to freely use and modify the original code to generate software that is more suitable for them.
The term open source software can be traced back to the mid-1980s, with the aim of challenging the hegemony of large software companies. The most famous open source software is Linux. It challenges Windows, which monopolizes all PC operating systems, and provides a possible choice for users who cannot stand Windows.
Although the open source software model was proposed earlier, it only became popular in the new century. At present, many open source software have appeared in the Western market, but China is relatively lagging behind, and many people do not even know such a concept.
As for Tang Zifeng, he only knew the concept of open source and the vitality of this model thanks to the golden finger of the time traveler. He was indeed shocked and admired when he heard that New Jingwei Company actually wanted to make Huaxia CAD into open source software.