Shared todayAI large model seriesIn-depth Research Report:AI Large Model Topic: The core beneficiary of the strategic position of headphones in the era of large models
Report Producer: Minsheng**).
Report total: 31 pages.
Featured Report**: The School of Artificial Intelligence
1.1 A leading comprehensive manufacturer of headphones and audio equipment in China
Edifier is a leading headphone manufacturer in China, according to Canalys data, as of 2023Q2, the company's TWS headphones have a domestic market share of 12%. In 1996, the company was established in Zhongguancun, BeijingIn 1999, the first overseas company was established in Canada;In 2004, a succession of classic products was released, including the e-series with a unique design style and the 20 Audio S2000 is well-known in the industry;In 2010, the company successfully landed on the A-share market, becoming the first self-owned brand multi-first-class audio company listed on the A-share market in ChinaIn 2012, the company wholly acquired the world's top and only mass-produced electrostatic headset brand STAX, and entered the field of HIFI headphonesIn 2020, Dongguan Edifier Automotive Electrical Technology Co., Ltd. was establishedIn 2022, the company was selected as one of the top 500 enterprises in Shenzhen, and many of the company's products won awards such as IF Design, CES Innovation, and Japan VGP. After 23 years of deep cultivation in the industry, the company has formed a brand layout for different market segments, built a strong market competition barriers and core competitiveness, and formed a product system of hundreds of models such as headphones, multi-class and home audio, car audio, professional audio, etc.
The company's products can be divided into five categories: headphones, audio, car audio, microphones, and e-sports peripherals, covering the use scenarios of most audio equipment. Among them, the headphones are the core of each product line, and a series of products covering different scenarios have been derived to meet the needs of users in an all-round way.
1) Headphone products.
According to different demand scenarios, the company's headset products can be divided into: educational product headsets, HECATE gaming headsets, Huazai headphones, etc. Educational product headsets include professional exam headsets, professional voice headsets, and unilateral call headsets, covering multiple usage scenarios such as professional vocal exams, professional exams, online learning, English listening and speaking practice, etc.
HECATE gaming headset is a professional gaming headset specially launched by the company for game enthusiasts, including four types: true wireless headset, headset, neckband headset, and wired headset. The Hecate series headphones have 24GHz ultra-low latency transmission technology, 71 Surround sound, three-chamber audio technology, active noise cancellation, dual-mode wireless connection, ergonomic design, and one or more technologies optimized for gaming scenarios.
Huazai earphones are a series launched by the company for young consumer groups, including true wireless earbuds and headphones. Huazai series earphones focus on the combination of aesthetics and ergonomics, with a variety of noise cancellation modes, super fast charging, earphone positioning, APP interaction, professional dust and water resistance and other one or more functions.
Smart headphones are a strategic focus for the company's further development. In September 2021, the company and Xiaodu jointly launched the LOLLIPODS small version of the true wireless smart earbuds, which combines the AI technical capabilities of Xiaodu assistant with the company's headphone manufacturing process, which is the embodiment of the combination of the company's own products and AI technology. On July 19, 2023, the company said on the interactive platform that it had recently signed an agreement with an artificial intelligence company under Alibaba Group to cooperate in the development of smart headsets, and related products were already under development.
2) Audio products.
The company's audio products can be divided into different types of: multi-speaker speaker, portable speaker, outdoor speaker TV audio, monitor speaker, home theater series, amplifier. In response to different consumer needs, the company's audio products have evolved into Edifier, HECATE, Huazai, Airpulse, Volona and other series.
The company's car audio products can be divided into: non-destructive series, quick assembly series, modification series, sound insulation series four categories, covering the upgrade of multiple components of the car audio system, including changing the set of speakers, coaxial speakers, non-destructive amplifiers and related sound insulation materials.
The company's microphone products can be divided into wired microphones, wireless microphones, head-mounted microphones, lavalier microphones, and car microphones according to different usage scenarios. Some products are equipped with professional capacitor microphone cores, a variety of pickup modes and other technologies.
3) Esports peripherals.
The company's gaming peripherals include: mice, keyboards, mobile phone radiators, and provide a variety of products to choose from for the different needs of gaming esports players.
The company's revenue structure has gradually stabilized, and the revenue of earphone products has become the company's main income. From 2018 to 2021, the operating income of the company's headphone products increased significantly year by year, and in 2022, the revenue remained basically stable due to the slowdown in market demand. The revenue proportion of headphone products has gradually increased from 40% in 2018 to more than 60% in the past three years.
1.2 Results and Financial Situation
The performance growth rate may usher in an inflection point. The company's total operating revenue increased from 8$8.1 billion to $23 in 20210.4 billion yuan, a slight decline to 22$1.4 billion. The company's net profit attributable to the parent company increased from 0$5.3 billion to $31.6 billion yuan, which slipped to 24.7 billion yuan, we expect a significant increase in 2023, mainly driven by the company's headset sales. The company's headset product line is very rich and cost-effective, and this year it has launched a number of popular products, ranking high in sales of products of the same category on online platforms such as Tmall and JD.com, with a high market share, coupled with the recovery of the TWS headset market this year after experiencing a downturn in 2022, the company's headset product sales have increased with the help of many favorable factors.
The company's profit margin level began to improve. From 2018 to 2022, the company's gross profit margin basically remained stable at about 32%, and in 2023, the company's gross profit increased significantly, mainly due to the increase in semi-finished products purchased by the company, the increase in raw materials and the reduction of labor and other costs.
The company's three-fee rate remained basically stable, and the R&D rate remained at 55% or more. In the past five years, the company's management rate, sales rate and R&D rate have basically remained stable, and the R&D rate has remained at 5More than 5%, reflecting the company's good management level.
2.1 The development trend of intelligent headphones
We believe that it is an inevitable trend for large models to move towards terminals, and the strategic position of headphones as an important carrier for terminal applications has been unprecedentedly improved. Looking back on the history of human-computer interaction, traditional interactive devices such as desktop computers, laptops and smart phones, etc., users interact by typing touch and other means, due to the limitation of the physical form of their hardware, to a certain extent, the separation between the device hardware and the user is strengthenedAlthough devices such as smartwatches and bracelets provide us with convenient means of health monitoring and information acquisition, they still lack comprehensiveness and independence in terms of functionality;AR and VR devices have also not been able to completely shake off the limitations of the screen.
From desktops and laptops to smartphones to wearable smart devices, all kinds of hardware are getting closer and closer to people in physical space, and the trend of technology intangibility is gradually becoming mainstream. Voice interaction is the most natural way of human-computer interaction, and relying on headset carriers is one of the best ways to realize the wave of A terminalization.
As an artificial intelligence terminal, the headset has the advantage of being widely popular and adapting to natural language processing. On May 24, 2023, iFLYTEK released the ** smart headset Nano series, and on June 29, 2023, the Impression AI recording and transcription conference headset was released, and the release of AI headsets has become an original trend. Looking back at Apple's growth trajectory in the mobile Internet era, Apple's mobile phone directly interacts with users and has massive interaction data, based on which the AppStore application platform is built, which eventually evolves into the Apple ecosystem. On October 25, 2023, Qualcomm launched the new S7 and S7 Pro-Gen 1 audio chips for headphones, speakers, and mobile computing platforms, which feature on-device AI capabilities for better audio personalization, and also support Qualcomm Seamless for better cross-device connectivity. As a non-sensitive, wireless terminal, AI wearable devices can help us access information and enjoy convenience. Headsets allow artificial intelligence to interact with the world through hearing, emphasizing a more natural way of human-computer interaction, especially natural language interaction, compared with traditional screen touch and other methods.
"AI+ headset" can be freely switched to access different large models. According to Qualcomm's "Hybrid AI ** Edge terminals, in addition to playing the role of traditional interactive entrances, are transforming into direct running lightweight large models to become a real edge AI platform, realizing that edge terminals can not only freely switch to access different large models, but also use their own large models to build their own platforms. Among the edge AI terminals, compared with mobile phones and speakers, the portability of headphones is highlighted, and it may become the fastest growing edge AI terminal at the current stage. The headset is able to connect different terminals and models as a carrier, and gradually adapts to individual needs, becoming the most suitable device for this function.
We predict the upgrade path of the headset: Bluetooth accessories - wifi networking - mobile signal networking, and finally become an independent intelligent assistant that can be used anytime and anywhere. Currently, headphones are mainly connected via Bluetooth, which means they must be connected to the cloud via a mobile phone or computer before they can interact between AI and humans. In the future, headphones may evolve towards wifi connectivity and eventually mobile internet. If the wifi function is implemented, the headphones will be able to connect directly to the large model, allowing us to access the large model anytime and anywhere. In the process of importing the cloud model into the end device, mobile phones and computers are relatively easy to handle because of their large size and low energy requirements for chips. However, if you want to carry a large model on a headset, you need a chip with high computing power and low energy consumption. In addition, data storage is also an important issue to consider in the future development of headphones.
2.2 The market size of smart headphones is growing rapidly**
IDC data shows that from 2016 to 2021, China's smart headset shipments have increased significantly. Affected by the epidemic in the first half of 2020, China's smart headset shipments declined slightly, but the second half of the year was very soon**, with 96.1 million smart earphone shipments in 2020 and 130 million smart earphone shipments in 2021, more than twice as high as in 2018. According to the Prospective Industry Research Institute, China's headphone market has developed rapidly in recent years, and smart headphones are one of the main driving forces. On the one hand, mobile phone manufacturers have launched headphones with voice assistant function to match their mobile phone products, and on the other hand, major electronics manufacturers have equipped headset products with voice assistant activation function in order to cater to the trend of market intelligence. According to the Prospective Industry Research Institute, the growth rate of global smartphone shipments will remain at about 20% from 2021 to 2027, with shipments exceeding 1 billion units in 2025 and around 1.5 billion units in 2027.
2.3 Competitive landscape
The competition pattern of China's headphone market is relatively scattered, and the overall competition is fierce. As of Q3 2023, the CR4 of the Chinese mainland headphone market is 29%, which belongs to the low concentration oligopoly market. Among them, apples accounted for 12%;Edifiers accounted for 6%;Huawei accounted for 6%;Sony accounts for 5%, and on the whole, the industry pattern is relatively scattered, and the head companies have no absolute market share advantage. The hot-selling products of headphones are mainly TWS headphones, and Edifier and Huawei are the domestic head brands of TWS headphones. The average GMV of the CR10 is 23%, indicating that the headphone industry as a whole is in a stage of expansion, and competition may intensify further in the future.
When it comes to the TWS headset category, there is no absolute leading manufacturer yet. As of Q2 2023, the market share of TWS earphone manufacturers in China is 15% for Xiaomi, 14% for Apple, 13% for Huawei, and 12% for Edifier.
First- and second-tier mobile phone brand manufacturers account for a relatively large market share in the TWS earphone industry. In Q2 2023, the CR1 of the TWS industry has fallen, and Xiaomi has surpassed Apple to jump to the top of the market share, and the leading position in the industry may be reshuffled. As the only non-mobile phone manufacturer in the top five market shares, Edifier relies on its rich TWS earphone product line and extensive range distribution to occupy a place in the highly competitive market. Staying ahead of the curve in the AI-native era is critical to the next phase of competition for vendors. Edifier has an early layout in the field of AI native headphones, and in 2021, it will cooperate with Xiaodu to launch the LOLLIPODS headphones equipped with Xiaodu assistant, and has accumulated relevant product experience.
From the perspective of industry competitors, the positioning of Huawei headphones covers low, medium and high-end, with ** ranging from 199 to 1499 yuan;Xiaomi headphones tend to take the low-cost route of cost performance, and the Xiaomi Air 2 SE product it offers is only priced at 89 yuan as a TWS productSony's flagship products are positioned in the mid-to-high-end, which is significantly different from the price range of Xiaomi's mainstream products.
3.1 Edifier has a significant competitive advantage
3.1.1. Strong new products march into a new track in the audio field
1) Bluetooth hearing aid and hearing aid headphones.
According to WHO's World Report on Hearing, by 2050, nearly 2.5 billion people worldwide, or one in four people, will have some degree of hearing problems. Without action, at least 700 million of them will need access to ear and hearing care and other services. As a sound amplification device, hearing aids can effectively amplify external sounds and improve the hearing ability of people with hearing impairment. Therefore, hearing aids have a large market potential and audience.
Edifier has previously developed three consumer-grade assistive hearing headphones: Assistive Hearing No. 1, Assistive Hearing No. 1 No. 2, and Assistive Hearing No. 3. The hearing aid series products have built-in intelligent hearing assistance chips and integrate a variety of hearing assistance algorithms to compensate for sound. Combined with the hearing curve of the app-assisted hearing fitting, the personal hearing loss compensation plan is accurately generated. Assistive Listening No. 3 is equipped with a dual acoustic suppression method of acoustic suppression algorithm and light-sensing acoustic suppression design, which can judge the wearing status of the earphones in real time, suppress the acoustic noise, and protect the wearer's hearing. Edifier has also recently obtained the Class II medical device certificate issued by the NMPA (National Medical Products Administration), and has launched two medical device-grade Bluetooth hearing aid products on the shelves of Edifier Medical Devices JD.com. Adhering to Edifier's profound technical accumulation in Bluetooth headsets, its Bluetooth hearing aid products have advantages over products with similar prices on the market in terms of sound quality, resolution, battery life, etc.
2) Open-back headphones.
Open Ear Headphones (OWs), short for Open Wearable Stereo, means Open Wearable Stereo System. Because they do not invade the ear canal, these headphones are more suitable for use in fitness sports, and can also cope with more outdoor scenes, such as city walk, going out to climb, night running, etc. In recent years, bone conduction headphones are a type of open-back headphones. In late October 2023, Edifier released two headphones, the Comfo Fit and Comfo Run, which are the brand's first open-back headphone products.
The Comfo Fit and Comfo Run are both air-conduction headphones. Unlike bone conduction headphones, which vibrate the bone and directly transmit sound to the ear without passing through the eardrum, air conduction is to add the traditional air propagation method to beamforming technology to achieve directional sound transmission. Compared with bone conduction, air conduction uses directional sound transmission, and the transmitted sound quality is clearer and more natural, and it is not easy to leak sound. At the same time, it is also different from bone conduction Bluetooth headsets, and there is no pain of wearing it for a long time. It is more comfortable and stress-free to wear for a long time.
Report total: 31 pages.
Featured Report**: The School of Artificial Intelligence