On September 27, in early autumn, a press conference was held at the Qingdao International Conference Center by the sea. The audience was packed. A middle-aged man trotted up to the podium, drawing cheers. The man was wearing a T-shirt and casual pants, and had a gentle temperament. No one would know that he was a billionaire if he walked down the street dressed like this.

This is the first time PICO has spoken out in the form of a press conference 13 months after being acquired by Byte. With the newly released VR all-in-one machine PICO 4, the head Zhou Hongwei pointed out the latest VR industry trends and pointed to Byte's future ten years later.

Zhou Hongwei

A year ago, in the Beijing office, when Zhou Hongwei was about to announce the news that PICO was going to be sold to ByteDance to his fellow colleagues, he could not hide his tears and almost choked up. Zhou Hongwei cried like this, and many people in the audience also shed tears - an era of PICO was about to end.

After all, Zhou Hongwei didn't want to sell it - after six years of hard work and a group of brothers, they saw that the company had already taken the top spot in the country. Even without talking about business, there was emotional connection.

Besides, PICO is a big deal for Zhou Hongwei, but for Byte, PICO is just one of many products. After entering Byte, what should I do? What should we do, brothers? There is no answer for Zhou Hongwei in 2021.

However, PICO is almost ready to be sold. Without selling, Zuckerberg, who is far away in the United States, cannot allow a company to manufacture Oculus Quest 2 while selling its own VR equipment for a long time.

It makes no sense both emotionally and rationally. Goertek, the parent company of PICO, might as well cut off its tail and survive, throw out PICO, stay on good terms with Meta, and still get a lot of cash.

No one wants to be the broken tail, including Zhou Hongwei, even if his next employer is ByteDance.

Over the past few years, the wealthy ByteDance has been adept at using its "money power" to rapidly expand its presence in the Internet sector. The purchase of PICO itself is a bit like a gamble.

Interestingly, two years ago, PICO had already sought financing with a valuation of 1.5 billion. However, the entire industry was wailing at that time. Although PICO was a well-deserved leader, no one cared about it and the financing failed.

Therefore, PICO's key decision-maker, Goertek boss Jiang Long, found several government-guided funds in Qingdao and secured this round of financing, which also allowed PICO to completely leave behind competitors such as 3Glasses.

Therefore, when Byte finally bought PICO for 9 billion, everyone was shocked.

Someone told Leifeng.com that it was Jiang Long who directly found Byte boss Zhang Yiming. The two bosses sat at the table and with a stroke of a pen, a deal of 9 billion yuan was quickly concluded, which was 6-7 times higher than PICO's previous valuation.

But the version closer to the truth is that the success of Meta Oculus triggered the pursuit of PICO by the two giants, ByteDance and Tencent. The continuous price increases by both parties caused PICO to increase sixfold in less than a year with almost no change in its fundamentals. In the end, ByteDance had the last laugh.

However, Tencent did not give up its efforts in the VR field. Instead, it acquired the gaming phone company Black Shark for RMB 2.6 billion, and Ma Xiaoyi of Tencent Interactive Entertainment was in charge of the matter.

However, this last acquisition by Tencent born in the 1930s was stranded due to various reasons. According to Leifeng.com, Tencent shelved the acquisition of Black Shark after giving Black Shark an early acquisition payment and a bridge.

This move is similar to Alibaba’s investment in Merit back then, but it also has its own merits. Regarding the chaos and abandonment of the acquisitions of Tencent VR and Black Shark, please pay attention to Leifeng.com’s follow-up reports.

Jiang Long

Back to the acquisition of PICO, which even bypassed the investment departments of both parties; when the deal was finalized, not only ByteDance but also PICO was in an uproar. Some people said that Zhou Hongwei even knew about it after the fact, but he could only suppress his surprise and accept his fate.

Regardless of whether the rumors are true or not, the largest acquisition in China’s VR industry has long been settled. Time has passed, PICO has been flying solo for more than a year, and Byte's achievements in the field of VR should also begin to be seen.

PICO 4 is the first new product after PICO was incorporated into ByteDance, and it is ByteDance’s first shot in the VR field. However, there seems to be a lot of uncertainty for ByteDance to get this “good start”.

2022 is not a good year for VR.

Oculus, which shipped nearly 10 million units last year, has also lowered its expected shipments this year by about 30%.

But ByteDance was not convinced. "Regarding PICO , ByteDance has set a stocking target of 2.5 million units for upstream companies , " said Xu Hong, a company executive close to PICO.

Paying attention to shipment volume is indeed the core logic of the VR track - where there are subsidies, there is sales; where there is sales, there is a market; where there is a market, there is the possibility of creating content and ecology.

In short, you can conquer the world by delivering goods in quantity. To spread the volume, how could Byte, who is well versed in Internet gameplay, not know that burning money is the most effective method?

Some people in the industry have done some calculations. If you include the customized screen of PICO4, the cost of the ignored structural parts, and the roughly 70% yield rate of PICO 4, Byte will lose nearly 30% for every device sold by PICO 4. 3000 yuan. In other words, if you sell one PICO4, you will lose money on each one.

Huang Feng, CEO of YVR, once complained to his friends: "If I price my equipment close to cost, it would still cost more than 4,000 yuan. But PICO, on the other hand, prices it directly at more than 2,000 yuan. Tell me, how do I do this business?"

Huang Feng

Some people may know that in addition to being the CEO of YVR, Huang Feng is also the founder of Wangyu Internet Cafe and is known as the godfather of Internet cafes. With the support of the Internet cafe business with strong income, Huang Feng has a good family background, but he cannot compete head-on with ByteDance in the price war. With the release of PICO4, where should local VR manufacturers go? Leifeng.com will report on this. All industry players are welcome to add this The author's WeChat is yongang77.

Yujie, an insider, made another calculation for Leifeng.com:

As of October 2022, PICO has a team of more than 2,000 people (not including public employees). Based on the average salary in the VR industry - a total of 500,000 yuan per person per year - plus five social insurances and one housing fund, the annual expenditure on human resource costs alone is 2 billion yuan.

Byte’s huge subsidy to PICO is also on the order of 2 billion.

ByteDance’s spending on content and marketing costs such as celebrity endorsements and advertising also exceeds 2 billion.

As for the subsidy for hardware costs, it is far more than 2 billion.

"PICO will spend tens of billions a year. How can we keep up with such money burning?" Yu Jie said with a hint of helplessness.

However, even if money is spent to make equipment, and although the money burn is unambiguous, the sales of PICO 4 are far lower than Byte and the public 's expectations .

Several sources close to PICO, including company executives and dealers, told Leifeng.com that as of October, PICO 4 had shipped only 60,000 units, of which 46,000 were sold, leaving a 30% backlog in the warehouse. .

PICO4 sold 16,000 units on the first day of sales, and 10,000 units on the second day. It then continued to decline and currently maintains a daily sales volume of 600 units.

Xu Hong told Leifeng.com: "Whether a piece of hardware can be popular mainly depends on the sales volume at the beginning of the release - there are usually big PRs and big discounts at the beginning of the release, and users are willing to try new things. If the sales volume does not increase in the first month Go, it will be difficult down there.”

Of course, an order quantity of 2.5 million units does not necessarily require 2.5 million units of equipment, but 1.5 million units must be sold anyway. At this speed, it will take Byte at least 100 months to complete the previous KPI of 1.5 million units .

Not only PICO 4, but also PICO 3, there are still 600,000 units in stock in the warehouse.

Another problem that must be faced is that for VR, Qualcomm's next-generation chip will be updated once a year, which means that one year later, PICO will definitely integrate the next-generation chip and launch the next-generation product.

However, the inventory has not been sold out yet and new goods are about to be delivered - how can PICO's senior management not be anxious?

Seeing this, you may have discovered that the crux of PICO's current difficulties lies in Byte's 2.5 million KPI for the next year.

How was this 2.5 million figure calculated? Why is it so different from reality? After many investigations, Leifeng.com found that the root cause of the problem lies in PICO's previous generation product - PICO Neo3.

The previous generation Neo 3 actually sold 500,000 units. This number is very impressive, and other domestic VR manufacturers are far behind. It also gave ByteDance executives a lot of confidence - the previous generation sold 500,000 units, and PICO 4 has a big production and big publicity, so it is easy to double the sales.

What's more, Neo3 has not been rolled out overseas. If it were, wouldn't the price have to double again?

The goal of 1.5-2.5 million is not entirely unreasonable when viewed this way.

However, in the overseas market, it is obvious that Byte has overestimated its capabilities and underestimated the actual battle situation. With PICO in its current state, it is almost impossible for this generation of products to sell the same amount of sales as domestically. Regarding the pitfalls and various nonsense encountered by PICO and Feishu in their overseas expansion, please pay attention to the follow-up reports of Leifeng.com.

More importantly, the actual water content in PICO Neo 3’s sales of 500,000 and 500,000 is too great.

The PICO Neo 3, which was released in May 2021, was initially priced at 2499-2999. However, this price is considered too expensive by many new users who have not yet entered the market.

Therefore, PICO’s initial idea was to sell at a reduced price, but this price was actually lower than the cost of BOOM, so there was no room for price reduction.

Leifeng.com learned that Zhang Yiming put forward three requirements to the PICO team: 1. The price of PICO Neo 3 cannot continue to drop ; 2. It cannot rely on promotions; 3. The DAU of Neo3 must also be higher than 50%.

With such a stipulation, Zhang Yiming knew that lowering the price again and again, or even lowering the price below cost, was an unhealthy move in itself. On the one hand, it seems too bottomless, on the other hand, it is not conducive to cultivating users, but will affect the release of subsequent products.

At the same time, what Zhang Yiming wants most is the ecosystem and platform. ByteDance does not want users to buy devices and leave them at home to collect dust. Therefore, DAU has become an important consideration for ByteDance's VR strategy.

However, no matter how good the ideas above are, they cannot withstand the chaos at the execution level below.

Although the price cannot be changed, PICO can offer cashback in other ways: if you check in for Neo 3 for 180 days after its launch, you will get a 50% discount on the purchase price. This is a two-birds-with-one-stone move, which not only ensures retention but also offers cashback to attract users. After a few rounds, the KPI is achieved.

PICO Neo 3 will return half of the purchase price within 180 days after opening

On the other hand, Neo 3 supports 30 days of free returns, allowing many early adopters to return the product after use. Many of them are free buyers who return the product after 29 days and then place another order, making it almost "free".

Goertek became the biggest winner: for each returned machine, Goertek could make 600 yuan by checking whether the machine was damaged and repackaging it. This money would naturally come from the marketing expenses of Neo 3.

Although 600 yuan is not much, by selling a Neo 3, Byte may not necessarily earn 600 yuan.

An insider said that the return rate of Neo 3 can reach 35%. This also explains why there are still more than 500,000 Neo3 in stock.

How could there not be problems with a corporate strategy based on data like this?

Back to PICO 4, since the shipment volume has been set, it must bite the bullet and sell at a lower price. However, with such dismal sales, the only way out is to make a bold move - further reduce the price.

On Xianyu, the price of PICO 4 is now around 2,200 yuan, and the price of Neo 3, which was released a year ago, has dropped to 1,100 yuan.

According to the logic of giving at least 15% space to the final retailer, 2,200 yuan is actually the purchase price of the final retailer.

On the one hand, this figure shows the users' psychological pricing for PICO products; on the other hand, it also shows that dealers who have stockpiled goods have begun to make concessions - or even clear out their inventory at a loss.

Byte wants to make PICO 4 popular again, and the nearest opportunity is this year’s Double Eleven, and in terms of pricing, it should be competitive with salted fish prices to make it attractive.

However, if the price is reduced again, it means that new investment will have to be increased. ByteDance is now facing a situation of "do it or not" - if it does not continue to spend more money, sales will not increase.

But having said that, VR is not the only money-burning business in Byte’s hands. Does Byte still have money to donate to VR? In other words, does Byte still have the courage to continue to spend money on VR? Even if you have this courage, if you can't solve the problem of breaking out of the early adopter user circle, what's the point of burning money if you can't break out of the circle? We can't just keep this group of enthusiast users tossing things back and forth.

These also leave many huge unknowns for PICO.

If in terms of sales, PICO is also protected by Byte’s “money power”, then in terms of content ecological construction, Byte’s simple and crude strategy does not seem to be that easy to use – burning money can help products to be quickly mass-produced, and content Ecological construction does not happen overnight .

PICO builds its content ecosystem through two methods: one is fitness and the other is video.

Regarding fitness, PICO focuses on VR fitness experience in small spaces, and also cooperates with some offline stores with the intention of opening up VR scenes in new ways.

However, many practitioners have expressed doubts to Leifeng.com about ByteDance's VR fitness strategy: When we work out, we wish the equipment on our bodies were as light as possible - but wearing a headset weighing more than a pound while working out doesn't sound very realistic.

And as the epidemic gradually ends, the demand for online fitness has gradually been replaced by the demand for offline venues.

Leifeng.com learned that ByteDance does not have much experience in fitness and has no definitive answer on how to do it.

What truly carries ByteDance’s expectations for the VR ecosystem is ByteDance’s killer feature - video.

On one hand, ByteDance has the national-level video content platform TikTok; on the other hand, ByteDance also has its own secret recipe, the recommendation algorithm. If anyone can make videos successful in VR, it must be ByteDance.

But the premise is, is the video path really feasible?

As a lesson learned from the past, Oculus downgraded video from the first-level strategy to the second-level strategy five years ago.

A person close to Oculus told Leifeng.com: In the few years just after being acquired by Facebook, Oculus sales have been insufficient and unable to compete with Meta.

During that most difficult time, people inside Oculus were in a panic, and many people felt that if the next product still failed to take the market by storm, the team might even be laid off as a whole.

When the time came to 2019, when Oculus Go was launched, Oculus learned from the painful experience and launched a top-down strategic focus on "what application scenarios is VR suitable for?"

In this discussion, Oculus had the courage to overturn all previous cognitions and re-analyzed the use scenarios of VR. In the end, they came to the conclusion that in the next 1-2 years, it will focus on gaming scenarios, in 3-5 years, it will enter the office scenario, and in 5 years, it will become a general computing platform .

And video is no longer their main research direction.

Story Studio, owned by Oculus, launched a VR short film "Henry" in 2016. This VR short film describes a little hedgehog looking for friends. It uses 6DOF technology and won the Emmy Award that year, becoming the first to win the Emmy Award. Emmy Award-winning VR film.

VR short film "Henry"

However, although the video quality is high, the "reusability" of the video is too poor - users will not watch the same video every time they put on Quest, which also makes VR video a high-input, low-output thing in the Oculus system.

Before long, despite its good reputation, Story Studio was inevitably laid off as a whole department. This has also become a manifestation of the gradual decline of video on Oculus.

Byte is good at making videos, so it naturally believes that videos can be a breakthrough point in combining itself with VR - looking for scenes with functions is a taboo in corporate strategy.

In order to embed videos deeply into VR, Byte invited several generals from Douyin. Among them, Ren Lifeng (nicknamed "Juan Juan") is a highly anticipated player who is even said to be the most likely to succeed Zhou Hongwei.

Ren Lifeng

Ren Lifeng has made great contributions to the rise of Douyin. He is well versed in the construction of content ecology. He has a high status in the world and is highly popular in the company.

In the competition with Kuaishou, Douyin entered the market late and had no first-mover advantage. Ren Lifeng found many heavy users of Douyin and built up the content ecosystem of Douyin little by little by operating the community. Starting from the subtle details, he laid the foundation for Douyin.

There are even rumors that Ren was later transferred to Xigua Video because he was too successful, so he was simply transferred to a new business to "open up new land." Byte wanted him to make a career in the mid-length video battlefield and compete with Bilibili, which is not an easy opponent. Over time, Xigua's "siege" failed, the top management lost confidence, and the "food and grass" support naturally gradually slowed down.

Ren Lifeng likes challenges, but no one wants to lead the team to do useless work. The heroes have no place to use their talents. Over time, the former "famous generals" have become the "lying flat faction" of ByteDance in the rumors.

But of course ByteDance understood Ren Lifeng’s strength, and transferred him, Song Binghua, Douyin’s variety show director, and Wu Zuomin, Douyin’s entertainment director, to the VR team, hoping they would bring Douyin’s successful experience to new platforms.

Regarding Ren Lifeng, Leifeng.com has communicated with several practitioners close to PICO. They all said that although Ren Lifeng has not been exposed to the VR content ecosystem before, he is learning quickly.

There is another anecdote about Ren Lifeng: PICO 4 has just been released, and many people in the industry are buying it for freshness. One of them criticized the design of PICO's new product in his circle of friends after using it.

When Ren Lifeng heard about it, he went to find this person directly. The latter was not polite and complained to Ren for 2 hours. After hearing this, Ren Lifeng was not only not angry, but also made an offer to this person, which was quite the courtesy of a virtuous corporal.

Coming off the fierce battlefield of short videos, Ren Lifeng may see a barren wasteland with no grass growing on the track of VR content.

Some practitioners said that in the past two years, 90% of users may be experiencing VR for the first time, so the first impression of VR devices is very important. "It is very important to push the right application at the beginning. If it doesn't work, it will take 5 years to refresh users' perception of this product."

In addition, veteran industry insider Chen Wei told Leifeng.com that Meta has acquired many VR content producers, which has put PICO in a passive position. All the content developers worth buying have been bought out - if it wants to break out on its own, it has to start from scratch.

If first-party applications determine the user's first impression of the VR device, then third-party applications determine how long the user stays in the VR device. At the same time, third-party applications are also an area that better reflects the vitality and confidence of external developers. In this regard, Byte still lags far behind Oculus.

Before Oculus was acquired, it held Oculus Connect (OC) for developers every year, which is now Meta Connect.

Liu Fei, a former employee of Oculus, has participated in OC every year since 2014. After the first two years of the conference, many Chinese developers came to Oculus to chat, and their enthusiasm was high.

But as the VR bubble gradually burst, VR content developers began to quickly exit the market. Every year during OC, there are fewer and fewer Chinese developers around Liu Fei. By 2018, only three Chinese developers were able to find Liu Fei.

In just a few years, Liu Fei has witnessed the rise and fall of the domestic VR content industry, and has also closely felt the developers' transition from hope to disappointment. Talking about the ups and downs experienced by developers, Liu Fei couldn't help but sigh.

A VR content practitioner also told a similar story to Leifeng.com: From 2015 to 2019, before the outbreak, he would visit application developers as a routine every year.

In the early years, the atmosphere for VR content development was very hot. Some developers huddled in a room in a private house to develop VR games, eating takeout all day and having dark circles under their eyes, but they were still full of energy.

But the VR dream was shattered, and VR developers went their separate ways. Even today, seven years later, the pain has not yet subsided.

In a sluggish environment, it is not easy for application developers to regain their confidence.

Sales are in vain and content is in vain. PICO is unwilling and unable to become another money-burning war of attrition by Byte.

It is true that Zuckerberg spent tens of billions of dollars on VR to bring Oculus to market - ByteDance does not have that much money, and it is very unlike Zuckerberg who has been passionate about VR for ten years. .

However, today, the situation in PICO has not reached the point of no return. Double Eleven and the World Cup have provided many opportunities, but for Byte, there are still many problems that need to be solved.

The most superficial problem is also the first "big mountain" in front of PICO - eager for quick success and quick gains, but too ambitious.

Simply put, the execution layer unilaterally pursues KPIs and numbers, which leads to the distortion of corporate actions and ineffective waste of resources without a deep understanding of corporate strategy.

In the case of Neo 3 mentioned above, Byte made a major miscalculation of the market, which indirectly led to PICO 4’s aggressive marketing strategy.

This reckless behavior is also reflected in many aspects of ByteDance's VR business. The timing of the release of PICO's new products has changed again and again.

At the beginning, the release time set for PICO 4 was June 2022. However, this time is simply an impossible task for PICO - so the release time can only be delayed again and again. In the end, it was Yang Zhenyuan's death order. The launch time of PICO 4 must be in time for Oculus Quest. Ahead of new product release.

It was finally released two weeks before the release of Quest Pro, but at least in terms of content matching, it was chaotic and disorderly, which reflected Byte's panic in VR strategy.

ByteDance’s “big enterprise disease” in VR has also formed the second “mountain” in front of PICO, which is indecisive and has confused ideas.

Amidst the illusion of "struggling forward" all the way, Byte's senior management is not firm enough in the decision-making of PICO development. Having both hands on marketing content leads to weak hands on marketing content.

Although ByteDance spent a lot of money, when it comes to PICO 4, the sales started off well but ended badly. With a lot of money spent on large-scale promotion, the data was barely acceptable. With less promotion, the popularity dropped rapidly. The content was also lackluster. The only exciting collaboration was "The Three-Body Problem", but it was just an IP and had not yet been produced.

When the industry heard that PICO had obtained the authorization for "The Three-Body Problem", they all thought that PICO had obtained the "golden cudgel" of content.

It is true that "Three-Body" is like a "golden cudgel". Although it is a "magic weapon", too many people have tried it and too few have achieved results. To wield this 13,500-pound stick is not as simple as people think.

Jiang Nan, a practitioner who is well versed in content, told Leifeng.com that the problem with "The Three-Body Problem" is that compared with other science fiction works, "The Three-Body Problem" does not have an iconic derivative - such as a lightsaber, a spaceship, or a power armor - which makes it very difficult to visualize the IP.

The iconic lightsaber from the movie "Star Wars"

In addition, the excitement of "The Three-Body Problem" lies in Liu Cixin's wild and unconstrained hard science fiction imagination. Things that are easy to express with words are not necessarily better expressed with images. The VR version of "The Three-Body Problem" still has the risk of "flopping".

There are rumors that Byte is talking about cooperating with the copyright of "Three-Body" just to cope with the press conference. The actual producer is still undecided, and the word "eight" has not yet been mentioned.

To do 80% of both things means that neither of them is accomplished, which, rounded off, is roughly equivalent to "accomplishing nothing."

However, in the final analysis, we must talk about the last big mountain facing PICO, which is also one of the most important pain points in PICO's development path - there is no leader, and everyone is fighting on their own .

According to Ke Shiqi, a former PICO employee, after being acquired by ByteDance, PICO's staff expanded rapidly, from about 100 people to more than 2,000 people.

The team has been set up, but ByteDance’s VR business lacks a true “number one” to guide the direction and make the final decisions.

PICO founder Zhou Hongwei, Byte CTO Yang Zhenyuan, and TikTok contributor Ren Lifeng are all big names within PICO.

Yang Zhenyuan

And behind them, among the domestic teams alone, there are "PICO faction", "Tik Tok faction", "Xinshi faction" and other schools. Naturally, there are many power games and political struggles behind the scenes. I will not go into details here, and please look forward to subsequent articles from Leifeng.com.

There are also many branches overseas. Allen, a Silicon Valley practitioner, said that PICO's Silicon Valley department is divided into four departments: Sales, Studio, Pico Labs, and Mobile OS. Among these four departments, it is said that there are always conflicts between the R&D department and the business department, and the two sides look down on each other. PICO also has an office in San Francisco in the United States, which was established before ByteDance acquired it. This team is a product of the Goertek era.

The uneven internal power is also reflected in PICO's strategy of flooding the project landscape - according to a former ByteDance employee, ByteDance does not deliberately differentiate between the project ratings for PICO's various projects.

“They are all top priority,” the former employee said. “But this way, there is no priority, and there will be a lot of internal struggle for resources.”

There is even some overlap between different team projects. It is said that there is more than one team working on Avatar (digital avatar) within PICO. The business also overlaps, which naturally makes the contradictions more profound.

This confusion in team building is the main reason why PICO 4 falls short of expectations: without a top leader, it is impossible to finalize a clear product strategy; without a clear product strategy, the executive layer cannot utilize resources effectively.

If you don't climb these three mountains in front of PICO, it will be difficult to stay ahead on the VR track forever.

At present, Byte should give priority to its internal team rather than paying attention to PICO; what Byte needs now is to act boldly and resolutely.

Haste leads to mistakes, and mistakes lead to chaos.

PICO is eager to prove the importance of VR to ByteDance, and it is this eagerness that has led to multiple chaos this year.

After entering the VR market, ByteDance is targeting Meta, the world's strongest VR manufacturer, as its imaginary enemy. However, ByteDance's strongest enemy in VR is not Meta, but itself.

As a giant Internet company, ByteDance is accustomed to the traffic and market dividends brought by its money-spending Internet strategy, and it is inevitable that it is dazzled by past victories.

However, using Internet thinking to make hardware is a taboo in the industry.

When entering a new field, large Internet companies often first use "saturation bombing" - investing people and money regardless of cost, with the number of users on the platform as the first consideration, and monetization as the second consideration.

However, the production of Internet products has no marginal cost and can be infinitely replicated. The cost of the product will not be a constraint on the huge user pool. In this case, the more people there are, the more money you make.

Physical hardware is different. Every time a unit is sold, there is a corresponding cost. At the same time, there are many other factors to consider, such as production line costs, supply chain capacity, and distributors. These are problems that Internet manufacturers do not face at all. Expanding production is not just about investing people and money.

Misestimating the difficulty of the hardware business is the fundamental reason why many major Internet companies have failed in hardware: the Dali Learning Light of Byte is far away, and OFO, which was once a hit, is far away. There have been many failed cases in the past. If PICO continues to do this, it will repeat the mistakes of its predecessors.

Relying on a price that is far lower than the cost of materials, Byte is confident that the price is low enough to continue the success of Neo 3, or even go further, so it makes great progress and expands production.

However, they fail to see that the domestic VR market is slow to respond. Many people tried Neo 3, but few became die-hard fans. One year later, only a few of them were willing to pay for PICO 4.

If it is an Internet product, Byte can call its troops back at this time and stop losses in time. However, in terms of hardware, stop loss is not so simple. The production lines are still rotating, and a large amount of inventory is accumulated in the warehouse. If it is not sold, it cannot be converted into cash, and the cost is still increasing.

There are countless Internet companies that lack respect for hardware and eventually fail due to inventory and huge consumption.

At the moment, PICO has immediate worries and long-term worries. Sales in nearby areas rely on price cuts and subsidies, and there is still the possibility of regaining ground. In the distance, PICO has to climb three mountains to gain a long-term seat on the VR track, to compete for the opportunity , and not to regret it when the next generation of computing platforms arrives.

The author of this article, Wang Yongang, has long been concerned about games, XR, graphics, and the metaverse. In the future, Leifeng.com will also conduct in-depth research on PICO and major domestic XR manufacturers, and continue to launch exciting in-depth content. There are still a lot of gossips in stock, welcome to tease ~ WeChat: yongang77

(Yujie, Chen Wei, Xu Hong, Liu Fei, Jiangnan, and Ke Shiqi are pseudonyms in this article)