nyslfriends Chapter 401 Developing MP3 Players
Chapter 401 Developing MP3 Players
January 26, 2001, 9:00 AM.
The conference room at Xinghuo Group was filled with people on both sides of the conference table. Ling Yun sat at the head of the table. To his left was Chen Zhongming, and to his right was Ma Baoguo. Further along were Li Mo, Zhao Weiguo, Wang Jianguo, Ni Guangnan, and Jiang Feng. Chen Lingling sat in a corner, a notebook open in front of her. The curtains were half-drawn, blocking the eastern sun, making the light in the conference room soft and not glaring.
Ling Yun looked around, then picked up a black tote bag from beside his feet, unzipped it, and took out three items, placing them on the table. The first was a white iPod. The second was black, slightly larger than the iPod, with a plastic casing and the "MP3 Player" logo printed on it. The third was silver, thicker, resembling a lighter, and printed with "MPMan." He placed the three items side by side in the middle of the table, making sure everyone could see them.
A few seconds of silence filled the conference room. Ma Baoguo leaned closer for a look and asked, "President Ling, what is this?"
Ling Yun said, "MP3 players. For listening to music. The first one was Apple's, which hadn't been released yet; Steve Jobs sent it to me. The second one was made in Huaqiangbei; it was already being sold in 99. The third one was from Sehan in South Korea, which was also being sold. Today's meeting has only one purpose: we also want to make MP3 players."
He picked up the iPod, held it up, and spun it around. The white casing reflected the light, and the scroll wheel gleamed. "This Apple one, with a 5GB hard drive, can store a thousand songs, sells for $399. This one from Huaqiangbei uses flash memory, 128MB of flash memory, sells for 1400 RMB. This one from Sehan, also uses flash memory, 128MB, sells for $199." He put the three items down, pressed them against his hands, and looked at everyone.
"We've always made flash memory. Xinghuo Electronics' USB flash drive production line uses flash memory. We can also make the 128MB version that Sehan makes. We can also make 256MB and 512MB. 512MB can store one or two hundred songs, which is enough for the average user. Users won't store a thousand songs in their music player; they can't store that many, and they can't listen to that many. A hundred or so songs are enough."
He picked up Sehan's, weighed it in his hand, and put it down. "Sehan's is too thick and too heavy, and it uses a plastic casing, so it feels terrible. We need to make it smaller, thinner, and better looking. We can also make it better than the iPod because flash memory is smaller, lighter, and more energy-efficient than a hard drive. That's an advantage."
Ma Baoguo picked up the Samsung MP3 player, turned it over to look at it, and asked, "President Ling, can we produce this flash memory ourselves?"
Ling Yun said, "Yes, we can. With a little modification, we can make MP3 players from our USB flash drive production line. We have our own main control chip, an ARM architecture, which Li Mo is working on. For the screen, Xinvino will be able to mass-produce small-sized OLEDs next year, in color, better than the monochrome ones used in iPods. Desay can supply the batteries. Xingda can make the casing. It's all our own supply chain. We can keep costs down."
Ma Baoguo nodded and put the MP3 player down.
Ling Yun took out another item from his bag—a silver USB flash drive, half the size of an MP3 player. He placed the USB flash drive next to the Samsung MP3 player for everyone to see. "This is a USB flash drive, and this is an MP3 player. The USB flash drive is half the size of the MP3 player. Why? Because the USB flash drive only does storage; it doesn't have a screen, buttons, a battery, or audio decoding. The MP3 player does all of those things, so it's large. But we can make it small. How small? Half the size of this. Half the size, and users will be willing to carry it with them."
He paused, looked around. No one spoke.
Ling Yun looked at Li Mo and said, "Li Mo, you'll handle the R&D. Use an ARM main control chip and our own audio decoding chip. For the software, use the embedded Xingchen system, trim it down to only music playback and file management. The interface should be simple, with few buttons, so users can figure out how to use it without reading the manual."
Li Mo jotted down a few notes in his notebook, then looked up. "President Ling, how much flash memory do we need?"
Lingyun said, "Let's start with 256 Mbps. It's cheaper. Next year, we'll use 512 Mbps. The year after that, we'll use 1 GB. User demand will increase, and our capacity will have to increase accordingly."
Li Mo nodded.
Ling Yun looked at Zhao Weiguo and said, "You handle the sales. Do both domestic and international sales. Use the Xingguang brand and sell in computer malls, digital malls, and online stores. Set the international price at $199 and the domestic price at RMB 999. That's half the price of Shihan, two-thirds the price of Huaqiangbei, and half the price of Apple. The goal isn't just to be cheap, but to make it affordable for consumers."
Zhao Weiguo jotted down a few notes in his notebook, then looked up. "President Ling, how should we establish the distribution channels?"
Ling Yun said, "Start by expanding into first-tier cities: Beijing, Shanghai, Guangzhou, and Shenzhen. Find two or three distributors in each city, set up demo units, and let people try them out. They can buy after trying them. We'll also do online sales, on the Xinghuo official website and Amazon. Prices will be uniform; no discounts, no promotions."
Zhao Weiguo nodded.
Ling Yun looked at Ma Baoguo and said, "You handle the production. The casing, battery, flash memory, main controller, and screen will all be made in China. It's not that we can't use imports, but we'll avoid using them if possible. Using domestic products means lower costs, a more stable supply chain, and less fear of being cut off."
Ma Baoguo asked, "Mr. Ling, should the outer casing be made of plastic or metal?"
Ling Yun thought for a moment and said, "Using a metal casing, aluminum alloy, and a frosted finish will give it a more premium feel. Except for the memory, which is inferior to the iPod, we are better than it in every other aspect."
Ma Baoguo nodded.
Ling Yun looked at Chen Zhongming and said, "President Chen, you'll be in charge of overall coordination. Oversee the R&D, production, and sales lines. Report progress weekly, and raise any issues immediately. Address them if you need to, and if you can't, come to me."
Chen Zhongming jotted down a few notes in his notebook, then looked up. "President Ling, what's the timeline? When will the prototype be ready?"
Ling Yun said, "We have three months of R&D time. We'll have an engineering prototype by the end of November, small-batch trial production by the end of December, and official launch by the end of January, with distribution before the Spring Festival. The Spring Festival is a peak season for consumption; users have money in their hands and are willing to spend it. Buying it will also make them look good as gifts during the New Year. This is an opportunity."
Chen Zhongming thought for a moment and said, "The research and development time is a bit tight."
Ling Yun said, "It's okay, I will work with the R&D team, break down the R&D into multiple lines, carry them out simultaneously, and coordinate with multiple departments to conduct joint R&D."
Chen Zhongming did not speak again.
Ling Yun looked around and asked, "Is there anything else?"
No one spoke.
He stood up, put the three MP3 players away, and put them back in his bag. "Then let's adjourn the meeting! Li Mo, come to my office for a moment."
Soon Ling Yun and Li Mo arrived at the office. Ling Yun poured Li Mo a glass of water, then sat on the sofa. "Li Mo, I want to open source both the MP3 hardware and software."
Li Mo was taken aback and asked, puzzled, "Why? We've worked so hard on research and development, invested money and resources, only to open-source it to others and let them steal our market share?"
"Don't worry, let me explain. My idea is that we only focus on the high-end market and establish Starlight's high-end brand image. We don't rely on it to make money. We have the entire industry chain. After we open-source our solutions, manufacturers will need to use the products in our open-source solutions in order to achieve rapid and low-cost mass production. These include our screens, chips, decoders, flash memory, and even batteries and casings."
"In this way, our entire industrial chain has orders and is fully activated. Only by continuously producing and receiving new orders can the technology and processes of the industrial chain continue to improve, and our competitive advantage will become deeper and wider."
"If we cover high, medium, and low price ranges with our products, our sales will increase, and companies in the supply chain will receive a steady stream of orders." Li Mo still couldn't accept it.
Ling Yun patiently explained, "We can't possibly take over this entire market, because given enough time, manufacturers will all be able to squeeze into it. We need to stand with them and provide them with resources, not oppose them or engage in cutthroat competition in the market. Besides the benefits in the supply chain, I have other plans, but I won't go into them for now; we'll talk about them after they're successful."
Li Mo nodded. "So, what should I do?"
"Make sure the public version is good, both the software and hardware are good, so that manufacturers can take it, change the name and start production, and quickly launch it to the market."
"Okay, I'll go back and have a meeting with R&D to discuss it," Li Mo readily agreed.