Inspur Wang Endong: The arrival of the domestic era of IT industry

The outbreak and continuous fermentation of the “Prism Gate” incident triggered a strong emphasis on cyber security by the government, important industry organizations and even ordinary people. The resulting IT industry changes gradually became clear, “going to IOE”, “going to IOH”, “ The wave of IT localization... has become one of the hottest industry topics.

As a representative of domestic IT manufacturers, Inspur Group (hereinafter referred to as Inspur), which has always been calm and introverted, suddenly became high-profile, and announced a grand plan called "I2I" (IBM to Inspur, from IBM to Inspur), aiming to fully seize IBM. Customers of X business and BP (Business Partner) accelerated the achievement of the goal of “China Server Market NO.1”. After the announcement of this plan, it immediately aroused widespread concern and heated discussion outside the industry.

IBM, Oracle, EMC, Dell and other European and American IT vendors are gradually emerging, while domestic IT vendors are beginning to make great strides, and the industry's watershed is taking shape. But at the same time, doubts are constantly ringing: Can domestic brands take on the heavy responsibility? Can a truly domestic brand be formed under the policy dividend? ......

Wang Endong, chief scientist and CEO of Inspur Group, accepted an exclusive interview with China Economic Weekly to unveil the I2I plan and directly questioned and explained the future possibilities of Inspur and Chinese IT vendors.

Market change: "National advances and retreats"

According to the latest data released by Gartner, a well-known information technology research and consulting company, in the first quarter of 2014, the share of US manufacturers in the server market was significantly reduced. The market share of IBM, HP and DELL was compared with the same period in 2013. Declined by 11% to 38%, with IBM X servers dropping by as much as 25%.

In the same period, Inspur server shipments reached 80,929 units, with a market share of 19%, ranking first in China and fifth in the global market, up 288% year-on-year, making it the fastest growing player in the world.

Inspur's winning and domestic brands' market share is far ahead of foreign manufacturers, and both show a watershed in the development of the entire industry: the trend of “national advances and oceans” is obvious. Since last year, domestic IT vendors that have already landed in the capital market and even some related companies that are “far away” have become hot spots in the market. In the case of such a sluggish A-share market, the stock prices of the three listed companies of Inspur went all the way.

“The 'Prism Door' gives us a clearer understanding of information security. In the past, many people may not believe or threaten to use the safety risks of using foreign equipment, but Snowden smashed this window paper. It is pointed out that security risks are not only technically and logically, but the US government is actually doing so.” Ning Jiajun, deputy director and researcher of the National Information Center Expert Committee, told China Economic Weekly.

State-owned enterprises and government departments must not use the services of foreign consulting companies, the government encourages the banking and financial industry to abandon foreign high-end server products, and government procurement cannot purchase Windows 8 products... A series of confirmed and unconfirmed messages convey good news. However, the "Prism Gate" incident is only an opportunity after all. Whether it can incite the industry change or not depends on the strength, that is, whether China can really replace imports, whether products and services can meet the needs of customers.

"At present, local manufacturers already have quite a few technologies and products that can be at the same level as foreign manufacturers. They are completely capable of replacing foreign products, such as our server machines, network equipment, etc. Although it cannot be said that it is implemented on all products. Replacement, but not all users need the most powerful and best performance products. In most scenarios, our products are available. For example, most office computers in the company use office software such as Word, Excel and PPT. There is no need to pursue thin, small and high performance, but also to pay higher costs for this, just enough." Wang Endong said.

IBM to Inspur plan: never stop at the low end

Inspur is one of the earliest IT brands in China. In the 1960s, Shandong Electronics Equipment Factory, the predecessor of Inspur, began to produce computer peripherals and low-frequency high-power tubes. In 1970, China's first artificial satellite "Dongfanghong No. 1" used the transistors produced by Inspur as electronic components. So far, Inspur has broken or created a world record in the world of server servers 16 times.

At present, Inspur is already the largest manufacturer and solution provider of cloud computing core equipment in China, and has three listed companies: Inspur Software (600756.SH), Inspur Information (000977.SZ), and Inspur International (596.HK). With more than 11,000 employees, the Group's operating income in 2013 reached 45.1 billion yuan.

In May of this year, the launch of the "I2I Plan" once again pushed the wave to the cusp. “Inspur launched the I2I program for two main reasons: the localization trend and the complete business layout of Inspur.” Zhang Haitao, vice president of Inspur Group, told China Economic Weekly.

After the "I2I Plan" was announced, there were doubts that the wave could only replace IBM in the low-end product line. In this regard, Zhang Haitao said that the wave of alternative plans is not limited to the low-end, "Inspur can be replaced in the high-end general-purpose server field. Foreign brands, no matter from products, technology, or market data, have no problem.” He said, “At present, the I2I program has achieved remarkable results. In January-March 2014, Inspur’s partners increased by more than 1,000. The total number is about 5,000. To this end, Inspur's 2014 sales growth target has been raised from 80% to 100%."

Inspur’s “I2I Plan” is not a budding marketing strategy, but a strategic decision that has been brewing for a long time. On the one hand, localization has become an industry trend, and “Spring River Plumbing” is a good time; on the other hand, the wave has become more and more popular. The biggest bottom gas comes from the successful development and commercial use of the "Tissot K1" system.

The "Tissot K1" system is a key application host system independently developed by Inspur. This technology fills the domestic gap and also marks China as one of the three countries in the world to master the latest key application host technologies, and has realized the core equipment of national information construction. Self-controllable.

The key application host is a high-performance server with high performance and high reliability. It is an irreplaceable core equipment in the construction of key industries such as finance, telecommunications, government, energy and other national vitals. It should be said that the key application host system is the lowest-level technical foundation of the national information strategy, because host security is the core of the firewall and port devices.

However, China has long relied on imports in this area, and some high-end products are still embargoed against China. Relying on foreign brands not only has the risk of information leakage, but users also have to pay huge economic costs. According to authoritative surveys, the average selling price of key application host systems in China has reached 2.4 times that of the United States. For manufacturers, key application hosts are also the main source of profit for the server market. After the launch of Inspur "Tissot K1", the prices of many international manufacturers' products fell by nearly half.

Prime Minister promotes "cloud computing": the Chinese market will certainly be able to breed international companies

On July 26, Premier Li Keqiang visited the Inspur Group and said that his future visit will not only promote China's high-speed rail and China's nuclear power, but also recommend China's "cloud computing" to the global market. This is also the first public announcement by the national leaders. Push China's "cloud computing" to the world.

Premier Li Keqiang’s "commitment" can be said to stir up a thousand waves, and the wave itself has to wait for the daily limit. The domestic A-share cloud computing related stocks have skyrocketed for several days.

"In the PC era and the Internet era, we started a lot later than abroad, and more are in catch-up. But in the era of cloud computing and big data, including the wave, many local companies attach great importance to this development. We The gap with foreign companies is not that big, at least it can be said that at the same time saw the opportunity, and began to run, this should be said to be the first time since the development of the information industry." Wang Endong said.

Although there are still many disadvantages and shortcomings of Chinese local companies compared to the rich foreign giants, there is no doubt that there is a huge domestic market capacity and huge consumption power. China has become the world's largest market for PCs, tablets and smartphones. It is only a matter of time before China becomes the world's number one server and mainframe market. Such a broad market is enough for domestic companies to become the world's leading international companies.

"China's market is too big. If a company can succeed in the Chinese market, then it will certainly have the strength to become a world-class enterprise." Wang Endong said, "The Chinese market has very fertile soil, but it must become a local enterprise. The soil. If our policies can continue unswervingly, it will not only change the industrial pattern of China's domestic market, but also change the competitive landscape of the global market."

Dialogue with Wang Endong:

The next five years will become the "wave" of globalization

Reporter: It is easy to make innovations difficult. How do you realize innovation in your opinion? What is the difference between IT industry innovation and other industries?

Wang Endong: The IT industry has two characteristics: First, it is fast. IT industry technology and product upgrades are fast, as Moore's Law says, CPU performance doubles every 18 months, which needs to be achieved through technology and product updates. In such a fast-growing industry, upgrading of technology products must be achieved through research and development and innovation.

Second, the industrial division of labor is relatively detailed, so the strategic positioning and innovative choice of the enterprise is more important, whether it is the core of the value chain, or whether it is doing downstream or peripheral things. In the IT industry, innovation is multi-layered, with business model innovation, system product innovation, and underlying core technology innovation. Business model innovation is the easiest but most easily replicated, while the underlying core technology innovation is the most difficult but also the most capable of forming core competencies.

Inspur pursues business model innovation and also focuses on improving product competitiveness, but the most fundamental is the underlying core technology innovation. For example, “Tissot K1” is the underlying core technology innovation. This product is the result of the “Special Project for the Development and Application of High-End Fault Tolerant Computers” of the National 863 Program during the “Eleventh Five-Year Plan” period. We invested 460 people and completed the research and development in 45 months.

Reporter: Inspur is positioning itself as a manufacturer and solution provider of cloud computing core equipment. What are the advantages and strengths of Inspur in cloud computing? Where is strength and confidence?

Wang Endong: Cloud computing is a new stage in the development of the information industry. In the choice of development strategy for cloud computing, we believe that the industry cloud is our main direction and goal. Because compared with the public cloud, the industry cloud can improve our work efficiency and improve our quality of life, such as government cloud, financial cloud, medical cloud... These can bring us tangible benefits. For example, many people complain that some government departments are difficult to enter, face is ugly, and things are difficult to do, but sometimes this is not entirely a matter of service awareness and work attitude, but our means are too backward, he is really difficult to find. The information you want.

Reporter: Recently, Inspur announced some plans in a high-profile manner in internationalization. Can you disclose future development plans and goals?

Wang Endong: Inspur's internationalization strategy is divided into three stages: the first stage is the learning stage, we cooperate with the top 500 companies, and lay the foundation for all aspects; the second stage is internationalization, that is, to go out To bring out the business that can be carried out overseas; the third stage is globalization, and our goal is to carry out our main business in more than half of the world's countries, that is, more than 100 countries, so that revenue from overseas accounts for About 50% of the overall income. Our goal for 2015 is to achieve a ratio of around 20%, and it is estimated that the goal of achieving globalization will be in the next five years.