As a company, one cannot avoid vulgarity, “is a saying that Zhou Hongyi has long said. However, to give internet giants a “good” ranking, Zhou Hongyi must be “popular”, followed by Luo Yonghao.
Of course, it’s not that 360+is good, but rather Zhou Hongyi’s past words that make people marvel, truly a “clear stream” in the internet industry. However, in recent years, ‘Internet Overlord’ has become so low-key that a few years ago, an article titled ‘Miss Zhou Hongyi of the People’ received huge traffic.
Now, Zhou Hongyi’s cannon is no longer just aimed at others, but also at himself. At the 9th internet security Conference a few days ago, Zhou Hongyi said frankly that “360’s business model is a bit wonderful”.

How to evaluate 360 is actually quite difficult. You say he is not good. He has indeed made outstanding contributions in the field of Internet security and has been recognized in many major national activities. You say he is good. From the perspective of C-end users, it has always been controversial. A series of problems, such as large memory consumption, more pop-up ads, and bundled installation of software, make users directly call “bitter 360 years”.
This year, 315360 was named by CCTV for false advertising; Not long ago, CCTV’s Weekly Quality Report also exposed the investigation of the Jiangsu Provincial Consumer Protection Commission on the computer network pop-up window. Among them, 360 security browser has popped up 9 times in 15 minutes, and 360 has been pushed to the forefront again due to advertising problems.
Therefore, there was a speech made by Zhou Hongyi at the Internet Security Conference, “The 360 business model is a bit wonderful. It is the most vulgar advertising money… Once people enter the advertising model, there will be a lot of aggressive behavior, so there are many pop-up ads, and some users complain.”
How many advertisements are there in 360? According to the 360 financial report data, the total operating revenue in 2020 was 11.615 billion yuan, down 9.55% year on year, of which the Internet advertising and service revenue was 7.512 billion yuan, accounting for more than 64.6%. Although compared with the advertising revenue of 10.658 billion yuan in 2018, it has declined in both scale and proportion, but it still cannot escape the challenge from the outside world.
Of course, 360 is not the only one questioned, such as Baidu and Tencent. “To label” is their common “dream”, but “label” may not be so good. For example, Baidu has been expanding its business for many years. The financial report data shows that in the fourth quarter of 2020, advertising revenue reached 18.9 billion yuan, still accounting for 81% of core business revenue. Why? Like 360’s security business, Baidu’s smart driving and 360’s cloud business are hard to make money.
However, compared with 360, it is more “self seeking” because of the word “free”. 360’s “free mode” began 13 years ago. In 2008, 360 Antivirus was launched in the siege of giants such as Jinshan, Ruixing and Kaspersky, and the advertisement of “360 Antivirus is forever free” on the screen is constantly circulating, which has completely changed the pattern of the domestic anti-virus software industry.
In just two weeks, the number of people covered reached 26.8 million, surpassing Kaspersky and rising to the fourth place. However, this is only the beginning. The spread speed of 360 Antivirus is comparable to that of “virus”. The number of people covered by 360 Antivirus has exceeded 100 million in more than one year. In the previous 10 years, it has occupied the first place in the domestic anti-virus market, and the number of users of Ruixing, with a market share of 80%, is less than 70 million; In 2011, two years after the birth of 360 Antivirus, the number of users exceeded 300 million and the market share reached 75%.
In two years, we have gone through 10 years of Ruixing. “Free” is undoubtedly the biggest factor for 360’s success. Zhou Hongyi is also very proud of this. “My free is not only the cheese of Jinshan and Ruixing, but also the income of 25 million.”
The “free mode” has brought a huge amount of traffic and public praise to 360. However, 360 is now scolded as a “rogue”, which may also be the inevitable result of the “free mode”. What does the revenue of C-end products depend on advertising after they are free? So to be fair, users who scold 360 are more or less suspected of “holding up the bowl to eat and putting down the bowl to scold”.
But can 360 be blamed? We can only say “360 bitterness is free for a long time”.
After eating enough free “losses”, Zhou Hongyi said: “We must not make hardware free”
Now, as the originator of the “Internet free mode”, 360 has finally begun to “overthrow” itself step by step.
Rong Caijing saw that at the 360 Group Smart Car Strategy Media Communication Conference in May this year, Zhou Hongyi delivered a 10000 word speech, and the word “free” was mentioned by him many times. “I also wrote a book called” Internet Methodology “, which should have been seven to eight years. Looking back, half of the conclusions in it are still correct, that is, how to use the idea of user first, product first, and ultimate experience of the Internet. But there is a point of view that the idea of free is wrong, that is, hardware must not be free.”
This sentence must not be groundless. 360 has suffered from “free” hardware.
In 2012, Xiaomi, the top brand of internet mobile phones, began to challenge its position as the “China Cool Alliance”. As an “old acquaintance” of Lei Jun, Zhou Hongyi referred to himself as “the second person besides Lei Jun to understand Xiaomi”. So he also waved his flag without hesitation and launched the “360 Special Aircraft” in collaboration with brands such as Huawei, Haier, and Alcatel. Even the “Little 3 Wars” of the past were talked about with great interest.
However, the 360 special machine has only appeared for a few months. Even though Zhou Hongyi has repeatedly emphasized “high configuration and low price”, those partners have never seen such a “trendy game”. If you want to reduce the price, you need to reduce the price, which is quite different from Zhou Hongyi’s idea, let alone realize his dream of “free hardware”. Two years later, Zhou Hongyi mentioned this matter again, and said that “later, these manufacturers regretted it. If they had done it firmly, today’s Chinese mobile phone market would be a different scene.”
360 just missed the rapid development of internet mobile phone in 2013 and 2014. But in the past two years, Zhou Hongyi’s “dream of hardware” has not stopped. “Children’s watch”, “air purifier”, “anti-loss guard”, “camera”, “portable WIFI”, “360 security routing” and other hardware products have been launched one after another, but half of them have not had a long life. For example, 360 security routing was only three months after its launch, and Zhou Hongyi personally stopped the project and said that “we will never make such a silly product again.” Another example is anti-loss guard, which has not been officially launched yet.
Zhou Hongyi’s obstinacy made many failures fail to defeat him. In 2015, he even announced that one of his cameras would also be “permanently free”, but at that time he also said frankly that he had no idea how to fill the cost and profit after free.
Also in 2015, 360 picked up the mobile phone business again and launched the “Qiku” mobile phone jointly with Coolpad. In 2016, after experiencing the triangle love with Coolpad and LeEco, the name of Qiku mobile phone was officially changed to “360 mobile phone”. However, Luo Yonghao did not expect, and Zhou Hongyi also did not expect that the “spring of Internet mobile phones” was so short for them. 360 mobile phones struggled in “Other” for two years and completely left the stage in 2018.
In 2021, when 360 was involved in “making cars”, Zhou Hongyi was awakened by the words “hardware must not be free”.
From “building mobile phones” to “building cars”, when can 360’s hardware dream be realized?
Why is Zhou Hongyi so obsessed with hardware products? Or what does hardware mean for 360?
From the 2020 financial report data, smart hardware business is 360’s second largest source of revenue except advertising business. In 2020, smart hardware business revenue was 2.142 billion yuan, up 27.77% year-on-year, accounting for 18.44% of the overall operating revenue.
Not willing to be an advertiser only, can smart hardware support the dream of 360?
At present, 360’s four major business projects are internet advertising and services, intelligent hardware, internet value-added services, and security. Internet value-added
The main revenue from services comes from the gaming industry, but the current market environment in the gaming industry is quite harsh. Recently, several major official media outlets have launched a “bombardment” on the gaming industry. One is an article published by Economic Reference Daily, which identified the gaming industry as opium and referred to it as “electronic drugs”; Subsequently, the Securities Times published an article titled “Jointly Safeguarding the Healthy Development of the Game Industry”. After targeting the real estate, education, and technology industries in sequence,
While the “security and other” business for B/G end business will be the focus of 360’s next stage, and the revenue growth of 800 million will also exceed 70%, but the base is still too low to make up for the gap in reducing advertising business.
Therefore, on the premise of reducing the revenue of Internet advertising and services, and quickly filling the resulting revenue gap, perhaps only the intelligent hardware business is the most reliable. From the perspective of result orientation, 360 is really more “optimistic” about hardware, that is, invest in Nezha to start building cars.
But for 360, there are several obvious lifesaving straws for the intelligent hardware business. The first is the profit margin. From the table, it can be seen that the gross profit margin of 360 hardware business at present is only 18.35%, which is higher than 70% of other businesses. Of course, the low profit margin of hardware products is a problem for the entire industry, and it is impossible to reach 70% or even more than 90%, as is advertising and services. The problem is that 360’s intelligent hardware has not truly achieved “small profits but quick sales”. For example, although the gross profit margin of Xiaomi mobile phone products is only 8.7%, it cannot sustain a large amount, with an annual shipment volume of 146 million units reaching 152.2 billion units.
Secondly, 360 lacks a “core”. This may also be the reason why Zhou Hongyi has been obsessed with smart phones for many years. Like Xiaomi, including the former Huawei, there are terminal products with smart phones as the core, with the expansion of smart hardware as the center, and then supported by services, such as Xiaomi’s “mobile phones” × AIoT “ecosystem; Of course, the “core” at this stage is not necessarily hardware, but also the ecological coverage of systems such as Huawei with Hongmeng OS as its core. On the premise that the “core” has not been formed, 360 wants to go beyond the first step directly to the second and third steps, which is somewhat unsatisfactory from the market situation for many years.
In addition, 360’s intelligent hardware business “has, or can’t be said to have”. what do you mean? 360 has not established its own hardware architecture, “children’s watch”, “air purifier”, “camera”, “sweeping robot”… and so on look complete, but not “system”. Although 360 has repeatedly emphasized that it should only make safety-related hardware products, the direct result of too “scattered” products is the lack of strong awareness.
Will “car building” become the starting point of 360’s counterattack? It’s hard to say that from the technical point of view, it is 360’s advantage to start from the “safety” of the old bank, and the market also has practical needs. But everyone also knows that car building is a money-burning job. Lei Jun’s calculation of burning US $10 billion in 10 years can not be supported by the current revenue of 360. Of course, from the perspective of onlookers, we still hope to succeed. After all, without Zhou Hongyi’s Chinese Internet, what is the Internet.