Losing Money to Become a Tycoon: Starting with Games
Chapter 333: Director Lin's Responsibilities
Meanwhile, at OTTO Technology.
Chang You, Lin Wan, and the company's core members were all gathered in the conference room, preparing to discuss the general R&D direction of the new phone.
Lin Wan had just come over from Shangyang Games.
The development of BE QUIET was currently underway. Ye Zhizhou, Wang Xiaobin, and several other designers were already working on design drafts, while foundational tasks such as art requirements were progressing in parallel.
Lin Wan did not originally need to be responsible for this kind of work, so she happened to be able to spare some time today to come to OTTO Technology and listen in on the discussion about the new phone.
The other employees sat upright, their expressions serious and attentive.
From Hongcheng Technology to OTTO Technology, although they were still employees and still making phones, everyone's mindset had subtly changed.
Back at Hongcheng Technology, although Chang You was a vice president, he did not have particularly strong decision-making power.
There were several other vice presidents at the same level as Chang You, not to mention a CEO above them.
Differences in perspectives among top management naturally led to friction and endless wrangling.
If Chang You, as a vice president, had so little freedom, then his subordinates had it even worse.
But now, Chang You was deeply trusted by President Pei and could fully decide the R&D direction of this product. His autonomy had greatly increased.
Naturally, his brothers no longer felt as stifled as before.
Moreover, after the company's bankruptcy and everyone going their separate ways, they had now reunited. Most of them felt, to varying degrees, that after reaching a dead end, there was suddenly light again—an experience that filled them with gratitude.
Chang You hung up the phone and said to everyone, "President Pei said he still has some matters to attend to, so he won't be coming over. He wants us to make our own decisions on everything."
"Alright, then let's begin."
"Director Lin, as Tengda's representative, if you have any opinions, feel free to raise them at any time."
Lin Wan nodded. "Okay."
She felt that she might not necessarily have many opinions, since everyone else present was more professional than she was.
But since her position was that of a director, the proper attitude was still necessary.
Chang You began the meeting according to the established agenda.
"The template for this phone should be based on the flagship model plan we developed back when we were at Hongcheng Technology. Conveniently enough, everyone should still have some plans that were forcibly shelved back then, and we've already had detailed discussions with suppliers regarding procurement plans. Anything without legal risks can be reused."
"For our company's first phone, we'll definitely have to use the ODM model. I don't think anyone has any objections to that."
"At present, our main tasks are twofold. First, to develop an operating system unique to our own phone brand. Second, to determine the general direction of this product so that we can communicate more effectively with the contract manufacturers."
"The importance of the operating system goes without saying—"
Lin Wan listened quietly from the side, occasionally taking notes in her notebook.
Although she hadn't deliberately studied the inner workings of the phone industry, through constant exposure she was still fairly clear on some basic concepts.
In the mobile phone industry, OEM and ODM are two common business models.
A technology company making phones does not necessarily need to handle design, manufacturing, branding, sales, and every other aspect on its own. Instead, it can simply outsource the corresponding work to specialized companies.
OEM refers to in-house design with outsourced manufacturing—essentially "contract manufacturing," such as Pineapple phones.
ODM, on the other hand, is when the company proposes specifications and requirements, and the manufacturer handles the design and production—commonly known as "white-labeling."
Of course, phone manufacturers can also put forward certain customization requirements to ODM manufacturers. As long as the money is sufficient, everything is negotiable.
OTTO Technology has only just been established and simply cannot independently shoulder all the technologies required to develop a smartphone from scratch, so taking the ODM route is the better choice.
"White-labeling" does not mean poor quality, nor is it anything to be ashamed of. A large number of smartphones, both domestic and overseas, are produced using the ODM model. Even Shenhua has many models that are completed through ODM.
Many ODM manufacturers have spent years doing phone design and manufacturing for others. From product design to hardware integration, they have solid solutions, rich experience, mature quality control and supply chains, and very reliable quality.
There was once a phone manufacturer whose low-end models produced via ODM were actually of better quality than its own independently designed high-end models, an outcome that left consumers rather baffled.
Of course, if a company can grow to the scale and level of Shenhua or Pineapple, then fully independent design with outsourced manufacturing of flagship models is obviously the better choice for maintaining a high-end brand image.
But for OTTO Technology in its current state, that goal is still quite far away.
ODM is white-label production, but it can also be customized. Naturally, the degree of customization determines how much money needs to be spent.
What everyone is discussing now is the general plan for this phone, on how exactly to integrate all the different solutions.
The group began speaking freely.
"The chip definitely has to be the latest generation."
"The screen has to be top-tier too, right?"
"The camera can't be bad either. Lately, quite a few flagship phones have started using dual-camera setups, why don't we do that as well?"
"The battery should be as large as possible. Flagship chips and good screens consume power pretty fast."
"The memory has to be big too."
"Wait a second, our procurement volume is so small, can we even get flagship chips and high-end screens?"
"If not, we'll just pay more. A phone this expensive without a flagship chip would get flamed to death. No matter what, we have to get them!"
Everyone chimed in one after another, eager to cram every newly released high-end feature into the phone.
The prototype for this device was Hongcheng Technology's flagship model, the M9, which Hongcheng Technology had originally intended as an attempt to break into the high-end market.
But the M9 was priced at only just under 4,000 yuan.
Now they were talking about pushing it into the 8,000-yuan price bracket.
How many premium features would they need to pile on to get there?
In the past, making phones was all about pinching pennies, doing everything possible to cut costs. Many great solutions looked tempting, but they were simply too expensive to use.
So they could only secretly save money on things like the vibration motor, charging port, NFC, and so on.
But now? They were stuffing in premium components as hard as they could—and it still didn't feel like enough!
And besides, space inside a smartphone is incredibly precious. You can't just throw in every latest and greatest solution indiscriminately.
Take full-screen display technology, for example, which hardly anyone was using at the time. It could make the top bezel extremely narrow, but it would also force a complete rearrangement of the earpiece and other components, inevitably leading to compromises elsewhere.
Phones like that might generate a lot of buzz, but the sacrifices were too great, and their practicality might not actually be very good.
These issues were discussed at length. In the end, Chang You decided to abandon those "looks-amazing-on-paper" solutions and instead stick to mature, stable, and expensive technologies—honestly just stacking hardware.
The hardware discussion was soon mostly settled.
Lin Wan could understand part of it. From a hardware configuration standpoint, this phone didn't seem much worse than Shenhua's flagship models. But in terms of the system, custom components, and unique selling points, it clearly couldn't compete with Shenhua.
The gap in brand power was even more astronomical.
Although their own phone also adopted some new technologies from the supply chain, offering a few decent-sounding gimmicks, there was no way it could surpass the flagship phones of major brands based on those small gimmicks alone.
And Shenhua's flagship phones sell for less than 6,000 yuan.
As things stood, even pricing their own phone at around 5,500 yuan would already make it hard to sell, so how could it possibly reach 8,000 yuan?
Chang You said, "Everyone, think of other solutions. President Pei has given a strict order, this phone must be sold at 8,000 yuan."
"When I talked with President Pei before, he already gave me some ideas. For example, this phone would be replacement-only, no repairs. If the phone breaks, we directly deliver a brand-new one to the customer's door, transfer the data on the spot, and then factory-reset the old phone."
"In short… we need to find ways to add extra services to this phone, so that it can justify the price."
With Chang You starting the discussion, everyone else began talking over one another again.
"What if we make the trade-in program more generous? As long as we release a new model, users who want to buy the new phone can trade in their old one. On top of the appraised value of the old phone, we raise the standard by another 500 yuan. That would help lock users into our brand."
"I think we can also make the packaging more premium. Use top-tier accessories like the factory screen protector and phone case, it could raise the perceived value a bit."
"Or we could partner with some app companies, like video platforms. Pre-install their apps on the phone, and users get membership benefits when watching videos on the phone."
Everyone tossed out ideas one after another, coming up with quite a few options, some that cost a lot, some that cost less.
But even if all of these were added together, it would still be very hard to push the phone's price up to 8,000 yuan.
After all, President Pei had specified that the phone's overall net profit margin must not exceed 5%. If, in the end, the phone's actual value fell too far short of the price, it would be very difficult to explain to President Pei.
By the end of it, everyone fell silent, feeling at a loss.
That was only natural. The smartphone industry has an extremely high barrier to entry, and the flagship phones of major manufacturers are essentially "all-around" models with no obvious weaknesses.
Even though Chang You's team could leverage some new technologies from their time at Hongcheng Technology, their R&D capabilities were still nowhere near those of an international giant like Shenhua.
So, purely in terms of the product itself, no matter how hard they tried, getting the price up to 6,000 yuan would already be good. With various small perks added, they might barely push it to 7,000, but that was still short of the 8,000-yuan tier.
Chang You swept his gaze across the room and said, "Everyone think again, are there any other ways? If we still can't reach the 8,000-yuan range, then we'll have to purchase some very expensive custom components."
Using those especially costly custom components would indeed raise the price, but the cost-performance ratio would be terrible. For a small company like OTTO Technology, it would feel like being taken for a sucker.
Seeing that everyone was at a dead end, Lin Wan spoke up.
"If we try to partner with other video platforms or software apps, at most we'll only get some kind of membership. It's hard to negotiate deeper cooperation."
"I can go talk to Tengda's other business units. We should be able to secure better perks, and their perceived value would definitely be higher."
"For example…"
"Before each new movie produced by Feihuang Studio is released, we give users of this phone two advance screening tickets."
"Phone users could enjoy lifetime membership at Moyu Internet Café, they would get discounted internet fees, plus a free drink every day."
"After binding a game account, users can receive one new Tengda game for free every year."
"As lifetime members of Terminal Chinese Web, they get discounted subscriptions, plus extra recommendation tickets and monthly passes."
"They automatically become VIP customers of Against the Wind Logistics, enjoying priority sending and receiving of parcels."
"They become honored guests of Mingyun Private Kitchen, when their spending reaches a certain amount, they can get a dish for free."
"That's all for now. If there are any other perks we can add in the future, we can include them later."
Someone beside her hesitantly raised a hand. "With so many benefits, Director Lin… can you really secure all of that?"
Lin Wan nodded matter-of-factly. "Of course. I'm familiar with the people in charge of these businesses. I'll go talk to them, who knows, they might even come up with better ideas."
Chang You's eyes lit up. "That would be perfect! Then we'll have to trouble you with this, Director Lin!"
Lin Wan waved her hand. "No need to thank me."
"President Pei once told me that, as a director, I'm indispensable at OTTO Technology, and that I shouldn't see myself as an outsider."
"I think President Pei was hinting that, as a long-time employee of Tengda, I should take on the role of a bridge between OTTO Technology and the other departments of the Tengda Group."
"Leave anything that involves coordination with other departments to me!"
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