Lanxun Wang Song: The Power of Change

The change Lan Lan has made after becoming a capital darling is undoubtedly a magnificent turn, from private companies to listed companies, from a loss before the listing to a continuous increase of more than 30% in consecutive quarters after listing, from the participants in the Internet market becomes leader. But for any company, its success is worth learning from.

After more than two years of listing, Lan Yi became the only listed company with the nationality of “China” in the CDN industry. The fact that she has successfully ranked among the top leaders of the CDN industry has caused us to pay attention to the blue power behind the capital. What kind of enterprise is Lanyi today? What is its potential for development? In the field of CDN, can current Chinese and US companies truly compete? In the CDN industry, Chinese companies represented by Lanxun are again How will it affect the development of the global Internet? To find answers to these questions, Li Shuyi, executive vice president and editor-in-chief of China Computer News, paid a special visit to Lan Song, chairman and chief executive of Lancome.

The Chinese market is itself a potential stock. Li Shuzheng: After the Lancome listing, the industry generally feels that the development of bluebirds is accelerating. The third quarter financial report Lanyi has just released shows that, compared with the same period of last year, Lanyi's net operating income increased by 30.4%. In our view, such a speed of growth should not be less than the result of capital power. What exactly are the internal and external factors that really give Bluebird this development?

Wang Song: After the listing, Lan Yi has been following the original plan's goals and directions. However, from a private company to a listed company, the biggest challenge for Lan Yi does not come from the market. It is more of a management requirement. We must increasingly meet the requirements of an international listed company, the most important of which is business control. Different from the past, all business is now controllable, manageable and predictable. This is an investor's request.

As you can see, after the Lancome listing, especially in the three quarters of this year, our overall operating efficiency has continued to grow at a rapid rate. Especially the operating ability of gross margin, this is a very important indicator, and it is constantly improving. Whether it is the IDC field or the CDN field, our gross profit margin has always been the first. In fact, it is the continuous improvement of the efficiency of the entire company's management and operation that has enabled Lanxun to achieve stable growth. This has also allowed us to maintain an absolute leader position in the industry and increase our distance from our competitors. In the future, we will continue to improve the operational efficiency of the entire company.

Shushu Li: Overseas listing will make the company's management, operations and other aspects become more standardized, which is an important internal cause to promote the development of Lancome business. What is the external cause of the growth of Lancome's business?

Wang Song: What investors are concerned about is whether Lanyin's business has the potential for development. The market in which Lanshou is located is large enough, and Lanyin's business and market are closely related to the Internet. Precisely, China is a huge potential Internet market. The development potential of the CDN industry is determined by two factors: market penetration rate and market size. In China, not only is the market penetration rate increasing, but the market itself is also growing.

First, the Internet is growing at a high rate, but the penetration rate of China's CDN market is less than 10%. In developed countries such as the United States, the market penetration rate is conservatively estimated at 50%. With such a large market in China, the increase in the market penetration rate will provide Lancome with a huge growth opportunity. From a macro perspective, China's Internet is developing rapidly, and the penetration rate of the Internet in enterprises is also growing. The number of Chinese Internet users is growing at a rapid rate. Such an environment will inevitably promote the rapid growth of the CDN industry. From the microscopic point of view, Lanxun's traditional customers have maintained a growth rate of more than 30%, and emerging areas such as mobile Internet are almost 100% growth rate. In the field of e-commerce, large e-commerce sites are almost all blue-chip customers.

Second, the most important aspect of the CDN industry is economies of scale. It needs to have a large enough market size and a large enough area to develop specialized companies. However, at present, there are very few listed companies in the global CDN industry, except that American companies are Chinese companies. This is mainly because there are not many countries that have large-scale markets. This leads to almost all of the European CDN services being provided by US companies. Lan Yi is the first listed company to do CDN business outside the United States. This shows that the Chinese market has the ability to provide sufficient scale benefits for CDN services.

The Chinese market will help Lancome become an international company in the future. We are very confident about this. To become a Chinese company that can successfully achieve market globalization like Huawei will be the goal of Lanyin.

Li Shuxi: Just now you mentioned that e-commerce and mobile internet are very important factors in promoting the development of the current CDN industry. In the future, what will be the "rejuvenation" that will promote the rapid development of the CDN industry?

Wang Song: It can be seen that, today, the demand for CDNs by SNS, Weibo, and web games has continued to grow, and both have formed a continuous process. Internet media, such as Youku and Tudou, have a strong demand for CDN services, and the trend of traditional media access to the Internet is becoming clearer, which will form the follow-up driving force for the development of the CDN industry.

In addition, the development potential of the corporate market remains to be explored. In the past, when we first started doing CDN, 80 percent of our business came from Internet companies. But today everyone will see that, in addition to the traditional media, even a company with only four or five people needs to build a corporate website to conduct business. Regardless of the size of the company, regardless of the traditional industry or emerging industries, almost all companies want to use Internet technology to conduct business and provide services. For CDN professional service providers, this will create a huge market opportunity.

Look at the difference between the ten years and Li Shuyi: As you said earlier, the penetration rate of CDN in China is less than 10%. Does this mean that in the future, as long as the penetration rate is increased, China’s CDN market can be quickly increased from 10% to 20%, even making the CDN market flourish? In addition, it is expected how long it will take for China to reach 50 as the United States does. More than % market penetration?

Wang Song: Yes. Everyone looks at the Internet abroad and only sees the front end. In fact, the gap between China's Internet and the United States, in essence, there is at least a gap of five to ten years. This gap is a problem of industrial development. As far as the CDN industry is concerned, there are at least five to seven years gap between China and the United States. In the area of ​​CDN, the first CDN company in the United States was established in 1998, but it went public in 1999. At that time, the company’s stock sold more than 300 US dollars. Although Lan Hao started from 1998, our first financing was in 2005, and our time to market was more than ten years later.

The gap of a decade has caused the size of domestic CDN companies in the country to be only one-tenth or even one-fifth of that of American companies. In the United States, this industry has experienced at least three rounds of listings of CDN service providers: The first round was represented by Akamai, the largest US CDN service provider, serving early Internet service providers (such as Yahoo!) and began to emerge. Then the Internet video began to appear. Another round of companies entered the CDN industry to serve them. The third round was for individuals and small and medium-sized enterprises. It gave birth to new CDN service providers and Amazon also joined them to provide CDN services. However, in China, we did not finish the first round and the market penetration rate has not yet reached scale.

Shushu Li: What do you think is the problem of low penetration in the Chinese market?

Wang Song: In the first round of financing in 2005, almost all customers of Lanxun were doing text messages; in 2010, almost all customers of Lanxun were playing games. It can be seen that the gap between the development of China's Internet industry and the United States is still very large. Because the degree of sophistication of the social division of labor determines the maturity of industrial development, China’s Internet industry cannot yet form an industrial chain after the detailed division of labor, as in the automobile industry. Therefore, the output efficiency is still not high, and enterprises cannot focus on themselves through industrial chain cooperation. The core business.

Akamai’s largest customer was Yahoo, and NetApp’s largest customer was Yahoo. A Yahoo's success has also led to the success of a series of companies that support the platform. In the United States, many successful cases in the investment circle originate from the system's planning. As long as one company that invests succeeds, it will be able to drive the companies behind to invest in it, so that the entire industry chain of investment can be successful. However, in China, such cases are almost absent. Every company is doing all the hard work. However, any company is limited in resources and wants to do everything well. The possibility is really small. This also causes the Internet companies in China to be easily copied. There are few that can achieve the ultimate goal. . Because the resources of a company are spread over multiple links, it has affected the development of the main business.

Li Shuzheng: China's industrial development maturity is not enough. It has not yet formed a particularly stable industry segmentation. As a result, the CDN market penetration rate is not high. Do you think the current "environmental factors" that hinder the rapid development of domestic CDN service providers Which?

Wang Song: Yes, the competition is not enough. In China, bandwidth cost is also one of the core obstacles to the development of the CDN industry. Currently, the bandwidth cost of the Blue Dragon CDN business exceeds 55%. It is estimated that the bandwidth cost of Akamai only accounts for 15% of its total cost. Therefore, the bandwidth cost of doing Internet services in China today is at least four times that of the United States. This is also the status quo of China's industrial development. Although China can duplicate the CDN market 100%, there is still a big gap behind the industry.

Always ready to climb over the peak of technology Li Shukai: Lan Hao can achieve this scale today, there must be some unique place. As a leading company in China's CDN industry, I believe that being a “boss” is certainly more than just a matter of scale and funding. Compared with competitors, what is Lanyi relying on?

Wang Song: I think it is the continuous innovation and innovation of technology. CDN is a just starting industry. We began to do pictures and static content at the earliest, and later started to do video and dynamic applications. In fact, technology has been changing.

Today's CDN is not just a simple content distribution, but a perception of the concept of the network, because we believe that the current CDN services need to have a deeper understanding of the network to do a good job.

In the past, the Internet was very simple, just let the PC go online. But today you will find that we are facing a variety of Internet access models. Terminals are increasingly diversified. The efficiency of network access and data transmission cannot rely on technologies such as caching and content distribution in a complex network system. To protect, this is also the reason for the deterioration of the effectiveness of CDN services based on traditional technologies. The blue-to-be-provoked CDN service is to completely solve the problem by sensing terminals, sensing networks, and sensing applications. The Internet is becoming an increasingly integrated system. How to achieve effective content transfer will be an increasingly complex issue. Especially the mobile Internet, the technical requirements for the CDN will be a real challenge. Some analysts believe that if the popularity of 4G, the management of the network will be catastrophic. On the one hand, the traffic is huge. On the other hand, the number of terminals is huge. The number of billions of terminals is a huge project to achieve effective positioning. The early CDN technology was based on DNS, and it could achieve relatively rough positioning. However, in the future, the device positioning must be more accurate and the positioning efficiency must be higher and higher to meet the requirements of the CDN service. Related technologies will also be relevant. More and more complicated. For this reason, we have been increasing our investment in R&D centers.

As you can see, in the past, CDN technology did not seem to be high-tech. But today, no matter Google, Facebook, or Microsoft, everyone is investing heavily in this field.

Shushu Li: As far as I know, Lancome's perception network can configure resources and provide corresponding services according to the network conditions and user needs. In theory, perceiving the network should enable the optimal configuration of resources so that all equipment resources and network resources can be used in the most efficient way. Compared with the traditional technology before, how much can the perceived network improve efficiency and reduce the cost?

Wang Song: With our newest technology and the application of information transmission on mobile networks, with the same content and user experience, the traffic can even be reduced by 50% after adopting new technologies. The cost will be greatly reduced.

The bigger the cloud is, the bigger the CDN stage is. Li Shuzheng: China's cloud computing has developed vigorously. Although the current application is not yet in place, the development trend is clear. The Internet can be regarded as opportunities and challenges for the CDN industry. What are the opportunities and challenges brought to the CDN industry by the development of cloud computing based on the Internet?

Wang Song: The opportunities that cloud computing and mobile Internet bring to the CDN industry far outweigh the challenges. If you don't have technical support such as the CDN industry or perceived network, you will find that cloud is actually very difficult to land. Because the application of the mobile Internet is totally dependent on the cloud platform, only relying on the CDN technology can improve the efficiency of the entire network operation, reduce the cost, the threshold of innovation.

In China, the cost of Internet innovation is not high, but the cost of success is very high. Without a low-cost, high-efficiency network platform bearing application, the expected amount of users cannot be obtained. Without a good platform to support the cloud in a low-cost, high-efficiency manner, cloud service innovation is difficult to do. In the end, it can only be done by the monopoly of several large companies. It can be said that China's CDN industry does not develop, is not in place, cloud computing and mobile Internet innovation is difficult to really implement. On the Amazon platform, there are hundreds of thousands of mobile Internet applications. The value of the cloud platform lies in supporting these applications and making them more widely available to users.

Shushu Li: The cloud must be based on the network. If all application services are concentrated on one platform, the premise must be that the network performance is very good and the efficiency is very high, otherwise it will be equivalent to no value.

Wang Song: Yes. This is precisely our understanding of the value of the Chinese CDN industry. At present, Akamai's largest customer is to provide cloud applications, and its cloud applications completely need a CDN network to help it land. I think that everyone in China should not just look at the application of cloud, because the most critical part of Amazon's cloud application is the CDN. If there is no CDN application, I think the landing of the Chinese cloud is a fantasy.

CDN support can also be seen as a kind of network coverage. The cloud is also a product of the need for economies of scale. Its cost depends on its ability to effectively use spare resources and its efficiency in providing resources. If the cloud data center can only cover the surrounding customers after its completion, the efficiency of the cloud will be too low. The scope of cloud coverage depends on network coverage. In different cities, the efficiency of the cloud will not be the same, and even in some cities, the efficiency will be greatly reduced. Solving these problems is precisely the expertise of the CDN.

The new Chinese CDN forces that were barely growing up on the Nasdaq stock market were successfully listed on the Nasdaq, becoming the first Chinese stocks in the CDN sector and occupying the status of China’s CDN market leader.... Today, it is not fortunate that Lan Hao is relying on.

It has encountered the Internet bubble, experienced the global financial crisis, and on the way to gaining capital and becoming an industry leader, Lan Yi has never been easy. Faced with the inherent disadvantage of China's CDN market environment, fierce competition from numerous domestic and foreign rivals, it is easy to maintain the status of an industry leader. Therefore, even today, the sense of crisis of Lan Yi is still strong, which is why Lan Yi has never stopped technological innovation.

The CDN is an emerging market with many opportunities in China. The gap with foreign competitors for ten years has caused Lan Yu, the domestic CDN companies, to feel a great deal of competitive pressure. However, Lan Hao still firmly believes that as long as China's local CDN companies focus on it, they will be able to compete with the top CDN companies in the United States and use this to achieve the development of globalization. Moreover, the development of China's Internet market, cloud computing market, and mobile Internet market is also in urgent need of local CDN companies to inject momentum.

The CDN market is both an opportunity for China and an opportunity for Chinese companies. It is hoped that the Chinese CDN forces working hard like the Lancome can go all the way.