We primarily provide one-stop office IT services on a subscription basis to enterprise customers consisting mainly of SMEs. We mainly compete in the office IT integrated solution market, a fast-growing segment whose penetration rate in the enterprise office IT service market increased from 0.3% in 2017 to 3.3% in 2021, and is expected to further grow to 16.9% in 2026. We had a market share of 0.6% in the enterprise office IT service industry in terms of revenue in 2021, according to Frost & Sullivan. In 2021, we ranked first in the office IT integrated solution industry in China in terms of revenue, number of devices under service, and remanufacturing capacity, respectively, with a market share of 19.6% by revenue, according to the same source.
During the Track Record Period, we have mainly generated revenue from pay-as-you-go office IT integrated solutions, sales of devices, and SaaS and other services.
‧ Pay-as-you-go office IT integrated solutions: We provide our office IT integrated solutions primarily via the pay-as-you-go subscription method. The pay-as-you-go subscription method is a flexible arrangement through which we provide hardware and handle device configuration, device/engineer deployment, operation and maintenance support, performance optimization, and device management services, such as order placement, subscription management, on-site inspection and bulk shipment of the devices, all under one service pack while customers can subscribe and unsubscribe to the office IT service flexibly based on their evolving needs.
‧ Sales of devices: In addition to our pay-as-you-go office IT integrated solutions, we offer customers the opportunity to purchase our devices, in response to certain customers’ needs. Customers can purchase the devices in installments, and the ownership of the devices are transferred to the customers when the devices are delivered to customers. In addition, we may sell pre-owned devices at commercially favorable prices through our online bidding platform, Epaiji, to optimize our device portfolio, and supplement our revenue streams.
‧ SaaS and other services: We developed our SaaS product to meet customers’ multiple digitalization needs. Our SaaS product, Epandian, is designed to help enterprise customers manage their assets and inventories from asset procurement and storage to usage and disposal for an annual subscription fee. Epandian allows customers to visualize and streamline assets and inventories operations and enables customers to track and manage portfolios of assets and inventories with transparency.
In particular, focusing on customers’ IT experience, we provide office IT integrated solutions, covering (a) IT devices, such as desktops, laptops and monitors, pre-installed with operating systems, selected software including, but not limited to, office suite, drivers, anti-virus programs, instant messengers and our self-developed office IT management tools such as printer auto-configuration programs, and (b) managed IT services, including device configuration, device/engineer deployment, operation and maintenance support, performance optimization, data migration, back-up and erasing, and various device management services, such as order placement, subscription management, on-site inspection and bulk shipment of the devices, to address our customers’ needs through all stages of the use of the devices. We have also developed a SaaS product, Epandian, to meet customers’ digitalization needs.
Leveraging our nationwide service capability, self-developed system named “Nebula” and industry-leading remanufacturing technology, we provide one-stop, stable and flexible services to help our customers maximize office IT uptime, improve efficiency, enhance employee productivity and drive business growth. Differentiated from device repair and replacement/maintenance process, our remanufacturing process involves precise identification of the cause of the malfunction, and repair of only the faulty unit as necessary, reconditioning a device to at least its original performance specifications and default configurations and extending the device’s service life. For example, we might replace only the broken LED component on a laptop screen, which is more cost-efficient than traditional refurbishment method, which typically replaces the defective screen as a whole. Furthermore, to improve our operational efficiency, we have developed Nebula system, containing a collection of internal management functions such as visualization for devices, capacity planning, customer relationship management, and service capability, connecting our operations from front-end to backend. See “Business – Our Technology and Infrastructure – Our Digitalization Technology.” As of December 31, 2022, we had approximately 42,000 subscribing enterprise customers and approximately 1.1 million devices under subscription. See “Business – Overview – Who We Are.”
The market size of enterprise office IT services is expected to increase from RMB156.0 billion in 2021 to RMB213.9 billion in 2026, according to Frost & Sullivan. The enterprise office IT service market consists of direct buyout mode and usage-based mode. The “usage-based mode” refers to a relatively more flexible mode of enterprise office IT services where enterprise office IT services are provided on demand and priced based on actual IT resource used. Unlike the direct buyout mode where enterprises directly purchase IT devices and software licensing from PC brands, software vendors and distributors, enterprises adopting the usage-based service mode usually do not own the office IT devices they use. See “Industry Overview – Enterprise Office IT Service Industry – Overview” and “Business – Overview – Our Market Opportunity.” The usage-based service mode has helped SMEs to address the pain points brought by the traditional office IT direct buyout mode, such as limited office IT operating capability, lack of external technical support as well as hidden costs and inconsistent service quality. Based on availability of managed IT services, the usage-based office IT market can be further divided into the device rental service and office IT integrated solution segments. In 2021, the market size of the office IT integrated solution market in China represented 3.3% of the enterprise office IT service industry and 72.9% of the usage-based office IT industry in China, according to Frost & Sullivan. The office IT integrated solution segment is expected to exceed the device rental service segment and drive the growth of the usage-based office IT market. See “Business – Overview – Our Market Opportunity.”
Currently, China’s enterprise office IT service market is still dominated by the enterprises who mainly operate under the direct buyout mode. The market under the direct buyout mode in China’s enterprise office IT service market has been relatively highly concentrated since 2010, with PC brands being the leading market players and taking up a significant market share. However, the market under the direct buyout mode has evolved into the long-term stable stage with an expected CAGR of less than 5% from 2021 to 2026. In the meanwhile, the market of usage-based service mode is expected to significantly grow. As compared with a market penetration rate of 60.0% in terms of the number of devices in the United States, the usage-based office IT industry in China is still in its early stage of development with a penetration rate of 3.2%, representing enormous growth potential. The usage-based office IT industry has become the fastest growing market segment of the enterprise office IT service industry, and its market size is expected to reach RMB37.7 billion in 2026, representing a CAGR of 40.2% from 2021 to 2026, according to Frost & Sullivan.
Source: Edianyun (02416) Prospectus (IPO Date : 2023/05/15) |