Chapter 410 – Learning Machine
Feng Yu had been eyeing the video games industry a long time ago. Just look at Nintendo! Their annual profits were a few hundred million USD! How much was the cost of a gaming console? It was only about 100 USD, and it was selling for hundreds and even up to thousands.
Feng Yu had done his research. Currently, in China, there were only those small and simple video game consoles. One console only cost less than 800 RMB. Compared to Nintendo consoles, which cost over 1,000 RMB, it was very cheap.
This was also because of Little Tyrant. The gaming consoles they introduced were very cheap and was compatible with Nintendo’s game cartridges. The places that sold the game cartridges had lots of pirated cartridges. This was also one of the reasons why Nintendo could not establish a foothold in China. Although they had lower the prices of their games, they could not penetrate the market.
Their consoles were not allowed to be exported to China at that time!
The Little Tyrant video game console was now the market leader in China and had occupied over 60% of the market share. No other company in China could challenge them.
The Little Tyrant had used low prices to attract consumers. But one console still cost over 100 RMB. Feng Yu remembered that the video game consoles’ prices will drop to only 40 RMB in his past life. If the distributer’s profits and transportation cost were not included, the cost of one console was less than 30 RMB.
The Little Tyrant had relied on their advertising on CCTV and lucky draws to increase their popularity. But if Aiwa or Wind and Rain brand were to introduce video game consoles, the consumers will surely pick them over The Little Tyrant because of their branding.
The problem faced by Aiwa or Wind and Rain, if they were to introduce video game consoles, was that its prices cannot be lower than The Little Tyrant. Both brands were positioning themselves as high-end brands and even when their products had similar functions with other brands, they were priced higher. If they were to introduce a game console that cost only a few dozen RMB, it would give the consumers the impression that this was a low-end product. It will also affect the Walkman or even the Super fans’ sales.
But Feng Yu does not have a way to work around this problem? What was the most profitable product sold by The Little Tyrant in his previous life? Video game console? No. It was The Little Tyrant learning machine!
What was a learning machine? It was a small machine with a keyboard and look like a 486 computer. One could learn a simple programming language, typing, languages and even foreign languages. All it needs were the right cartridges.
The Little Tyrant had introduced this type of learning machine was because China had allowed the importation of video game console. Nintendo had entered the Chinese market, and the Little Tyrant game consoles were only imitations of the Nintendo. Nintendo had the patents, and The Little Tyrant had infringed their copyright. Even their advertisement at CCTV was considered illegal!
Nintendo’s products were not sold in China because China at this time had banned all gaming consoles entering China. Other than some that were brought back to China, most of Nintendo that was sold on China were smuggled goods!
China’s policy had let The Little Tyrant the opportunity to grow. Of course, there were also other factories in China that were doing the same thing. But The Little Tyrant was the one that successfully became China’s market leader!
The Little Tyrant does not know that they were imitating Nintendo and had infringed the copyright? Of course, they knew it! But in this era, China does not care about patents and copyrights. There were only a handful of companies like Tai Hua Trading who applied for patents for their products.
Anyway, everybody was doing this, and the government also did not take action against them. Nintendo was also unable to sue them. They could take the opportunity to grow. Early last year, The Little Tyrant still had 2 million RMB debts.
But this year, The Little Tyrant had more than 10 million RMB of assets, and this was still growing rapidly!
The Little Tyrant’s growth will come to an end now. Aiwa and Nintendo will jointly develop a new product, and it will be the learning machine, which was produced by The Little Tyrant in Feng Yu’s previous life.
This idea will be used by Feng Yu, and it will be called the Aiwa Learning Machine. It will only be sold in the Chinese market. This was suggested by Aiwa as Aiwa’s products were popular in China. Aiwa will get 70% of the profits, while Nintendo will only get 30%.
Nintendo’s only aim was to penetrate the Chinese market. Thus, its only condition was for them to use Aiwa’s China sales distribution channels free of charge. They firmly believed that their products will quickly gain a foothold in China and will capture the market. They do not care about this learning machines as the profits were too negligible. It was not in line with Nintendo’s way of doing things.
The proud Nintendo thought that they could stand on top of the world’s video game industry. They had even beaten SEGA. Who else could challenge them?
The Chinese market was a vast market. They firmly believe that it will be just like how they had penetrated and control the US and Europe markets. Their products will beat all competitors!
Feng Yu and Nintendo had different views. Games were the biggest asset of the video game industry. Nintendo thinks the games they developed will continue to control the industry, but they never expect that they will be replaced by computer games in the future. Consoles were slowly replaced by computers.
No matter how sophisticated and advanced Nintendo’s technologies were, the sales of their consoles will drop. This would happen in only a few years’ time.
Aiwa and Nintendo’s cooperation were progressing very fast. In another month’s time, the learning machines prototype will be ready, and by July, it will be produced in large scale for the Chinese market/
To entice Nintendo to work with Aiwa, Feng Yu had sought the help of Master Lu to allow video game console to be imported into China. Feng Yu knew that even when China enable foreign companies to import their game consoles into China, they will not sell.
The Little Tyrant and the other low-cost video game console had already controlled the market. Even Aiwa’s Learning Machine, which was priced similar to Nintendo consoles, will be selling better than these foreign video game console.
The same prices, learning machine, will encourage learning, and at the same time, one could have fun. Video game consoles can only be used to play games. Who do you think will the parents buy for their children? Which parents do not want their children to do well in their studies? Which parent will want their children to play video games every day? Just the name itself will increase the sales!
If Nintendo performed better than what Feng Yu expects, then Feng Yu will start another movement to support China goods. If this could create problems for Sony, it will be the same for Nintendo.
Feng Yu had to take precautions against the foreign companies and also the domestic companies. The Little Tyrant will be introducing their learning machine sometime late this year. But Feng Yu will not let them have the chance. He still has a trick up his sleeve!
“Fine, Manager Feng. I know what to do. I will register this brand.”
After hanging up the phone, Wu Zhigang immediately went to the Trade and Industry Bureau to register “Learning Machine” as a trademark. That means no other products can be called Learning Machine in the future. This will be a brand. A brand that was owned by Aiwa!
After hanging up, Feng Yu smiled. Without the Learning Machine, he wants to see how The Little Tyrant competes with him. The Little Tyrant should be going into his arms soon……