WPS Anxiety Can’t Be Solved by “Matryoshka”

This article mainly discusses a series of problems faced by WPS, the office software under Kingsoft, including the controversy caused by its "Matryoshka charging" model, and how to maintain competitiveness in the fierce competition in the AI ​​office market.

Recently, Kingsoft WPS was caught up in the controversy of "Matryoshka-style charging". With the official media's personal comments, this controversial topic was once again pushed to a climax. Member, Super Member, Super Member Pro, AI Member, General Member... The dazzling membership names and rights standards have caused old members of the WPS platform to express dissatisfaction, saying that there are problems such as arbitrary modification of membership levels and "Matryoshka-style" charging.

The focus of the controversy is that in March this year, the AI ​​function of the WPS platform began to be put into commercial use. Users who had previously purchased the highest level of WPS membership (i.e. Super Member Pro annual card) originally enjoyed rights including the AI ​​function, but now can only pay extra to use it separately.

At the same time, the WPS platform launched two new membership systems, AI membership and WPS Premium membership, which can use AI functions. In other words, the rights and interests of old users have dropped from "premium" to "basic".

In fact, this is not the first time that the WPS platform has made large-scale adjustments to its membership system. Public information shows that WPS was originally divided into three levels: Doker Member, WPS Member, and Super Member. In April last year, the membership system was integrated into two levels: Super Member and Super Member Pro.

At the same time, WPS platform has been frequently exploring AI: on July 6 last year, during the World Artificial Intelligence Conference, WPS officially launched WPS AI, an intelligent office assistant based on a large language model, and started public beta in November; on April 9 this year, it officially released WPS 365, a new office productivity platform for organizations and enterprises, which includes the upgraded WPS Office, the newly released WPS AI Enterprise Edition and WPS Collaboration.

On the surface, on the one hand, there is the controversy over the "Matryoshka-style charging" caused by the frequent changes in the membership system, and on the other hand, WPS's AI process is in full swing. But on a deeper level, this may be the pain that WPS has to face during the AI ​​transformation period.

WPS is known as the Chinese version of Office. In 1988, Qiu Bojun spent 1 year and 4 months in a rented room in a hotel, using a computer to type more than 100,000 lines of code to write WPS. He defeated Office for free and took back the domestic market, accumulating a huge user base. Relying on the success of WPS, the "Kingsoft" business system was built. In 2019, Kingsoft Software split Kingsoft Office and successfully listed it independently on the Science and Technology Innovation Board.

In the Chinese office software market, Kingsoft WPS has always occupied a leading position, but with the rise of up-and-coming online document companies in recent years, the diversified market environment has brought considerable challenges.

In terms of revenue, Kingsoft Office's performance growth has slowed down significantly: from 2016 to 2021, Kingsoft Office basically maintained an annual growth rate of about 40%, while the year-on-year revenue growth in 2022 and 2023 was 18.45% and 17.27% respectively. The market value of Kingsoft Office is also showing signs of fatigue. It has shown a clear downward trend since the second half of last year. Although the stock price rebounded at the same time as the AI ​​was released, the effect was not obvious.

Can the "Matryoshka-style charging" solve WPS's anxiety? As a long-established domestic office software, can it tell a good new story after going all in on AI and make users and the capital market pay for it? WPS still has a long way to go.

1. The nesting doll-style charging method, are old members being ripped off?

"On October 26, 2023, I purchased a four-year WPS Super Member Pro card at the Douyin WPS flagship store. This membership was the highest priced at the time and had the highest permissions, including the AI ​​function. On April 15 of this year, I suddenly found that the AI ​​function could not be used." A consumer who complained on the Black Cat platform said that he bought a four-year membership for the AI ​​function, but found that the AI ​​function was disabled after only a few months of use. If he wants to continue the experience, he needs to purchase an AI membership or a premium membership.

Picture/Screenshot of the Black Cat Complaint Platform

In April this year, similar complaints appeared in large numbers, and the consumers who complained purchased memberships around last year's Double Eleven. According to the complaints, many consumers said that WPS emphasized the AI ​​function when it launched Super Member Pro, and now temporarily changed the membership rights and level system, which is suspected of "false propaganda" and "playing word games". The newly added AI members and premium members have reduced the original highest level WPS Super Member Pro to a "basic model", and old members feel that they have been ripped off.

In response to the complaints of old members, the relevant person in charge of WPS said: "It was a benefit for members to use AI functions before, but now the benefit period has expired. In March this year, WPS AI began commercialization with a relatively large investment. As a new membership service, WPS AI membership is still in grayscale testing and is a paid upgrade option. Users can choose by themselves. If they choose not to upgrade, the original membership rights will not be affected in any way."

Obviously, the old members were not satisfied with this reply. Mr. Zhao, a senior WPS user from Shanghai, said: "I chose the Super Member Pro to get everything in one go. What I bought was definitely not the current service, but the long-term service in the future. Now the membership level has dropped from the highest to the third, which is a virtual depreciation. I must feel uncomfortable."

According to Kingsoft Office's official website, the current WPS membership system is divided into three types: WPS Super Member, WPS AI Member, and WPS Grand Member. Specifically, the changes in the details of various rights and interests are that the WPS AI rights and interests that the original Super Member Pro can obtain for free have been upgraded to WPS AI Member, and the main difference between WPS Grand Member and WPS Super Member is the WPS AI rights and interests. The other minor differences are the differences between the original Super Member Basic Package and the Super Member Pro Package. The basic rights and interests of the WPS Super Member Basic Package have basically not changed.

Simply put, in the existing membership system, WPS General Member = WPS Super Member Pro + WPS AI Member, so it is not difficult to understand why netizens complain about the "Matryoshka-style charging".

Picture/Kingsoft Office official website

In fact, the problem of complicated WPS membership rules has been around for a long time. At first, WPS had WPS members, Daoke members and super members. In addition, it also set up several "independent packages", such as the "PDF package" for editing PDFs, the "cloud disk package" for synchronizing cloud documents on multiple devices, and so on. On April 17, 2023, WPS made an integration upgrade, dividing the membership system into two systems: the "Basic Package" and the "Pro Package" for WPS super members: the Basic Package includes the original WPS members, Daoke members, cloud disks and other rights, and the price is 148 yuan/year; the Pro package differs in personal space capacity and other aspects, and the price is 248 yuan/year.

Now, in just one year, the membership system has undergone another major adjustment. Intuitively, the membership system has been upgraded from two to three. However, during the upgrade process, problems such as the coexistence of old and new members, inconsistent AI rights publicity, and too short a change cycle have emerged, causing dissatisfaction among users.

The adjustment of the membership system this time focuses on the issue of AI rights and interests. Behind the "nesting doll-style" charging is actually the result of WPS's heavy investment in AI, trying to seize the high ground in the era of AI office. However, frequent adjustments in the short term will inevitably bring hidden worries.

2. Competition in AI office products is fierce. How does WPS retain employees?

AI has been almost the only hot topic in the technology circle over the past year, including OpenAI, ChatGPT, Big Model, Copilot... Almost all Internet technology companies tacitly regard AI as the next growth explosion point.

The addition of AI has brought an opportunity for change to the existing office software market and is expected to reshape the market structure. Focusing on the domestic AI office software market, not only Kingsoft Office's "WPS AI", Alibaba's "Tongyi Qianwen", Baidu's "Wenxin Yiyan", iFlytek's "iFlytek Spark", ByteDance's "Doubao" and other products are in hot demand, but Internet giants all want to tell a good story in the field of generative AI.

In addition, Processon AI, Gaoding AI, and Meitu Design Studio, which focus on the fields of design and drawing, and Tiangong Search, which focuses on the field of search, have also emerged in various segmented scenarios to meet the office needs of users at different levels.

On April 9, Kingsoft Office held a productivity conference, and the core of the conference was the progress of the latest WPS 365 products in collaboration and AI, integrating the three major capabilities of documents, AI, and collaboration. WPS collaboration has added daily office collaboration tasks such as message chat, meetings, and email on top of the original document level, realizing one-stop AI office and competing fully with Feishu, DingTalk, and WeChat for Enterprise in the field of collaborative office.

There are various AI office software on the market. Does WPS AI have obvious advantages?

Figure/Public information compilation

Comparing WPS AI with AI office products from leading Internet companies such as Wenxin Yiyan, Tongyi Qianwen, Doubao, and iFlytek Spark, we found that:

In terms of the official launch time, the launch time of each company is concentrated around mid-2023. Kingsoft Office's official release time ranks second only to iFLYTEK.

From the perspective of functional positioning, there is not much difference in the caliber of external publicity among various companies. Basically, AI products are positioned as intelligent office assistants, with functions covering dialogue interaction, copywriting, logical reasoning, and multimodal generation. It can be said that "everything that should be there" is included.

Judging from the current commercialization progress, Alibaba's "Tongyi Qianwen" and ByteDance's "Doubao" are in the free stage; iFlytek's "iFlytek Spark" is free for individual users and charged for corporate users; Baidu's "Wenxin Yiyan" large model 3.5 is free, and the continuous monthly subscription fee for 4.0 professional version members is 49.9 yuan, and the single-month purchase is 59.9 yuan; Kingsoft Office's "WPS AI" is priced at 248 yuan/year and 348 yuan/year according to the membership level.

As you can see, only WPS AI currently does not have any free channels for using its functions, whether it is for basic AI functions or more advanced functions. At the same time, stronger competitors in the collaborative office field are also focusing on AI.

In April this year, DingTalk launched the AI ​​assistant market. It is no longer satisfied with providing users with basic services such as information query, schedule management, automatic text generation and improving office efficiency. It has begun to build an ecosystem and embrace big model technology changes.

In April last year, Feishu’s official WeChat account released a new product “My AI”. In November of that year, Feishu officially launched a series of AI products such as “Feishu Intelligent Partner”, which can be used in business scenarios such as content creation, content summarization, data analysis, scenario construction, and system construction.

At the end of last year, Tencent Docs launched an intelligent assistant that can complete the circulation of all categories and hundreds of instructions with one click.

At a time when users have many product choices and product functions are similar, WPS AI has introduced a strict charging policy. Does this come from the strong confidence in its own technical strength and product advantages, or is it blind self-confidence?

In contrast, the advantage of WPS is that it fills the gap between large models and corporate office needs, and its B-side business is growing rapidly. According to the financial report, Kingsoft Office's revenue in 2023 was 4.56 billion, of which domestic institutional subscription and service business revenue was 957 million, a year-on-year increase of 38.36%.

"One big model cannot do everything well. WPS 365, which is connected to multiple large domestic models, will help users determine the problems that need to be solved, which model needs to be called in the scenario, and provide the most suitable model to solve the problem." said Wu Qingyun, vice president of Kingsoft Office.

Huang Chuantong, senior director of Kingsoft Office, once mentioned: "Among domestic IT companies, there is only one product (WPS) that has been continuously developed for more than 30 years. There is probably no other company other than Kingsoft Office."

Undoubtedly, for a long time, especially in the distant DOS era, Kingsoft Office was regarded as the "light of domestic software". Compared with the expensive Microsoft Office suite, WPS, which is free to use and has powerful basic office functions, has a considerable cost-effectiveness. In the past decade, with the help of the mobile Internet, WPS has successfully overtaken Microsoft Office and gradually regained the market share of personal office and government and enterprise markets. Relevant data shows that WPS has a market share of more than 90% in the domestic mobile office software market.

WPS, which attracts users with its products and cost-effectiveness, has accumulated a huge user base and cultivated user habits. It has almost no competitors in the domestic office software market. However, in the rapidly changing Internet world, if you want to retain users for a long time, relying on past achievements is far from enough. In recent years, users have not been optimistic about the use of WPS functions.

Some netizens complained that the highest membership level of WPS has more than 250 built-in functions, but only a few of them belong to the scope of daily usage scenarios, "the other 80% are useless functions, and the bundled sales are ugly."

However, the much-anticipated WPS AI has only a few users after its release one year ago. With the monthly active devices of WPS Office PC and mobile versions reaching 270 million and 329 million respectively, the most popular "paper outline" command in WPS AI has only been used 126,000 times, and the other commands have been used between 20,000 and 40,000 times. The poor data reveals the anxiety of WPS, a veteran office software.

3. AI stories are not sexy enough, and WPS is also anxious

As we all know, tool-based applications have long been trapped by low fees. Kingsoft Office became the leading office software in China by defeating Microsoft Office for free, but it is still difficult to open up the paid market.

The AI ​​strategy did bring Kingsoft Office a short-term growth, but from a longer time perspective, Kingsoft Office's revenue growth and profit growth have been slowing down in recent years.

Specifically, between 2016 and 2021, Kingsoft Office basically maintained an annual year-on-year revenue growth rate of about 40%, while the year-on-year revenue growth rates in 2022 and 2023 were 18.45% and 17.27% respectively.

Similar to the performance of revenue, the growth of Kingsoft Office's net profit has also slowed down significantly. In 2016 and 2020, Kingsoft Office achieved growth of 189.66% and 121.20% respectively, but in 2022 and 2023, its net profit growth was only 5.80% and 17.92%, showing a clear shrinking trend.

This means that there are not as many people willing to pay as expected. On the other hand, Kingsoft Office's AI technology advantage is not obvious, so it urgently needs more funds to invest in AI research and development. This may also be the reason for the "nesting doll-style charging" - Kingsoft is eager to return to growth and urgently needs more money.

It is reported that WPS does not directly develop large models at present, but diverts large models through self-developed small models. It mainly cooperates with Baidu, MiniMax, Zhipu AI, Alibaba, and iFLYTEK's large models, and pays manufacturers based on the usage of tokens (words). This means that every time a user uses it, a large number of tokens will be spent, and each inference is a cost. Users pay monthly, which may cause WPS to pay extremely high costs to manufacturers.

According to Kingsoft Office's financial report, from 2019 to 2023, Kingsoft Office's R&D expenses were 599 million yuan, 711 million yuan, 1.082 billion yuan, 1.331 billion yuan and 1.472 billion yuan, respectively, a year-on-year increase of 23.08%, 52.15%, 18.72%, 40.06% and 11%, respectively.

Looking at the market value of Kingsoft Office, it has shown a clear downward trend since the second half of last year. Although the stock price rebounded during the same period when AI was released, the effect was not obvious. It can be seen that the capital market does not buy into Kingsoft Office's AI story.

In addition to the controversial "Matryoshka-style charging" vortex, Kingsoft Office has also been accused of violating user privacy and its major shareholders have frequently sold off their holdings to cash out.

Relying on "Matryoshka-style charging" to cover the cost of AI, even at the expense of user experience, is like drinking poison to quench thirst. After all, as a domestic software, it can counterattack and break through the strong blockade of Microsoft, the global hegemon, and have today's market position, relying not only on the strong product strength, but also on every real user.

Author: Le Yi, Editor: Lin Lin This article is written by the author of Operation Party [Yi Ke Business], WeChat public account: [Yi Ke Business], original/authorized to be published on Operation Party, and any reproduction without permission is prohibited.

The title image is from Unsplash, based on the CC0 protocol.