Chapter 324: Outu Technology
Losing Money to Become a Tycoon: Starting with Games
Chapter 324: Outu Technology
The moment he heard they were going to make an eight-thousand-yuan phone, it was Chang You’s turn to hesitate.
“President Pei, the eight-thousand-yuan price tier is certainly absolute high-end, but even Pineapple hasn’t reached that level yet…”
“If we want to set the price at this tier, there are only two paths:”
“Either we forcibly raise the price through extremely high brand premium—but that requires the market to have a very high level of recognition of our brand;”
“Or we pile on hardware, accessories, and supporting services so that the phone’s actual value and added value roughly match that price point.”
“The former is definitely impossible, and the latter… is also quite difficult.”
“Personally, I think making a high-end phone in the four- to five-thousand-yuan range has a much higher chance of success.”
Chang You hadn’t expected these words to come out of his own mouth.
Back when he was at Hongcheng Technology, Chang You had argued endlessly with the boss and other executives, insisting that they must make high-end models, stop fixating on thousand-yuan low-end phones and two-thousand-yuan mid-range phones, and boldly push into the four- or five-thousand-yuan segment.
In the end, no one listened. Everyone was obsessed with making quick money from low-end devices.
Now everything was reversed.
The boss was loudly insisting on charging straight into the eight-thousand-yuan tier, while Chang You—usually the aggressive one—suddenly looked conservative…
This role reversal left Chang You feeling rather uncomfortable for a moment.
He had never imagined that one day he’d be labeling himself as “conservative”…
Pei Qian, however, was fully prepared for this reaction.
Did you really think I hadn’t considered all of this beforehand?
Even if I wanted to fleece people with an “IQ tax,” the system wouldn’t allow it!
If Pei Qian made a phone that cost 3,000 yuan and forcibly priced it at 8,000, the system would never approve it, because that price would clearly exceed the phone’s actual value by far.
The system allowed prices to fluctuate within a certain range, but no matter how much they fluctuated, they couldn’t exceed a fixed price band.
Some international giants with strong brand premiums might have overall profit margins of around 30%, while domestic manufacturers often only had margins of about 10%.
And if Pei Qian were to make a phone, no matter how high the premium, it definitely couldn’t exceed 30%.
He even wanted to push that number even lower.
Because the high-end market was aimed entirely at the rich. With the Fire Qilin as a cautionary example, Pei Qian had already realized that for wealthy consumers, once they’re willing to spend 8,000 yuan, they really don’t care about spending an extra five hundred or a thousand more.
In other words, if the phone doesn’t sell, then no matter what price it’s set at, President Pei will lose money happily and thoroughly;
If the phone does sell a few units, then the higher the price President Pei sets, the less money he loses.
So, by setting the price a bit lower and keeping the profit margin low, even if a small number of units sell, they won’t make much money, and overall it’ll still be a massive loss.
By then, a huge amount of money will have been invested, a few hundred phones will pile up in warehouses, and if they can’t be sold, they’ll only be discounted again and again.
Isn’t that a joyful loss?
Pei Qian showed a confident smile and said to Chang You, “Forcibly raising prices through high brand premiums—that’s charging an IQ tax. How could we do something like that? It’s disgusting!”
“Just pile on the components. Jack the costs way up!”
“As for the overall net profit margin, I think around 5% is fine. Thin margins, high volume.”
Chang You fell into deep thought.
Many of his long-held views about the mobile phone industry were being overturned at this very moment.
Piling on hardware, brute-force style? An overall net profit margin of only 5%?
It didn’t sound entirely impossible.
But somehow… the more he thought about it, the more unreliable it felt.
Seeing the difficulty on Chang You’s face, Pei Qian asked with genuine concern, “What, is it hard to pile on the components to reach that price point?”
Chang You hesitated for a moment, then said, “If we really force it, it’s not completely impossible.”
“But there will be two problems.”
“First, we definitely won’t be able to mass-produce this phone in large quantities. With small purchase volumes from the supply chain, unit prices will naturally be high—that’s one aspect.”
“The other issue is that if we stack components aggressively, some of the new technologies aren’t fully mature yet. That makes all kinds of minor problems more likely, and the yield rate can’t be guaranteed.”
“The former is manageable—at worst, it just means spending more money. But the latter would be a fatal blow to a high-end phone brand.”
“An eight-thousand-yuan phone breaking down every few days—what would consumers think?”
“Of course, it won’t be as exaggerated as eight out of ten phones being unusable, but if eight or nine out of a hundred units develop faults, that’s still a huge hit to our reputation.”
“The more immature new technologies we use, the more serious this problem could become.”
Low yield rate?
Pei Qian smiled. “That’s easy to solve. We’ll build a data transfer function. When a customer’s phone breaks, we’ll just replace it with a new one and deliver it to their door. Since it’s a high-end phone brand, it’ll be replacement-only, no repairs.”
Pei Qian thought to himself that hardly anyone would buy it anyway. With so much inventory piling up, if someone was unlucky enough to run into a faulty phone, they could just get an unconditional replacement.
Speaking of this, Pei Qian thought of another issue and decided to solve it at the same time. “Also, we should find ways to add more exclusive value-added services to the phone.”
“For example, free door-to-door service. If a customer’s phone breaks and they’re in Jingzhou, our staff will bring a new phone directly to their home, transfer the data on the spot, take back the old phone, and even bring some small gifts and apologize in person.”
“If they’re in another city, we’ll cooperate with other courier companies—free shipping. The courier delivers the new phone to their door, helps transfer the data, and then ships the old phone back.”
“Or maybe with this phone, you get a few hours of free internet every month at Moyu Internet Café, or something like that.”
“In short, add more value-added services so it actually deserves the price.”
Pei Qian reasoned that the system’s requirements were fixed: the phone had to be worthy of its price. So he’d just load it up with expensive supply-chain technologies and tack on a bunch of mostly useless add-on services. At the very least, that would be enough to fool the system.
Chang You looked at President Pei. In his eyes, beyond confusion and bewilderment, there was also a faint trace of admiration.
So many problems, and they had all been resolved just like that?
Of course, it was hard to say whether these solutions would really work or be effective, but at least on the surface, there were corresponding answers.
As Chang You thought about it more, he suddenly felt a jolt of alarm and silently thought, 'Chang You, Chang You—how did you unknowingly become the kind of person you hated the most?’
He recalled his time at Hongcheng Technology.
Back then, he was always trying to persuade Hongcheng Technology’s boss to adopt new technologies, raise phone prices, and stop obsessing over the low-end market.
But the boss and other executives at Hongcheng Technology always brushed him off with various problems.
Things like “a high-end brand can’t be done,” “customers won’t accept it,” “the yield rate can’t be guaranteed,” and “this approach isn’t stable”—he heard these lines every day.
At the time, he was furious. Those problems did exist, but you couldn’t just refuse to do something because problems existed. You should try to solve them!
And now, facing President Pei, Chang You suddenly realized that the roles had been reversed.
He was the one constantly raising problems.
And yet President Pei kept resolving one problem after another!
‘Chang You, Chang You—if you keep avoiding problems and shifting responsibility like this, are you still worthy of President Pei’s trust?’
After asking himself that, Chang You made up his mind. “Alright, President Pei! I think this plan is feasible!”
“I’ll do my utmost to get this done properly!”
“However… President Pei, I have a small request.”
Pei Qian nodded. “Go ahead.”
Chang You said, “Back when I was at Hongcheng Technology, I had a group of brothers. Later the company went bankrupt—some of them are unemployed now, others jumped to different companies, but we still keep in touch from time to time.”
“If you don’t mind, could I poach all of them? Don’t worry, President Pei—their salaries aren’t very high!”
Hmm?
Pei Qian’s eyes lit up when he heard this.
Wasn’t this the dream team that brought down Hongcheng Technology?
Perfect, this saves me the trouble of recruiting from scratch!
Pei Qian knew very well that Chang You was currently quite unpopular in the industry.
But this newly established tech company was, after all, a subsidiary of Tengda and carried Tengda’s name.
If Chang You recruited under Tengda’s banner, even if various industry bigshots looked down on him, they might still join out of respect for Tengda.
But what if there really were a few truly capable people among them, and they somehow brute-forced this business into success—what then?
Now that Chang You wanted to reassemble the dream team that had sunk Hongcheng Technology, Pei Qian was even more delighted.
“No problem!”
“Whoever you want to recruit, just say the word. I won’t interfere.”
“But there’s one thing I must make clear: since your brothers are coming to work in Jingzhou, they must not be shortchanged in any way. Each person must be given full relocation expenses and housing subsidies!”
“As for salaries, we can’t let our brothers feel disheartened. Pay them at least 30% above their original salaries!”
“Once the product is finished, regardless of sales, bonuses and benefits will all be aligned with Tengda’s parent company—not a single cent less!”
Chang You’s hands trembled slightly, filled with excitement and emotion.
What was this?
This was the boss’s absolute trust in him!
Such significant authority over personnel decisions—handed over just like that. If the boss didn’t truly value his talent, would he really be this reassured?
Originally, Chang You felt that the R&D pressure was enormous. With so many immature new technologies, even just assembling them together would pose countless difficulties.
But now, with his brothers who had struggled alongside him before, many projects that had been abandoned halfway through development could be revived and continued.
And with President Pei showing such trust, even if it meant working himself to the bone, these difficulties had to be overcome!
Pei Qian then thought of another matter and felt it should be made clear in advance.
“President Chang, there’s one more thing.”
“In this new company, although you’re responsible for all the business, Tengda will assign a director. In terms of the actual hierarchy, she’ll rank half a level above you.”
“But you must have your own judgment. If your opinions differ from hers, you can report it to me, and I’ll mediate. Understood?”
Pei Qian hadn’t forgotten the second most important objective of this phone business.
That was to do everything possible to push Lin Wan back into inheriting the family business.
If Lin Wan didn’t get involved in the phone business at all, then even if the phone venture truly failed, it wouldn’t deal much of a blow to her confidence.
So she had to be made the nominal person in charge of the phone business.
The ultimate goal was to let Lin Wan manage the phone business just a little—but not let her get too deeply involved—so that when the business failed, she would still feel that she ought to take the blame herself. That would be the perfect outcome.
Therefore, Pei Qian still had to secretly give Chang You some support.
Chang You nodded. “Don’t worry, President Pei. I’ll get along well with the director.”
Clearly, Chang You hadn’t realized the seriousness of this issue.
But Pei Qian couldn’t explain too much either. He could only wait until real problems arose.
At that moment, Chang You finally remembered the most critical issue of all.
“President Pei, we haven’t decided on the company’s name yet.”
Chang You’s reminder made Pei Qian realize it as well.
Right—everything about the development strategy had already been thought through, yet the company still didn’t even have a name.
Pei Qian thought for a moment. What kind of name should they choose?
What kind of name should a high-end phone company have?
It should have a name that looks really low-end!
A name directly determines a user’s first impression.
Many brands give people a first impression of being “low-end” or “tacky” purely because of their names, so even if they later release high-end phones, consumers still don’t recognize their brand value.
So it had to sound as rustic as possible.
But at the same time, it couldn’t be something like “Dog-Egg Phone” or “Cuihua Phone,” otherwise Chang You would never accept it.
Pei Qian thought for a bit. “For the sake of expanding into international markets and becoming a global brand in the future, let’s go with a pure alphabetic name that’s easy to remember.”
“And then, based on the phonetic translation, we’ll give it a Chinese name with a good meaning.”
Chang You strongly agreed. “Yes, that’s exactly the right approach.”
Pei Qian thought again. “Then let’s call it Otto Technology. Translated into Chinese, that would be Outu Technology.”
“‘Ou’ as in the seagull that flies over the sea. Seagulls are found all over the world, soaring between sea and sky. This symbolizes our business spreading across the globe, with the company’s future as vast as the blue sky and as magnificent as the ocean.”
“‘Tu’ as in grand ambitions and great plans, symbolizing our ability to achieve a magnificent vision!”
The actual meaning, of course, was his hope that this company would become completely crippled at a high level—lying in bed and blowing a horn, so it could be sent off to bliss as soon as possible.
Chang You fell into thought.
The name’s meaning was quite good, and it was fairly smooth to say out loud.
So, why did it vaguely feel like there was some indescribable sense of awkwardness about it?
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