In the 2023 annual report, Kingsoft Office had about 4,539 employees. When the 2024 semi-annual report was disclosed, Kingsoft Office had about 4,601 employees. In the general environment of ensuring profits through measures such as "reducing costs and increasing efficiency," Kingsoft Office has still achieved growth, which is "truly remarkable."

WPS crashed, driving many working people crazy with worry.

On the morning of August 21, some netizens reported that "WPS software crashed," and related topics also trended on Weibo. At 11:41 am, @WPS Customer Service announced, "This morning, WPS experienced a service failure, causing some users to be affected. The service is gradually recovering now."

That evening, after WPS resumed service, it announced a compensation plan. From 0:00 to 24:00 on August 22, all users could redeem a 15-day free membership.

Coincidentally, two days before WPS crashed, the NetEase Cloud Music App also crashed. Regarding the reason for NetEase Cloud Music's crash, the official also attributed it to a service failure. However, many analysts believe that the core reason for the NetEase Cloud Music App's crash was "layoffs hitting the mainstay," caused by cost reduction and efficiency enhancement measures.

However, according to the "Digital Intelligence Research Society," it was found that Kingsoft Office, the entity behind WPS, has not conducted substantial layoffs. In the 2023 annual report, Kingsoft Office mentioned that "there are a total of 3,087 R&D personnel, accounting for approximately 68% of the total number of employees," which simplifies the calculation to a total of 4,539 employees. In the latest disclosed 2024 semi-annual report, Kingsoft Office stated that "there are a total of 2,991 R&D personnel, accounting for approximately 65% of the total number of employees," which simplifies the calculation to a total of 4,601 employees. Although the number of R&D personnel has decreased slightly, the total number of employees has increased instead of decreased. In other words, Kingsoft Office has not yet introduced major measures to "reduce costs and increase efficiency."

Not introducing major measures to "reduce costs and increase efficiency" does not mean that Kingsoft Office is having an easy time. Semi-annual report data shows that revenue increased by 11.09% year-on-year in the first half of the year, and net profit attributable to shareholders increased by 20.38% year-on-year, with both performance indicators experiencing slight declines compared to the previous quarter.

In the secondary market, Kingsoft Office fell more than 3% intraday to 185.17 yuan per share, setting a new 52-week low and also creating a new low in nearly two years. Looking solely at 2024, the decline has already exceeded 40%. As of now, Kingsoft Office's market value is 87.3 billion yuan.

Individual subscriptions prop up half the sky

Out of the total revenue of 2.413 billion yuan in the first half of 2024, domestic individual office service subscription business contributed 1.53 billion yuan. Total revenue increased by 11.09%, and individual subscriptions increased by 22.17%.

Thus, the individual subscription business is both the core source of income and the main driver of growth. However, even so, WPS still crashed, leaving hundreds of millions of working people devastated as their documents suddenly disappeared just as they were about to submit them.

Out of the 2.413 billion yuan, in addition to individual subscriptions, there is also institutional subscription revenue, which was only 443 million yuan in the second quarter, and its growth rate did not outperform the overall revenue growth rate. The other two business segments, institutional licensing and overseas advertising, although accounting for a small proportion of revenue, both showed negative growth.

This further highlights the importance of individual subscription services.

In December 2023, after Kingsoft Office "cut off" its domestic advertising business, maintaining such a growth rate in 2024 was indeed remarkable.

However, upon closer examination, Kingsoft Office's individual subscription business, which props up half of the company, has been exposed to many problems. For example, it has been repeatedly exposed for violating user privacy. In November 2023, WPS's privacy policy mentioned using user data after desensitization as basic materials for AI training. Soon after, WPS responded and apologized to users.

Regarding violations of user privacy, Kingsoft Office is not a "first-time offender."

In addition to violating privacy, Kingsoft Office's "Russian doll" pricing has also been questioned by many.

Among them, the "Xinhua Daily Telegraph" published an article titled "Members, Super Members, Super Pro Members, AI Members, Grand Members... Kingsoft Office WPS Accused of 'Russian Doll Pricing'" on May 10, directly pointing to pricing issues with Kingsoft Office products and unreasonable price increases after becoming a monopoly.

On May 13, the "People's Daily Commentary" account of the People's Daily Commentary Department published an article titled "Russian Doll Pricing Returns: Tricking Users is Equivalent to Self-destructing One's Own Brand | People's Commentary," which pointedly stated, "Big packages contain smaller packages, and smaller packages are charged separately. Such calculative behavior is similar to the tricks used by some audio and video websites and clients, which is to harvest users by creating innovative charging items and formats."

It is noteworthy that the article did not directly mention "Kingsoft Office" by name, but the accompanying image used the WPS membership table.

In the article, "People's Daily Commentary" added, "Especially for operators with a dominant market position, it is even more important to respect users and strive to tap their own potential rather than blindly extracting money from users. Tricking users is equivalent to self-destructing one's own brand."

In the opinion of the "Digital Intelligence Research Society," as of now, the monthly active users of Kingsoft Office's main products exceed 602 million, but there are only 38.15 million annual paid individual users. From this perspective, Kingsoft Office still has significant potential to continue "extracting money" from individual subscription users.

AI has not fully stood up yet

In December 2023, when Kingsoft Office announced the closure of its domestic advertising business, the "Digital Intelligence Research Society" believed that this was Kingsoft Office cutting off its own retreat and fully betting on AI.

As an "antique player" that has experienced the PC era, mobile internet era, and cloud computing era, Kingsoft Office did not hesitate in the face of the surging AI wave.

The "All-in AI" strategy was highly anticipated. In April 2023, Kingsoft Office launched a generative AI application with large language model capabilities, codenamed "WPS AI." At that time, Yao Dong, Vice President of Kingsoft Office, also announced three directions for the future development of WPS AI: AIGC, reading comprehension, and human-computer interaction.

However, more than a year has passed since then, and while the three directions seem promising, many functions that subscription users can complete are still in the first stage. The second stage requires a large amount of data model training, and Kingsoft Office, which had privacy policy issues last year, has difficulties in this regard. For the third stage, technology is not the most important factor. Before policies and regulations are in place, it is not yet possible to implement it.

It is not yet certain what form WPS AI will take in the future, but it is certain that many heavyweight players have already entered this field, including products such as Feishu, DingTalk, Notion, and Evernote, which are all deploying products based on generative AI.

DingTalk AI focuses on office scenarios, Evernote AI emphasizes intelligent collaboration experiences, and Feishu AI focuses more on enterprise services. Each has its own direction of development, but they also encounter similar challenges.

For example, the increase in computing power supported by accurate data leads to an increase in capital costs. At the same time, there is no consensus or unified standard among companies regarding the compliance issues of data leakage and personal privacy protection. If one blindly pursues commercial success while ignoring security issues, it will ultimately backfire.

The "Digital Intelligence Research Society" found from the 2024 semi-annual report that AI was mentioned in many places, but it did not clearly state what new changes or variables AI has brought to Kingsoft Office over such a long period of development.