“There are two types of companies in China’s AI+Education market: one is educational technology company, knowing how and to what extent their technologies can serve the demands in the education field. The other is technological education company, understanding what kind of functions are entailed in education and attaches more expectations to technologies.” In May this year, Huang Yan, CTO of TAL Education, addressed that at the Artificial Intelligence + Adaptive Education(AIAED) forum.

Aligning with Huang’s perspective, we introduced in our latest article that driven by the Chinese government’s move on laying out the related policy of AI development and education informatization, the AI giants and unicorns have been looking for a suitable trajectory to cooperate with schools in order to penetrate education industry. However, unlike companies with technology edges, when education companies intend to seize the market share of AI industry, they are still concerned with the nature and original scope of education itself, regarding AI as only a tool to achieve their educational business blueprint.

Since the listing on the NYSE in 2006 and 2010, New Oriental and TAL have become the top two Chinese education concept stocks in the US, and have a lot in common in their AI+education business layout. Therefore, this article will unfold their stories to understand how the education giants look for technical support and seize the opportunities in the AI education industry.

“The first step of penetrating AI market is to return to the essence of education”

When the conception of “AI+ education” was put forward, it obtained high expectations from the whole society that AI can not only make up all the drawbacks of traditional education but also can realize the fantasized teaching scenarios shown in science fiction movies. However, “AI+ education” seems difficult to be implemented at current stage proved by the market situation.

At present, AI+education is still in the initial stage of capital operation. Although nearly 200 investment institutions such as China International Capital Corporation(CICC), Tencent, Sequoia Capital, MatrixPartners and IDG have revealed their investment willingness, 82.6% of the funding is still concentrated on the financing round before B or B. Lots of the investors have a gambling attitude without doing standardized investigation on the technical background and market prospects of the invested companies. Moreover, there are more than 400 online education companies with AI business in China, but 70% of them are facing the predicament of suffering from a loss. It seems that the AI education industry has become a bubble just within a year and is even considered as a costly failure attempt.

So how should AI+education players lay out their blueprint? Top education players such as New Oriental and TAL have already answered this question that AI cannot be the final purpose and education business is ultimately going to return to the essence. In light of this, they have set a three-step strategy: (1) firstly conducting a layout by investment then harvesting the market share. New Oriental and TAL have unveiled their investment agenda since 2012, and in 2017, New Oriental closed 12 investment deals and TAL has invested in 14 companies. These two giants are not only building an ecosystem, but also making a scheme for cutting-edge technology in advance. (2) determining a business strategy then increasing the input. In other words, AI application needs to be based upon the suitable scenario, and AI+education players need to find the right direction. (3) Constructing a whole package of AI education solutions.

Striving to create a combination of “cutting-edge technology” and education

With previous investment, layout, trial and thinking at the primary stage, New Oriental has been actively moving on in the sector of AI+education to look for cooperation. For instance, it has worked with NetEase and Tencent Cloud to explore the whole package of solutions to education cloud, moreover, intensively cooperated with the Big Learning Research Center in the fields of deep learning, big data applications, innovative intelligent science, and intelligent communities, then constantly established the New Oriental Brain Science and Image Recognition Technology Center along with the New Oriental AI Research Institute, and N-Brain League aiming at building cooperation among AI-related institutions and universities such as the University of Illinois and Chinese Academy of Sciences’ Institute of Automation. There are reasons to believe that New Oriental has already penetrated the AI education sector with linking each process like technology, resources, data, talents, etc., forming a late-mover advantage. The New Oriental group adopts the combination of technology and education as their crucial mission, with the intention of providing students with more effective learning methodology.

As for TAL whose business starting with maths tutoring, the polishing of teaching content and the developing of teaching abilities have always been their superiority and have always maintained a relatively high level. However, with the continuous expansion of their business map, especially after its market value exceeding 10 billion US dollars, “content” and “brand” are not enough to support the future development and profits. Therefore, not only New Oriental, but also the future chooses AI as a new core business.

In 2017, TAL invested 1 billion RMB(147 million USD) and 4,000 personnel in AI R&D, and in July 2017, TAL acquired the AI startup FaceThink, which is known for its emotion recognition technology, then established an AI Lab, led by Yang Songfan, the founder of FaceThink. Yang said that they are just using AI to create and explore new potentials, which are divided into four aspects: (1)providing better teaching contents, (2)creating more effective teaching experience, (3)building a more scientific evaluation system and lastly(4) offering more equitable educational resources.

Huang Yan also once proposed that the role of AI in education is not to simply replace the position of teachers, but to be a partner working together with teachers and parents to provide children with high-quality contents and effective education. Just like what he said, in TAL’s layout, AI is just a technological approach to improving educational content and teaching styles. It is also regarded as a digital assistant rather than a business focus itself. For an education company, AI is to redefine the division of labor between people and machines in the field of education, and help to exert the value of both human and machines.

Taking “student’s personalized learning experience” as the future orientation

At the International Conference on Artificial Intelligence & Education in May this year, Zhang Bangxin, founder and CEO of TAL, introduced the two educational ideas that the company adheres to: at the macro level insisting on helping achieve the fairer education with higher quality, and at the micro level providing the most appropriate education style.

Specifically, at the micro level, analyzing and processing the data acquired from students’ learning activities has greatly improved the accuracy, scientificity and practicality of learning evaluation. For example, in 2018, TAL has cooperated with Shanghai Municipal Education Commission, they take a central primary school as a pilot, recreating and accurately recording students’ behavioral trajectory through the digital tools like “paper and pencils” in the class. Based on the data, teachers can not only know what the students have learned by real-time monitoring but also can detect students’ aptitude and shortcomings, which can help students to explore their potentials and lay a solid foundation for realizing large-scale AI teaching model in accordance with one’s aptitude.

Huang Yan has also pointed out that with the deep integration of AI and education, everyone could have access to his/her most suitable education and the goal of education will be upgraded from exam-oriented to interest-oriented. The New Oriental Group, embracing the same vision with TAL, also starts AI personalized education through the product BlingABC launched by its subsidiary company. This product is aimed at solving the problem that Chinese students have encountered in language learning. Through the face detection & analysis, speech recognition, NLP and other AI technologies, student’s in-class performance can be quantified from the students’ emotion, course participation and learning outcomes, and then the products can give personalized advice to each user. Although there are still some ethical controversies in the application of AI in the field of personalized education such as data security, Zhang Bangxin advocated that the whole society should be more tolerant of new things and make ethical judgments by pondering the nature and development goals of AI education products.

“Education’s essence” is the core of the industrial layout that the two companies both highlighted, which may be the unique advantage of education companies involved in the AI field. “Education is not the filling of a pail, but the lighting of a fire.” New Oriental and TAL have reached a consensus here: “The reform that AI brings into education space is destined to be a long-term process. We need to improve the efficacy and resource sharing at first, making AI penetrate into all the scenarios of education, then think of changing the game and future.” After all, “AI+ education” is not a market that can bring huge benefits in a short term.

According to CNNIC’s forecast, by 2020, “AI+ Education” will fuel up a huge market of 300 billion RMB (45 billion USD), which has become the next battlefield for head companies and capital to compete. The more companies eye this new market, the more fierce competition will be triggered. But we need to always remember that no matter how the policy drives and where the capital flows, the footholds of the dual combinations “AI+Education” and “Enterprises+Schools” will always lie in the latter. Producing contents with high quality will always be the key to gear up the expansion of the education market.