Byte's Beanbag Fever: The AI Industry on the Rise

As we step into 2024, the landscape of artificial intelligence (AI) is more dynamic than ever, and amidst this evolution, ByteDance's Doubao large model has made a significant markThe company has successfully navigated the competitive sea, emerging as a latecomer but achieving remarkable successThis narrative traces the journey of Doubao from its inception to becoming a frontrunner in the industry.

The adventure of Doubao began in February 2023 when ByteDance commenced its exploration into large AI modelsBy August of the same year, the company launched a public beta for Doubao, an AI conversational product built upon the Lark large modelThis initiative marked the start of a relentless cycle of iteration and enhancement for the Doubao model, positioning it competitively in the market.

On May 15, 2024, Doubao officially commenced its external services, sparking what can be described as an all-out pricing war among large model services

With ongoing advancements in multimodal capabilities, Doubao attracted a substantial global user base, eventually securing the second position on the international monthly active user rankings in November, just behind OpenAI's ChatGPT.

The rise of Doubao has not only captured user engagement but has also generated a distinctive buzz in the A-share marketNumerous listed companies began announcing collaborations and potential partnerships with ByteDance and the Doubao model, which created a "Doubao fever" within the financial communityAnalysts speculate that despite Doubao's relatively late start, it has surged ahead within a mere two years thanks to ByteDance's continuous investment and innovative drive.

Moreover, Doubao's prospects within the B-end market and productivity-enhancing scenarios have unveiled its considerable application potential and commercial valueWhat, then, has enabled ByteDance to create such an impactful device in the AI ecosystem? A crucial element lies in the company's ability to break down the traditional barriers that separated consumer (to-C) and business (to-B) technologies, allowing for a unified and internalized model capability.

In the industry narrative, although Doubao began its journey later than its competitors, its recent rapid advancements place it in a position of strength

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The Doubao model originates from ByteDance's "Lark" large model initiative developed in 2023, and has become one of the first models in China to pass algorithmic registration.

Comparatively, while Baidu's Wenxin Yiyan began its public testing as early as March 16, 2023, and Alibaba's Tongyi Qianwen rolled out user testing in April of the same year, it wasn't until 2024 that Doubao began to gain real tractionA pivotal moment occurred on May 15, 2024, when ByteDance announced Doubao's open service launch, coinciding with dramatic price reductions, which saw the primary model's cost dip to an astonishing 0.0008 yuan per thousand tokensThis aggressive pricing strategy ignited a "price war" among major AI service providers including Alibaba, Baidu, Tencent, and others who followed suit.

Over the subsequent months, Doubao quickly began to outpace its contemporariesData indicates that by November, Doubao's app boasted an impressive monthly active user count of around 59.98 million, ranking just behind OpenAI's ChatGPT on a global scale

In further developments, reports from QuantumBit revealed that by the end of November 2024, Doubao's cumulative user base exceeded 160 million, with an average daily download increase of 800,000 users—a notable growth rate exceeding 15%, consequently making Doubao the leading AI app in China and second globally.

At the Volcano Engine FORCE conference on December 18, 2024, it was revealed that Doubao's general model had exceeded a daily token usage of 4 trillion, an increase of 33 times compared to its launch seven months priorThe model has notably enhanced its capabilities in multimodal data processing, handling a substantial increase in image generation, speech recognition, and various other functionalities.

When analyzing the B-end market, Doubao has established partnerships with around 80% of mainstream automotive brands and integrated its services into several mobile and personal computer devices, reaching approximately 300 million devices in total

In the past six months, Doubao's usage from smart terminal devices surged by an astounding 100 times.

In terms of productivity-related scenarios, the past three months have seen an explosive 39-fold increase in information processing use, a 16-fold growth in customer service and sales applications, a 13-fold increase in hardware terminal interactions, and a 9-fold rise in AI tools usageThe education sector also reported significant growth.

Once again showing its prowess, the Zhiyuan Research Institute released its latest comprehensive evaluation of large models on December 19, 2024. In a review of over 100 open-source and commercial closed-source models around the world, Doubao's general model achieved the highest subjective score in the large language model categoryDoubao's visual comprehension model ranked second among visual language models, closely following GPT-4o, while the Doubao image generation and video generation models—specifically the Dream P2.0 Pro—achieved global second rankings in their respective tests.

So, what precisely did ByteDance do right to unlock such explosive market share for Doubao? According to Tan Dai, the President of Volcano Engine, the success can be attributed to a development philosophy built upon “stronger models, lower costs, and easier implementation.” He emphasized that while Doubao may have been released later than competitors, it has undergone rapid iterations to become one of the most comprehensive and technologically advanced large models in China.

Doubao boasts a robust suite of features, including language processing, speech interaction, image generation and editing, music generation, and video generation, topped off by recent developments in visual understanding, encapsulating what is now the most comprehensive model family in China

Recent reports from Zheshang Securities have highlighted ByteDance's intrinsic AI capabilities and diverse application scenarios allowing for practical implementation of large model technologies.

Tan further elaborated on Doubao's core competitive edge during a December 18 interview, noting the integral importance of algorithms, talent, data, and engineering in cultivating a successful modelHowever, he quickly highlighted the key determinant was successfully breaking the traditional divides in tech applications across consumer and business sectors, effectively internalizing and unifying model capabilities to enhance user experiences.

The strategic emphasis on consistently optimizing functionalities, boosting performance, and lowering costs has allowed Doubao to meet diverse user needs across both consumer and business marketsCollaborative endeavors with players in the automotive and technology sectors are expanding the model's operational footprint within smart hardware applications.

Moreover, Doubao's ascendance can be traced back to ByteDance's unwavering commitment to substantial investments in foundational models

Zhang Yiming, the founder of ByteDance, strongly believes in the principle that "great effort leads to remarkable outcomes," which applies directly to their large model initiatives.

Reports indicate that ByteDance allocated an astonishing 80 billion yuan to AI in 2024, nearly matching the combined capital spending of China's three tech giants, which totals approximately 100 billion yuanTheir projected capital expenditure for 2025 is expected to soar to around 160 billion yuan, primarily focused on AI computational resources and data center infrastructure development.

The industry has acknowledged the commendable achievements made by ByteDance with the Doubao large model, particularly from both technological advancement and commercialization perspectivesAs Zhou Yahui, the founder of Kunlun Wanwei, noted in a November 28 post, while he deemed ByteDance's 2023 AI strategy lacking, it does not diminish their noteworthy performance in 2024.

The rising popularity of the Doubao model has led to a significant increase in stock prices for numerous concept stocks, indicating heightened market interest and anticipation for the AI sector

Companies such as Sanwei Communication, Zhangyue Technology, Yaowang Technology, Tianxiashow, Vision China, and Shengguang Group have all benefited from Doubao-related stock surges and have addressed inquiries regarding their affiliations or collaborations related to Doubao in various investor relations platforms.

Upon further investigation, many of these companies have confirmed existing or potential cooperations with Doubao in areas such as AI technology, intelligent devices, and digital human interfacesThere are primarily two focal points emerging from this collaboration trend: hardware and softwareFor instance, Zhongke Lanyun, a leading company in wireless audio system-on-chip design, has launched its third-generation BT895x chip, which is now featured in the market’s second AI-enabled headphones, compatible with the Doubao model.

Zhongke Lanyun has also deeply partnered with ByteDance's cloud service platform, Volcano Engine, achieving integrations that produce software and hardware solutions tailored for Doubao

Additionally, Nanjing Technology has announced its engagement with Doubao, emphasizing their role as a comprehensive agent for Volcano Engine’s products across multiple sectors while pursuing synergies in new-generation zero-trust network architecture.

However, not all associated narratives surrounding Doubao have been positively affirmedCompanies like Lexin Technology and Yiyuan Communication clarified their lack of cooperation with Doubao, emphasizing that while they provide IoT chipsets and modules for various industries, they have no specific plans to delve into the AI-based toy market.

Consequently, Yiyuan Communication echoed similar sentiments, noting their focus on wireless communication modules and solutions, indicating that the AI toy sector does not constitute a primary operational avenue for the companyAs market enthusiasm swells, it also brings forth risks—some firms exploit the hype surrounding Doubao to amplify or fabricate endorsements in a bid to heighten stock prices, fostering misleading speculative behavior that not only disrupts market order but also poses considerable risks for investors.

ByteDance has issued warnings regarding this phenomenon, cautioning against the rampant speculation surrounding "Doubao concept stocks" laden with exaggerations and even falsehoods

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