Shulou(Shulou.com)06/03 Report--

There is a famous idea in game theory, which we all know, called the Prisoner's Dilemma.

And this theory has such an extension, which is often used to explain the situation that complex technology and Internet companies may face when they reach a certain stage of development, which is called the "repeated Prisoner's Dilemma": several prisoners are caught in a dilemma. They all want to help next door. As a result, everyone can only keep the original equipment, and then fall into the awkward situation of an endless cycle.

When a company is faced with many problems, such as technology research and development, marketing, products, operation, administration and talent reserve, it may fall into a similar situation because of limited resources.

For example, Xiaomi, which has been plagued by various problems since its listing, seems to show such a situation today: insufficient R & D costs are causing products to fail at the end of the market; in order to save this situation, Xiaomi continues to increase its marketing. It also leads to the further squeeze of R & D investment.

This cycle is reflected in Xiaomi's product reputation, and then to the financial report to the stock price. A series of signs seem to be showing that Xiaomi could fall into a cooking without rice called "research and development".

Millet fatigue behind the financial report

Let's start with the financial report. On November 19, Xiaomi just released its Q3 results.

In the second financial report after listing, Xiaomi handed over the positive and negative results. On the one hand, the growth rate of IoT market and overseas market of mobile phone is obvious. On the other hand, for the domestic core market, Xiaomi's shipments are slowing down, and even institutional data show that Xiaomi's domestic shipments of mobile phones have begun to decline.

For example, IDC shows that Xiaomi Q3 shipments are down from the same period last year; according to Counterpoint, Xiaomi's domestic market share is down 15% from the same period last year.

Another problem exposed after the financial report is that the average shipping price of Xiaomi mobile phone system still does not go up.

According to Q3 data, the current global average price of Xiaomi phones is 1052 yuan each. As a whole, it is still at the level of low-cost machines. In other words, Xiaomi's attempt at the high end of the market does not drive the ability of brand premium, and fast delivery at low prices is still Xiaomi's umbrella.

At the same time, although Xiaomi's share price rose after the financial report, due to the news of holding a group with Meitu to keep warm. But the share price of Xiaomi continued to fall throughout Q3.

Why is this?

In the final analysis, Xiaomi still did not come up with a convincing product in this critical quarter of the mobile phone market. Especially in the vanguard of the flagship plane, MIX 3, which made its debut this year, has shown almost one-sided poor reviews on social networks and media reviews.

The media are more likely to accuse MIX 3 of having no off-screen fingerprints, no 3D structured light, no high-power fast charging, let alone three-camera lens, and its main configuration is almost exactly the same as that of MIX 2S and Xiaomi 8, which is only equivalent to the slide version of MIX 2S. On the other hand, a large number of users have exposed a large number of problems, such as network outage, broken loudspeaker, abnormal charging and so on.

As we all know, the performance of flagship aircraft means too much. The weakness of MIX3 directly leads to the above effects: in the domestic market, which is more in pursuit of experience and technology, Xiaomi phones begin to withdraw rapidly from the core competition community; the high-end market cannot be opened, and sales can only be made up by the low end; the brand wind reviews represented by flagship machines have been declining, and the capital market has begun to lose patience, causing the stock price to continue to decline.

However, anyway, we are sure that there is a good chance that Xiaomi's new flagship will follow the old path, witness how many "cool techs" PPT, but can not find shark fin with three pairs of chopsticks, and witness Xiaomi's marketing techniques become the martial arts of Xiaomi.

Behind this "life-and-death fatigue" of Xiaomi model, there is such a reality: the R & D layout that continues to open low and walk low is making it difficult for Xiaomi to squeeze out its technological highlights.

Behind the defeat of the high end, "cool techs" is really not black anymore.

Obviously, Xiaomi knows how important R & D is to a technology company. Lei Jun said, "if you want to become a great company in this industry, I think it is necessary to have autonomy in core technology before the company can go far." The words are still ringing in one's ears. At the same time, however, the actual situation of Xiaomi's low R & D investment in recent years is more and more obvious from the deep layer and appears on the surface of Xiaomi.

You know, the general trend of the global smartphone industry today is that R & D is becoming more and more expensive. Today, the mobile phone market has completely entered the deep water of research and development, and Apple has begun to tell the story of chip computing; Huawei spent nearly $90 billion on research and development in 2017!

In the future, AI, chip, photovoltaic, graphene, any technology will come to the real world with the brand "We are expensive and complex".

Perhaps it can be said that the technological exploration of mobile phones has completely fallen into the situation of "heavy sword without edge, big skill without skill".

However, the alternative Xiaomi does the opposite. In 2017, Xiaomi spent 3.2 billion yuan on research and development. In interesting contrast, Xiaomi's marketing expenses reached an astonishing 1.9 billion yuan in the same period. In other words, what I study for 10 yuan, I have to use 6 yuan to find a way to sell it. I wonder if you have heard the story of health products?

Low R & D and high marketing is not a good phenomenon for technology companies.

When nutrients are difficult to meet the consumption, it will affect the normal trend of product iteration and technology upgrading after a period of time. For example, Xiaomi chip, which attracted wide attention last year, still hasn't heard from the second generation a year and a half later. At several technological sticking points in today's mobile phone market, such as AI, 3D structured light, fingerprinting, and hardware / software collaborative technology, Xiaomi also gave up resistance with a posture of eye-to-eye defense, instead showing a product posture of "anyway, we have plenty of cool techs, but we won't tell you what it is."

When Xiaomi used to use "cool techs" as its trademark, it is difficult to "produce" new cool techs. In fact, most of Xiaomi's proud "cool techs" is someone else's technology. Xiaomi's real skill is to win eyeballs by following the trend of design and marketing, and a repeated prisoner's dilemma seems to be in front of it.

Millet without Millet: the Dead Knot in the Prisoner's Dilemma

The problem Xiaomi faces now is when all players in the market significantly raise the level of R & D investment and aim at chain innovation. Xiaomi continues to be thin in the field of research and development, even showing the early phenomenon of technological thirst.

In order to maintain the expansion of shipments on paper and maintain the bottom line of share prices, we need to pay more attention to marketing, channels, investment, and overseas markets, which do not change the product itself, but also cost money.

However, this is more or less a bit of a hard bet on consumer support.

Further failure to come up with new things in R & D will only lead to a further deterioration in the competitiveness of products, new technologies can not keep up with, or can only do some "pseudo-updates" at the verbal level. This is tantamount to covering your ears and stealing the bell, so Xiaomi's reputation, especially that of its flagship machine, is likely to hit bottom. The saddest hurdle is that when public opinion and the market gradually guard against Xiaomi's technological aphasia, the pressure will fall on the advertising and marketing field on which Xiaomi depends for survival.

But what if you put all your eggs in one basket in research and development? This field of "sitting on a bench for ten years" is the most long-term but too slow room for value growth. This is not in line with the reality that the newly listed Xiaomi must brush its performance hard, and it is also not in line with the strategic trade-offs that Xiaomi shows today.

Neither left nor right, no matter how we go, we will return to the original contradiction, which may be the main contradiction that Xiaomi has to deal with in strategic decision-making today. After all, there is no ballast rice in the technical end, how to display clever cooking skills in marketing, it is impossible to serve delicious banquets after all.

Today's Xiaomi may really need to run hard to catch up with the millet in the heart of that rice noodle. No number on the books should be exchanged for the expectations of supporters.

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