Shulou(Shulou.com)11/24 Report--

The problem may be the industry itself.

Author | Lu Yao

Editor | Sang Mingqiang

For a long time, if you talk about the mobile phone industry in 2023, it seems doomed that there will be nothing new.

Over the past year, more than a dozen conferences have been held in the industry. OPPO, Xiaomi, IQOO and Huawei have launched new mid-and high-end phones, such as OPPO's folding screen Find N2 and Xiaomi's 13 series, with a particularly fierce competition in the 4000-5000 yuan price band. But in contrast to the hot situation of the new planes, few people seem to pay attention to these anymore.

According to the latest data released by IDC, global smartphone shipments of Q4 fell 18.3% year-on-year in 2022 and 11% for the whole year. In response, institutional analysts also said bluntly that the market performance in the quarter was the worst in a decade.

During the same period, according to Counterpoint Research research, the decline in smartphone shipments in China has spread for five years after another double-digit decline in smartphone shipments in the whole year.

Specific to manufacturers, Apple, Samsung, Xiaomi, OPPO, vivo, the top five manufacturers collectively plummeted. Among them, Samsung and Apple fell 4.1% and 4% respectively, while domestic Xiaomi, OPPO and vivo also fell 19.8%, 22.7% and 22.8%, respectively.

If you look back at 2017, when domestic smartphone sales were at their peak, shipments also fell for the first time: 491 million units, down 12% from a year earlier. It is generally believed inside and outside the industry that after capacity climbing and online and offline multi-dimensional layout, channel competition and marketing can no longer play an absolute role, coupled with the large-scale expansion of the industrial chain during that period, which directly led to oversupply. With the decline of manufacturers' profit space, it also spread to the production link.

Interestingly, however, the problems faced by mobile phone manufacturers five or six years ago are very different from what they are now.

For example, at that time, Xiaomi was stuck in the supply chain, Jia Yueting's Letv mobile phone encountered a financing crisis, Luo Yonghao hit many suppliers with a hammer, and frequent personnel changes became a dominant factor restricting the development of Meizu. After that, OPPO and vivo came from behind, breaking the marketing mode of Internet thinking. During that time, manufacturers went hand in hand, but at least the market retained expectations for new technology leaps.

According to a report released by the China Academy of Information and Communications, in the first quarter of 2016, there were 274 smartphones on the market in China, with an average of 3 smartphones released every day. That number is second only to the peak in 2013, when 2288 phones were on the market a year. In the past 2022, Xiaomi and vivo released the one-inch 12s Ultra and flagship X90 Pro, as well as Apple's Smart Island animation.

From the perspective of the industry, following the definition of the appearance of the straight touch screen by iPhone, the whole industry has ushered in drastic reforms in product form, interaction mode, information acquisition efficiency and so on. There are more and more players, camera, color matching, screen design, performance continue to roll in, stacking competition, price war, and then eliminate some; when the replacement cycle is more than 3 years, manufacturers have fallen into the supply chain, self-developed chips, operating systems, smart Internet and other fields.

However, these have not caused any qualitative change. Because simply can not stop the decline in consumer demand, or even dilute the brand characteristics, followed by trapped in homogenization. Especially in the past two years, mobile phone bosses have begun to realize that as the multiple of market capacity shrinks, the way manufacturers used to engage in price wars and rely on incremental markets to make up for low profit margins is no longer feasible.

As a result, Huawei and Xiaomi have long stopped their mobile phone business and acquired pico layout VR instead. After Geely acquired Meizu, Luo Yonghao's entrepreneurial story turned to AR,iPhone on the original basis.

For more than a decade, Meizu, Xiaomi, Huawei, OV and other domestic brands, Huang Zhang, Lei Jun, Shen Wei, these names are involved in the torrent of history, not long or short, but it is enough to witness an industry go through its rising period completely.

However, if we change our way of thinking and go back to the product itself, it is not a question of whether there is a bottleneck in a certain technology, but that the user's imagination of the mobile phone has almost reached the extreme, the memory is high enough and the efficiency is fast enough. what is surging is only the wave of consumption and the change of the dimension of product innovation. Maybe the new demand needs VR, AR and other products to meet, but that will be in the future.

01. Internet Mode and Mobile Sea tactics at the beginning of this year, vivo founder Shen Wei still compared mobile phones to an industry with "long slopes and thick snow" in his Spring Festival speech, hoping to welcome the next decade of smartphones. I think the main reason behind this is that in 2022, vivo once again topped the domestic list with 18.6%, although the year-on-year growth rate fell by 25.1%.

We have to mention the data background here. Four authoritative organizations, IDC, Counterpoint, CINNO Research and Canalys, have concluded that the annual shipments of the domestic mobile phone market have dropped by nearly 20% compared with the same period last year. Among the top five on the list, OV plus Xiaomi dominated the list, but all experienced a decline of more than 20% from the same period last year; Glory is the only mobile phone manufacturer with year-on-year growth, Apple is relatively stable, and the share gap between Xiaomi and other manufacturers is gradually widening.

Shen Wei attributed the biggest challenge to the industry to the slowdown of technological innovation, saying that "it is necessary to avoid a price war as far as possible. The improvement of innovation ability and operational efficiency is the top priority of increasing efficiency and reducing cost." Even if we avoid "cold winter" and do not mention it, there is still an emphasis on reducing costs and increasing efficiency between the lines.

To some extent, vivo has the shadow of all kinds of players in the industry.

When it was first established in 2010, Shen Wei's thinking on brand positioning continued Duan Yongping's law of focus: "in the subdivision of the industry, establish a relative competitive advantage, and finally catch up." In fact, vivo is not the brand with the highest exposure rate, which can be traced back to its founder. Although Duan Yongping went out with OPPO Chen Mingyong, the former gave the outside world a sense of square, while the latter had a sharper personality.

Therefore, compared with the radical OPPO, vivo's marketing strategy can be said to be conservative. For example, OPPO, which is at the helm of Chen Mingyong, invested 50 billion yuan to build a 2000-person R & D team. On the contrary, vivo, some media revealed that the size of the entire chip team is only 200. originally, vivo also intended to make a high-profile core, but worried about changes in the external environment, after seeing Huawei being sanctioned by the United States, it chose to clamp its tail.

After comparing the products of the two companies, we can even see that vivo is following OPPO. For example, after the latter launched the "ultra-thin" Finder in 2014, vivo also hit the ultra-thin model within a month. After the full screen, drip screen, Bluetooth headsets, smartwatches to folding screen phones, OPPO restarted the Find series, which has been shut down for many years, in an attempt to compete for the high-end market vacated by Huawei, followed by vivo products.

Lagging behind and conservative are not like the characteristics that a brand with the first market share should have. when looking back on the development of vivo, we will find that historical decisions, superimposing current market strategies and watering vivo, which is leading in the domestic market, also magnify the company's hidden worries in the future.

The reality is: in the market competition, the sales champion vivo is still using offline aircraft-sea tactics as always.

In the "China Cool Alliance" ten years ago, manufacturers launched new phones within 100 yuan through the arrangement and combination of different configurations and functions. most of the products lacked new ideas, and ZTE, Kupai and Lenovo were no longer big players in the mobile phone industry after the price war. "they are all desperately trying to increase the configuration and features, as if whoever can launch the product the fastest will win," Cao Jingsheng, vice president of Coolpad, recalled in an interview.

However, this method of play has been accidentally preserved and continues to this day.

Due to the product layout, vivo does not like Xiaomi to adopt the strategy of "Internet marketing + extreme performance-price ratio". It makes efforts in first-and second-tier cities. The former's 21% market share is still mainly medium-and low-end models. According to media statistics, in the past two years, vivo has released more than 40 models in one year, far exceeding other similar brands. This is followed by the question of "high price and low configuration" and the difficult problem of system adaptation.

As a result, according to industry insiders' observation: vivo always needs to stock a lot of parts, but the effectiveness of the new machine is short, it can't be sold soon after it is released, and the parts that have been ordered cannot be returned, so they rely on the new models of doll style to rush the sales volume to the parts inventory. For example, the vivo y35m and v2230a submitted by vivo to the Ministry of Industry and Information Technology are the same except for different memory.

In addition to China Cooler, Meizu and Xiaomi, both of which released a number of products within 100 yuan of the price difference, released 50 red rice phones in nine years after the launch of the first red rice in 2013. of these, 11 models were launched in 2020, while Meizu, which had only 1-2 new models in the previous year, also released nine new phones in 2016.

The Xiaomi model has reached the border since it became the largest smartphone shipment in China in 2014. Even Lei Jun himself admits that mobile phones are facing innovation bottlenecks. The innovation of domestic manufacturers is becoming more and more limited, such as dual cameras, fingerprint identification, long standby and so on, repeatedly arranging and combining hardware configuration and functions, and Apple's innovation is also less and less.

On the other hand, Luo Yonghao, who does not have the advantage of upstream supply chain but is strict with mobile phones, also chooses contract factories to produce. It has been reported that compared with the low sales of hammers, Foxconn focuses on the production of Apple products, unlike the OPPO as the supply chain support of the mobile phone, the quality rate of hammer T1 is not high.

The competition is big, the profit is small, with Xiaomi as the representative, relying on online channels, relying on OEM stacking, the pursuit of cost-effective Internet model can not work, the promotion means of offline channels are more flexible, but the inventory problem is obvious.

Obviously, the rules of the game have changed a long time ago.

02, high-end is doomed, the key is how to understand the "high-end" in 2015, the contemporary mall on Zhongguancun Street ushered in a new face: Xiaomi House.

Lei Jun later pointed out that "Xiaomi will next shift the focus of sales channels from online marketing to brick-and-mortar stores." in the same year, a 100-person product appreciation meeting was held to release the first high-end millet Note top match. throughout the appreciation process, Lei Jun repeatedly mentioned the two key words "high cost of accessories and low rate of good products".

According to the data released by IDC at that time, smartphone shipments in the Chinese market fell 4.3% in the first quarter compared with the same period last year, which was the first time in the previous six years. The survey results of other institutions said that although the growth rate was likely to grow, the growth rate slowed down, revealing a message that the market stock decreased, mainly due to the decrease in first-time buyers.

But at that time, the demand for mobile phone functions was far from saturated. According to the results of a survey, nearly 60% of mobile Internet users change their phones, more than they bought for the first time. In other words, it is the low-end smartphones that cannot meet the needs of most users, and consumers are still happy to upgrade their phones to get a better experience.

On the other hand, the decline in the shipping rate also made it difficult for Xiaomi, which was valued at $46 billion at that time, to justify itself. in Lei Jun's view, the wave of replacement will be a dividend for his high-end layout.

"NOTE may not really make money." Lei Jun said.

Xiaomi Note stack in addition to Snapdragon 810 processor, there are 2K LCD screen, rear 1300 megapixels + OIS optical anti-shake, 3D glass back cover, HIFI chip, etc., and later his sentence "high-end should be product quality and performance high-end is called high-end, not expensive is high-end", has become a golden sentence to move users.

For Xiaomi, after the failure of Note 2 to hit the high end, the MIX series opened a comprehensive screen era, but the lack of supply chain and technology maturity finally led to the collapse of this generation of models. Lin Bin, president of Xiaomi, once said publicly that one of the reasons for the delay of Xiaomi 5 was the chip. At that time, Xiaomi 5 had decided to use Snapdragon 820 chip. Qualcomm used to release chips at a relatively fixed time, but Snapdragon 820 was not released on time. Xiaomi 5 also had to postpone.

Before 2018, flagship computers were all the rage, with magnifying and subdividing functions, shooting, music, games, processors, very thin bodies or large batteries. In essence, it is still to find differences in the process of stacking, on the basis of the upstream parts of the mobile phone industry, add some research and development achievements, "micro-innovation" has become the mainstream.

At that time, when the 10th anniversary of OPPO, vice president Wu Qiang made clear the prospect of brand upgrading, high-profile declared that OPPO will set off a brand upgrade war, vivo naturally will not leave too far, after all, mobile phone is a "seafood market", tuyere is too important for players.

In terms of practice, take vivo as an example, corresponding to the aforementioned "subdivision" strategy, the technology is not designed enough to put it together, so the vivo mobile phone that focuses on audio-visual technology and aesthetic design, optimizes the function of portrait photography, and creates double-sided soft portraits, all of which have become their own brand labels. Officially, this positioning is to be "design-driven" to meet the needs of users, while avoiding head-on confrontation with the main "cost-effective" and "high-performance" competitors.

Wait for the sales volume to come up, and then to make up for the deficiency, and enrich the background in 5G, design, AI and other technologies. To some extent, this strategy does work.

According to relevant statistics, in 2014, vivo was only a marginal brand in China's smartphone market; in 2015, vivo sales exceeded 35 million, ranking fourth in China; by 2021, vivo won the first place in the domestic market with 21.6 million sales and continues to this day.

Since the first generation X1, which sold at 2498 yuan a decade ago, vivo hopes to launch a double flagship, X focuses on the small screen flagship, Xplay focuses on the big screen and performance flagship, the starting price of the X90 series has reached 3699 yuan, and another product line, X Fold, makes efforts in the folding screen market.

At the end of last year, Hu Baishan, executive vice president of vivo, pointed out in an exclusive interview with the media: "in the past, most of the work was short-track things, not long-term." The share of mid-and low-end phones continues to decline, and the price segment of the Android market below 3000 yuan has been hit hard. He believes that the reason for the deficit between the low-and middle-end and the high-end market is the user mentality, and for most low-and middle-end users, the performance of mobile phones three years ago is also sufficient.

"as long as the equipment can be used, they will stick to it, but high-end users are not price-sensitive, and the frequency of replacement is the same as in the past."

Shen Wei compared 2022 to the year of vivo's high-end breakthrough. According to a set of Counterpoint data, vivo accounted for 13% of China's high-end phone market of more than 3500 yuan in the second quarter of 2022, second only to Apple. In the range of US $600 to US $799, vivo's share increased by 504% compared with the same period last year, and the average price of high-end products reached an all-time high of 6170 yuan.

In Hu Baishan's view, the product gap between vivo and Apple is getting smaller and smaller. "in fact, we are a generation and a half to two generations ahead of Apple."

But the problem is also obvious, vivo used to play and high-end path is not fully adapted. The opening of offline channels mainly depends on agents, and the actual profit points of high-end smartphones become thinner, and agents will match profit models to make up for retail revenue. Officials say that vivo terminals are more restrained, such as S-series, and adopt a defensive strategy in price, but the power of high-end phones will devolve to other models to enhance user experience.

On the other hand, in addition to the high-end products, consumers' requirements for service capacity are also rising, while vivo even if it reduces the quantity in the primary and secondary agents and cancels the second generation in the dealer link, but the front-end agency system is still the core. Vivo relies on distribution agents to build the back-end service system, which is also different from Apple, Huawei, Xiaomi direct stores and flagship stores.

In the past, through the machine sea strategy to win by quantity, vivo can make up for the lack of ecological income, but in the process of high-end, the impact of ecological lack will also be magnified.

In addition, although vivo has the largest share in the domestic market, it is not ranked among the total shipments of the global market in the same period. According to Strategy Analytics, Apple earned 68% of its revenue on Singles Day last year, with 14 and 13 contributing the most. JD.com 's Singles Day mobile phone is in the top 10. There is no vivo and no other Android flagship phones.

03. Why is the current mobile phone industry an innovative desert? in his "Imitation Law", French sociologist Tuld pointed out that in the process of human change, there are few new inventions, more transformation and imitation. When the imagination of a field is fully developed, even if every segment or technology can be called gold, it is also a desert of innovation. The mobile phone industry is a typical example.

From the birth of the first tube computer and the emergence of the real consumer notebook in 1946 to the release of the first generation smartphone by Steve Jobs, the third generation of personal PC was defined. The ultimate goal of changing the interaction mode and machine shape is to meet the needs of users on this basis.

The logic behind the dilemma of the smartphone industry is easy to understand: sales are declining, but it is still a rigid necessity, and the scene is more widely used, but at the same time it becomes more blurred; as the function becomes more and more powerful and the durability becomes better and better, then in this process, it is natural to eliminate some mid-and low-end products, while the high-end trend that is being mentioned now is decided by both manufacturers and users.

Throughout the fierce battle over the years, after several rounds of reshuffle, there are only a handful of capable players from hundreds of mobile phone manufacturers more than a decade ago. In the past, manufacturers were held back by cash flow and supply chain, obsessed with using the Internet model or machine-sea tactics, such as hammer pledged shares, Kupai sold to Letv, when the big cola mobile phone business was terminated in 2016, founder Ding Xiuhong said in the open letter, "the reshuffle of the mobile phone industry is faster and more brutal than expected."

When the production capacity and capital problems are solved, players are busy stacking materials, hardware and software volume, but these are not as saturated as the needs of users.

Almost all of the average processors on the market can run current popular mobile games; 5G usage is lower than expected, and there is a lack of new killer applications on the market; no matter how many cameras, most of the tasks are still to meet basic daily needs. The actual experience improvement brought about by changing the mobile phone is getting less and less, and the driving force is naturally reduced sharply.

For example, after Xiaomi, who once led the Internet mobile phone and advocated "extreme" players, looked around, Lei Jun put his last venture in building a car. In 2019, Huawei established BU, a smart driving solution, to enter the car market and become an incremental parts supplier to Smart Networked cars. Under the trend of automobile intelligent transformation, Xu Zhijun, Huawei's rotating director, said that incremental components will account for 70% of the value of a car.

Since 2021, in addition to R & D patents, it has been reported that Apple has communicated with a number of hardware manufacturers that the first car will be a fully self-driving car, with car-building plans moving from corporate services to personal consumption. OPPO has applied for a number of car patents to enter the car, and vivo has also released a new brand of Jovi InCar vehicle networking products. Officials said that they will join hands with car factories, car networking service providers and application developers to build a unified open ecology inside and outside the car.

In contrast, new energy car companies, Geely and Weilai, joined the camp of making mobile phones; Tesla founder Musk once set up a Twitter to recruit mobile phone experts to work in his company.

Yu Lei, a former vice president of Jin Li, believes that smartphones and smart cars will become two important terminals and entrances to the ecology in the future, while Wang Chenglu, a Huawei executive, describes smart cars as "mobile phones with four wheels". This means that mobile phones have chip research and development capabilities, batteries and other related software and hardware technologies, and more importantly, the future trend of vehicle-machine interconnection has contributed to the migration of mobile phones to new energy vehicles at the level of the industry chain.

Demand doesn't go away, it's just another way to survive.

Imperceptibly, people regard the mobile phone as a hardware product that adapts to the needs of the outside world, such as car-machine interconnection, smart home and so on. They only think about problems in a cuboid tool, and the current bottleneck is obvious enough. The historical track has proved that in many cases, the final possibility of industrial evolution is to move towards integration, and instead of revolving around the mobile phone itself, the trend of "mobile +" may continue in the future.

This article comes from the official account of Wechat: new eyes (ID:xinmouls), author: Lu Yao

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