Huawei, which "does not build cars", recreates Huawei

This article is from the WeChat public account "Internet Jianghu", author: Internet Jianghu, Pencil Road is published with permission.

In the past year, Huawei's survival path has not been as easy as the outside world thinks.

Affected by the supply of RF chips, the flagship P50 series released by Huawei last year was only available for 4G, and the high-end mobile phone market further contracted. On the other hand, the growth of Huawei's automotive-related business does not seem to be so ideal. According to the Association, from April to October 2020, sales of the Cyrus SF5 totaled less than 6,000 units.

Under pressure, Huawei still brought a new new product launch conference at the end of last year, releasing many products such as the P50 treasure box of the new folding screen machine, the Huawei WATCH D smart watch, and the first Hongmeng Automobile AITO Q&I M5. The stage is still gorgeous, Yu Chengdong is still confident, and behind the gorgeous performance, Huawei is also facing a more difficult living environment.

Behind the "no car", what is Huawei's survival background?

Huawei's survival is difficult to shu dao.

If you summarize the strategy of the past two years in one sentence, it is more appropriate to describe it as "everything for survival". According to the recent financial report released by Huawei, in the first three quarters of 2021, due to the decline in glory spin-offs and terminal sales, the company's operating income decreased by 32% year-on-year to 455.8 billion yuan, and it is expected that the sales revenue in 2021 will be about 634 billion yuan, down about 28.8% year-on-year.

Even so, Huawei still retains the most core mobile phone business assets: brand, technology, and channels.

Huawei's "smart selection" is the core of Huawei's brand in the past two years, and the automotive-related business has gradually begun to carry more brand + channel assets of mobile phone business. Huawei has two bottom cards, one is the brand and the other is technology.

In terms of brand, Huawei has always brought its own aura, but the brand aura is not a panacea.

The essence of Smart Choice is actually the empowerment of channel + brand, under the aura of Huawei's brand, it is not difficult to achieve short-term growth, which is why after Cyrus SF5 joined Huawei Smart Choice, sales have grown rapidly. However, the competitive brand law of the incremental market is greater than the technical law, and the competition in the stock market is greater than the brand law. The subsequent decline in sales of the Cyrus SF5 seems to prove this.

In terms of technology, the accumulation of mechanical technology is equally important as the accumulation of intelligent technology.

A reality that cannot be ignored is that consumers in the automotive industry are more strict and rational about products. Consumers not only look at the Zhonghua brand, but also value the mechanical product strength of the Sf5, which requires a large number of production technology, supply chain technology accumulation and integration of the automotive OEMs.

Brand and technology are Huawei's strengths, but they are obviously not the strengths of Xiaokang Group. According to the data, by the end of November 2021, the cumulative sales of the Xilis SF5 will be only 6997 vehicles, which is far from the goal of 5 million yuan per year shouted by Yu Chengdong.

The sales figures seem to indicate that Xiaokang Group may not be the best choice for Huawei's entry into the car track. Previously, there may also be some different views on the cooperation between the two sides within Huawei.

According to tencent deep network report, a recently departed Huawei management said about the current cooperation between Huawei and car companies: "Rolls-Royce engines put on tractors, it must still be tractors, not Rolls-Royce." ”

"Xiaokang Group is more like Huawei's foundry, huawei cars are more like a real nameless, but Xiaokang Group's technical accumulation in the automotive field may not be enough, whether in production quality control or experience, there is still a certain gap with mainstream domestic manufacturers." An auto industry insider revealed.

In the view of the Internet jianghu, it is not so much a foundry as a "technology testing ground", and the cooperation with BAIC, Xiaokang Group and other companies is only superficial, and in the depth, Huawei's purpose may be to seize the technological added value behind the iteration of automobile electrification.

At present, the high value-added chain of the automotive industry is shifting. In the past, the high added value of automotive products was a brand, and the other was actually a traditional automotive product force with internal combustion engine and gearbox as the core technology. In the era of new energy, this value logic has been subverted, Tesla, Weilai, Xiaopeng and other brands can also have a good premium, high added value to come to intelligence, automatic driving and software ecological technology.

For Huawei, compared with building cars itself, Huawei's purpose may be more to seize the ecology of future automatic driving. Huawei's purpose is more to do a platform ecology, the more cars that access the Hongmeng intelligent cockpit in the future, the more complete the Hongmeng ecology will be, and the higher the technical added value brought by new energy vehicle products.

On the route, Huawei chose three ways:

The first is the ecological expansion at the software level.

At present, Huawei is also constantly expanding new partners, at present, in addition to the Cyris SF5, BYD Han, Volvo XC60 are equipped with Huawei HiCar, and Huawei has also reached a cooperation with Mercedes-Benz to carry HMS for Car on the new generation of S-Class. Overall, the degree of cooperation in this kind of expansion is relatively shallow, Huawei is more like the role of the supplier of car networking technology, more significance may lie in the entrance value and traffic value of the internet of vehicles, and the added value of technology is relatively limited.

The second is the integrated supply of software and hardware.

Huawei's cooperation with Xiaokang Group is an example, Huawei provides software and hardware supplies including HiCar, DriveOne all-in-one electric drive system, motor controller, lidar and other software and hardware supplies, and deeply empowers products.

Such cooperation will consume a lot of technical and talent resources, and similarly, the deeper the empowerment, the higher the added value of the technology, and the more cash flow can be brought in the future.

This kind of cooperation is attractive to small and medium-sized OEMs that lack competitiveness in the automotive track, but for some powerful OEMs, such a way is difficult to accept. As Chen Hong, chairman of SAIC, said: "It's like a company providing us with a holistic solution, so that it becomes the soul and SAIC becomes the body."

The third is to provide a full set of HI solutions for car companies, including Hongmeng car machines and self-developed on-board computing chips.

This solution is relatively easier to accept by mainstream OEMs, and Huawei has invested a lot of resources in this field, after Wang Jun, chief operating officer of Huawei's smart car solution BU, said that Huawei has invested more than $1 billion (about 6.37 billion yuan) in auto parts research and development, with a total R&D team of 5,000 people.

For Huawei, the situation may not be as optimistic as imagined, with the soaring delivery of tesla, Xiaopeng, Weilai and other brands in the new car-making forces, the head effect of the industry will become more and more obvious, and the market space left for hongmeng ecology is also shrinking.

In the long run, the richness and maturity of new technologies are the key to supporting Huawei's long-term growth, and Huawei's technical strength and brand strength are not weak, which may have some advantages in future competition.

In the second half of the competition of technology companies, where is the opportunity for Huawei to turn around?

The car is Huawei's present and Huawei's future, but not Huawei's "fundamentals". What are the fundamentals of Huawei's future growth? The Internet jianghu believes that in fact, there are three core capabilities.

First of all, the design ability and manufacturing system of high-end new products with HiSilicon as the core.

In recent years, Huawei has actually been trying to retain HiSilicon's complete high-end chip design capabilities, which means that in the field of high-end chips, Huawei still has the opportunity to turn over.

One fact is that the chip manufacturing industry is making less and less progress, Moore's Law is close to failure, and the progress of the process is becoming more and more difficult. Due to the physical laws of the quantum tunneling effect, the chip process is approaching the limit, which has led to chip companies such as Intel and Nvidia having been "squeezing toothpaste" in technology.

In other words, there is actually a technical "Gou and dividend" in the chip industry: the mainstream manufacturers with slow progress in process technology are "sneaking and stealing" and the global core shortage is serious under the influence of the epidemic, and the latecomers have more opportunities to catch up.

In fact, before chip manufacturing has a feasible landing plan, Huawei seems to be trying to preserve HiSilicon's talents and technical strength through "design authorization".

Previously, Huawei's official flagship store had once listed a "Dingqiao" brand mobile phone equipped with a Kirin 985 5G version of the chip, and its products were almost the same as Huawei's Nova8 Pro in terms of shape design and hardware parameters, so there was speculation that this may be a third-party brand product under the authorization of Huawei's design, the purpose of which is to bypass the impact of chip supply and pave the way for HiSilicon.

Secondly, the ecological capability of AIOT with Hongmeng operating system as the core.

Judging from Huawei's actions, whether it is the launch of the AITO Q&I M5 equipped with Huawei's core technical capabilities or the recent news of cooperating with Volkswagen to create a joint venture, Huawei's purpose is very clear, that is, to continuously expand its technical and ecological influence.

First, we can continue to make the ecological cake of Hongmeng and continue to expand the imagination in the technology ecology and application ecology, and second, the deeper the technology ecology with Hongmeng as the core takes root in the industry, the more secure Huawei's overall AIOT ecological capabilities will be, and the less likely it is to be affected by external factors such as sanctions.

Finally, with the investment in basic disciplines as the core, the ability to continuously innovate in technology.

The 5G technology patent fee is actually a meaningful income for Huawei, which actually verifies that domestic technology companies can bring benefits and returns by investing in basic disciplines.

First of all, the most intuitive income is the income from intellectual property rights, typically like Nokia, although Nokia essentially withdrew from the mobile phone market, but in 2018, Nokia's patent revenue reached a staggering 173.3 billion yuan, which has exceeded Xiaomi's turnover.

For a technology company, if it has considerable intellectual property income, it means: 1, it stands at the top of the industry's value chain, 2, the industry's technology competition, it will be in a dominant position for a long time.

The Internet jianghu believes that the competition in the technology industry is the competition of innovation ability, which is actually the new ability to innovate in the field of STEAM. With the escalation of competition in the industry, the leading edge of technology companies in STEAM technology can bring excess revenue.

For example, the advantages of technology can further radiate the product side, which in turn can drive business growth.

The Apple M1 chip is a good example. The data shows that after the launch of the new M1 chip equipped with a technology-leading peer, its shipments increased by 111.5%, and it should be known that such an increase was achieved by products with a unit price of more than $1,000.

According to Huawei's "Innovation and Intellectual Property White Paper 2020", by the end of 2020, Huawei holds more than 100,000 valid authorized patents worldwide, and more than 90% of patents are invention patents. The revenue from these intellectual property rights is likely to become an important growth support point in the future.

In fact, the three fundamentals are the core of Huawei's "survival". The logic is that technological innovation triggers industrial innovation, which in turn creates new demands and new markets, bringing more business increments. Whether it is the release of new products in the mobile phone business or the recent actions of Huawei in the automotive industry, in essence, it is actually a continuation of such a core logic.

From the perspective of the general environment, the development of science and technology in the world has entered a period of relative stagnation, at this stage, compared with the company's own technology application ability, the ability of basic disciplines and technology research and development capabilities are the key to supporting the value of future growth.

For Huawei, it is difficult to survive how to maintain a steady stream of cash flow under the current situation that the mobile phone business is difficult to recover in the short term before the domestic chip manufacturing industry can really fight. The cycle of technology realization may be relatively short, but the monetization cycle of investment in basic disciplines is very long. Under the long-term high investment, it is not yet known whether there will be industry-influential achievements such as polarization codes in the future.

Write at the end

Under THE SANCTIONS OF THE UNITED STATES, HUAWEI'S SURVIVAL ROAD IN THE PAST TWO YEARS HAS BEEN QUITE DIFFICULT, AND HUAWEI'S DECISION-MAKERS HAVE ALWAYS UNDERSTOOD THAT DOMESTIC SUBSTITUTION IS THE ONLY WAY TO LIVE, ALTHOUGH THIS ROAD IS QUITE DIFFICULT AND NEEDS TO CONTINUE TO GO ON.

Because this is a difficult road, Huawei does not have many opportunities to make mistakes. As Guo Ping, Huawei's rotating chairman, said: "Huawei itself is the only one who defeats Huawei, and the firm and correct direction, dynamic organization and culture are the real challenges we face. ”

Bless Huawei, the era of hard technology has arrived, which is undoubtedly the best stage left by the times for Huawei.