In 2021, Xiaomi experienced a roller coaster year.
In the mobile phone market, Xiaomi actually lacks a sense of existence this year. In 2021, Xiaomi released three flagship models of Xiaomi Mi 11 PRO, Xiaomi Mix 4, Xiaomi Mi 12 and folding mobile phone Mi MIX Fold, none of which became a hit. In the whole of 2021, Xiaomi's stock price also fell by more than 40%.
Xiaomi mobile phone decline of course has millet mentioned the supply chain lack of core, iPhone13 strong and other factors, but these factors have not affected oppo, vivo, glory and Samsung, from the perspective of internal factors, it may have Millet's focus and investment focus shifted to car manufacturing has a certain relationship.
In 2021, Xiaomi experienced a year of roller coasters
Xiaomi experienced a turning point in 2021 from the peak to the top.
Before the second quarter of 2021, Huawei's mobile phone business contracted, Xiaomi OV have reaped the dividends of the post-Huawei era, in the first half of 2021, Xiaomi's rise is gratifying, revenue from the smartphone business is 47.825 billion yuan, an increase of 0.5% year-on-year, Xiaomi shipments once reached the second place in the world.
However, the situation took a sharp turn for the worse in the third quarter of 2021, and according to the data of the third quarter, the shipment of Xiaomi mobile phones decreased from 52.9 million in the second quarter to 43.9 million in the third quarter. Shipments decreased 17% sequentially compared to this year's Q2 and 5.8% year-on-year compared to Q3 last year.
According to the statistics of the research agency Canalys, the domestic mobile phone market, in the first three quarters of 2021, Xiaomi's market share reached the lowest point in Q3 - 14%, and the domestic market ranked after vivo, OPPO and Glory.
From the objective environment, behind this is related to the rebound of honor mobile phones, the sale of iPhone13 series, the steady progress of OV and other factors, which makes the capital market realize that the competitive environment of the smart phone market has not landed, and the concerns of the capital market are once again reflected in Xiaomi's stock price.
In the past 2021, Xiaomi Group continued to repurchase shares, with a cumulative repurchase of about 343 million shares during the year, costing more than HK$8.4 billion, but still did not stop the downward trend of stock prices.
As of the close of trading on January 14, 2022, Xiaomi's stock price was only HK$18.6, and its market value was only HK$466 billion, down more than 40% from its highest point a year ago.
From today's point of view, large manufacturers are generally benchmarking Apple, and Xiaomi OV glory collective breakthrough high-end is already tacit understanding. Lei Jun's recent shouting of the slogan of "comprehensive benchmarking apples" has also aroused heated discussion.
However, from the perspective of market performance in 2021, the average selling price of Xiaomi's mobile phone, ASP, fell from 1116.7 yuan in the second quarter to 1090.5 yuan, compared with the average selling price of Apple and Samsung in 2021 - 5121 yuan and 2204 yuan, Xiaomi's high-end strategy is far from successful.
Objective market competition factors are external factors, from the perspective of internal factors, we will notice that Xiaomi's focus is shifting to the car-making business, but the industry competition environment in the mobile phone market has become more and more intense and complex, and the situation of Xiaomi in the main business may not be optimistic.
Will Xiaomi's car build drag down the future of the main business?
From the current point of view, Millet's investment in the car manufacturing level continues, its car-making strategic priority has been quite obvious, since the official announcement of car manufacturing in March 2021, Xiaomi and Lei Jun's relevant investment institutions have invested in dozens of automotive industry chain enterprises, covering intelligent driving, chips, power batteries and other fields.
For example, in the field of chips, Xiaomi has invested in Companies such as Yuntu Semiconductor, Yutai Microelectronics, Juxin Microelectronics, and Yizhao Microelectronics. In the field of batteries, it has invested in Enterprises such as Hive Energy, AVIC Lithium Battery, zhuhai Guanyu and so on.
According to the statistics of Guojin Securities, as of the end of September 2021, Xiaomi has invested in the layout of 62 enterprises in the field of intelligent vehicles, including 17 intelligent driving layouts, 13 intelligent electric layouts, and 6 intelligent cockpit layouts, of which 22 companies are new investments in 2021.
Recently, Xiaomi has also invested in Zhejiang Fute Technology Co., Ltd., a manufacturer of new energy auto parts, and Qixin Micro, a manufacturer of auto control chips, in addition, Yu Liguo, president of the former Jihu Automobile, joined the Xiaomi Automobile Department, and Lei Jun also said that the Xiaomi Mobile Phone Department will transport talents to the automobile business in the future.
According to Lei Jun's plan, Xiaomi Automobile will build a factory with an annual output of 300,000 vehicles in Beijing, and the car is expected to be mass-produced in the first half of 2024.
That is to say, the landing of Xiaomi's auto products will be 2 years later, from today's point of view, new energy vehicle subsidies are receding, the competition in the electric vehicle market is becoming more and more fierce, and Xiaomi's investment in the automotive field has just begun.
At present, Xiaomi's layout strategy is mainly to achieve the integration of the automotive industry chain by investing in industry supply chain manufacturers.
Xiaomi's investment layout, we can see Xiaomi in the field of AI automatic driving deployment, which is one of the core battlefields of smart cars, whether it is Tesla, Xiaopeng, Weilai, Baidu and other players are in the field for many years, Xiaomi needs to catch up from scratch, which is also a process that requires long-term accumulation and investment.
In the automotive sector, as a latecomer, it is often necessary to pay a greater price to surpass the existing leaders in the market.
Xiaomi already needs to continue to invest in the supply chain, software development, smart cockpit and other aspects, but there are still many places to spend money. Some insiders concluded that just to burn out a digital tram system, Weilai burned nearly 40 billion yuan, and Tesla burned more than 100 billion yuan.
According to Huawei's "pressure principle", new entrants must "burn" 200 billion yuan in a short period of time to smooth out the gap between the strength of new forces and new forces as soon as possible.
Evergrande Automobile has burned nearly 50 billion yuan so far, but still no car has achieved mass production, and to a certain extent, it has dragged down the entire Evergrande.
As a new car-making force, under the continuous investment layout, how long can 100 billion be burned, the prospect is still full of uncertainty.
But it can be known that car manufacturing is a long-term project, investment is a bottomless pit, Xiaomi is still a start-up company, whether it is the technical strength of the main business mobile phone, product competitiveness, brand influence is still in the continuous catch-up stage, at the current critical moment to invest in car manufacturing, which may continue to affect Xiaomi's investment in technology research and development at the mobile phone business level and product innovation energy and deep cultivation.
Xiaomi chose to enter the automotive industry not because it has already secured its position in the mobile phone market, but for several reasons:
On the one hand, Lei Jun is a believer in the theory of wind outlet. In the past, when Lei Jun talked about his early entrepreneurial experience, he once said that he worked harder than Ma Yun, but he did not succeed as Ma Yun. Lei Jun himself concluded that it was because he did not follow the trend.
From past experience, Lei Jun believes in following the trend, as long as it follows the layout of the future outlet, the chance of success is very large.
This obsession with the outlet and the firm belief in going with the flow make Lei Jun believe that electric vehicles are the next growth point after smartphones and the future of Xiaomi.
On the other hand, the high-speed growth time window of the mobile phone business has passed, and Xiaomi's judgment on the one hand is that Xiaomi has sat firmly in the top four in China, but in the high-end market to compete with Apple, Xiaomi knows that the strength is not enough, and it is unrealistic for the mobile phone market to seek high profits in the high-end market in a short period of time to achieve revenue growth. The mobile phone business has entered a stage bottleneck period, high investment and low return may be the norm, the input-output ratio is not high, and it needs to seek projects that drive stock price growth faster.
There is nothing wrong with this idea, Xiaomi also stressed that there is enough cash and cash flow to support the company's car-making business, and Xiaomi Automobile is not considering separate listing financing for the time being.
But in fact, spin-off and separate listing financing actually has benefits, it will not consume Xiaomi's cash flow too much, and can reserve more research and development investment funds for the main business of Xiaomi's mobile phone business.
According to the data, as of the end of 2020, the cash balance on Xiaomi's account is about 108 billion yuan, which is actually Xiaomi's hard money by relying on mobile phone business + IoT and life consumer products business, which could have been used for Xiaomi's future research and development investment in mobile phone business.
However, at present, Xiaomi does not want to spin off the car-making business, but to develop the car-making business into another core support point for Xiaomi's market value, breaking through the current market value limitations.
But the problem is that the automobile business is placed within Xiaomi, which may consume more of xiaomi's research and development investment in the mobile phone business in the future.
We look at the relationship between Xiaomi cars and mobile phones from the barrel theory.
The barrel theory was proposed by Laurence J. Peter, who pointed out that if a barrel wants to be filled with water, it must be equally flush and unbroken by each plank, and that the decisive role of the barrel in the amount of water is not the longest plank, but the shortest plank.
The essence of this theory refers to a common problem that any organization may face, that is, the various parts that make up the organization are often uneven, and the inferior parts often determine the level of the entire organization.
In Drucker's words, it makes more sense to base your performance on your own superior resources.
For Xiaomi, its advantages are based on the mobile phone business, and the valuation of the capital market is also concentrated on it. However, from the perspective of the industry, although Xiaomi has shown considerable growth performance in the past, Xiaomi has not yet established enough comprehensive competitiveness barriers in the main business. In particular, the competition in the mobile phone industry has developed to this day, and more and more emphasis has been placed on comprehensive competitiveness and hard-core technology.
The current problem is that Xiaomi lacks the ability to control the in-depth control of the mobile phone supply chain, and hard-core technologies such as chips, screens, systems, and communications have been Xiaomi's shortcomings for a long time, and the ability to innovate and persuade products and brand premiums is not enough.
Xiaomi's strength in the past is to enhance the product experience through the operation of upstream technology, but in 2021, from Xiaomi MIX FOLD, Xiaomi 11 Pro, Xiaomi 11 Ultra, Xiaomi MIX4, Redmi K40, Xiaomi Civi, etc., whether it is a straight phone or a folding screen phone, Xiaomi did not stand out.
According to the barrel theory, when the main business is not competitive enough, but at the same time the competitors become stronger, this time should think more about the short board of the barrel - mobile phone hard-core technology and innovation level of research and development investment, occupy a leading position in a category, and then distract from doing side business.
If it has not yet occupied a leading position in the core category, the negative effect of blind expansion of the category may be that it greatly involves the innovation and technology investment of the original core category, which will disperse the investment of a company in the human, financial and material resources of the core main business, which may eventually lead to the lack of competitiveness of the main business and the sideline business, falling into the quagmire of homogenization and price war.
We can actually see this from the product performance of Xiaomi mobile phones this year.
From the perspective of the board theory, the mobile phone business is the foundation of Xiaomi's giant ship, if the competitiveness of the mobile phone business is weakening, then Xiaomi's stock price is difficult to pull up, which is why Xiaomi announced the year of car manufacturing, the stock price fell by 40%, the capital market realized that Xiaomi's car-making prospects are not optimistic, but also aware of the lack of optimism in the main business of mobile phones.
From the current pattern of domestic mobile phones, many large manufacturers are entering the folding screen market, but whether OV or glory, at the level of mobile phone business is all in the posture, its product sales, market share is also in a stable growth trend.
In addition to Xiaomi's lack of explosive models, the MIX 4 and Xiaomi 11 Ultra released by Xiaomi have been exposed to problems such as burning WiFi.
In the folding mobile phone business, Xiaomi released the MIX Fold last year without solving the inherent shortcomings of the folding screen, it uses a U-shaped hinge, the screen will have a sense of blocked falling in the process of opening, and there are obvious gaps after folding.
OPPO Find N and Honor Magic V perform much better in solving the folding screen product experience such as one-handed grip, hinge, and crease. That is to say, Xiaomi, whether in the field of straight mobile phones or in the foldable mobile phone market, has not reflected the advantages of the product level.
Due to the inability to mass-produce in the past two years, car manufacturing may not add points to xiaomi mobile phone brands, but will weaken Xiaomi's professional brand image in the field of mobile phones and strengthen Xiaomi's image of outlet speculators, because whether it is mobile phones or cars, its brand premium comes from technical strength and product technology content.
If a company is unwilling to deepen hard-core technology and challenge the ultimate potential in its main business, how can people believe that it is a company that has the determination and ability to continue to deepen cultivation and innovate and make breakthroughs in the automotive field?
The overall situation of the mobile phone market is undecided, the environment has become more complicated, and the uncertainty of millet has become more
Back to the mobile phone market, the competition environment in the mobile phone market in 2022 is more complicated, and xiaomi faces more uncertainty.
In the mobile phone market, the current manufacturers have entered the stage of refining and deepening the high-end market, OV has invested more in the chip level, and Honor has inherited a large number of Huawei's R & D team, in the high-end battlefield products, technology research and development level continues to increase, the determination of the manufacturers is quite strong.
From Xiaomi to OV Glory four major domestic head manufacturers, objectively speaking, Xiaomi's staying power and comprehensive strength in product technology and competitiveness are weak. At present, it is actually necessary to continue to consolidate the core competitiveness of the mobile phone business, increase investment, focus on new product innovation, and strive to catch up.
But Xiaomi has put important energy into the battlefield of car building, and from the performance of 2021, to some extent, excessive investment in car manufacturing has actually affected the performance of mobile phone products.
Another noteworthy change in the mobile phone market in 2021 is the emergence of many old manufacturers and small manufacturers that have disappeared. There are Samsung abroad, and there are Coolpad, LeTV, Charm Blue, Lenovo Lemon, etc. in China, and some unknown new brands have also been born, such as Dingqiao, Thunderbird, Youchangxiang and so on.
Why is it that in the case of the increasing saturation of the mobile phone battlefield, new and old brands have come to stir up trouble?
On the one hand, this is related to Huawei's fading out and exit, without a strong opponent, many brands have seen the opportunity to share a piece of the pie, especially in the case of large manufacturers are fully impacting the high-end market, the low-end market has new opportunities.
Secondly, judging from the new machines released by these new and old brands, they are currently competing for the entry-level low-end market.
In addition to the distraction of Xiaomi's car, it is necessary to benchmark Apple in the mobile phone market.
This reveals a new signal: on the one hand, Xiaomi's double-line attack on mobile phones and cars will undoubtedly involve the investment energy of the main business. On the other hand, in order to fade the label of cost performance, Xiaomi may weaken the investment in the low-end mobile phone market, which undoubtedly gives other brands the opportunity to compete for the low-end market.
From the perspective of 2022, the product selection of the middle and low end may be more diversified and personalized.
In addition, Xiaomi is not optimistic in overseas markets now, and the pressure on mobile phone business will become more and more obvious.
A large part of Xiaomi's revenue comes from overseas markets, especially the Indian market, but the business environment in the Indian market is not optimistic.
For example, not long ago, foreign media said that the Indian Ministry of Finance notified Xiaomi India Pte Ltd of tax evasion of 653 million rupees (559.49 million yuan). The documents show that Xiaomi India paid royalties and license fees to Qualcomm and Beijing Xiaomi Mobile Software Company in the United States, and by not counting "royalties and license fees" in the transaction value, Xiaomi India evaded tariffs and became the beneficial owner of these imported mobile phones and their parts.
Xiaomi responded that Xiaomi adheres to legal and compliant operations around the world and abides by the relevant laws and regulations of the place of operation.
In essence, based on the importance of the Indian market to Xiaomi, we are more inclined to believe that Xiaomi is a compliant operation in India, and the essence of the current Indian notification of Xiaomi's tax evasion reflects the deterioration of india's business environment.
From the perspective of the past two years, India has banned many Chinese apps many times, from Tik Tok, WeChat, Baidu to UC. Obviously, India's uncertain supervision and deteriorating business environment have cast a shadow over the future of Xiaomi's mobile phones in the Indian market.
In addition, the signal and action of Samsung's return to the Chinese market is also very obvious, accompanied by a large number of small and medium-sized manufacturers re-entering the game, the rebound of glory, the uncertainty of overseas markets has become more, in fact, it has added more uncertainty to the growth of Xiaomi in the main business.
The car is a big fat in the eyes of many entrepreneurs, but it is also a big trap. From LeTV Jia Yueting to Evergrande Xu Jiayin, many big guys have suffocated for the car dream.
Whether the car building brings millet a second curve or a performance drag and burden still needs to be observed, but from the perspective of the mobile phone business, xiaomi's worst moment has not yet arrived.
In the case of the upward trend of stock prices and the lack of optimism in the growth momentum of the main business, opening up a new track of heavy investment sometimes does not provide more valuation support points for the stock price, but may weaken the investment energy and competitiveness of the main business at a critical moment, and then affect the stability of the market.
From this point of view, how to go in the future of Xiaomi, how to balance the relationship between the main business of mobile phones and the strategic priorities of the car manufacturing business, and test the wisdom of Lei Jun.
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