We always think that there is a solution to the problem, and sometimes it is the solution itself that creates more problems.
On December 26, 2013, the Ministry of Industry and Information Technology issued a pilot approval for mobile communication resale business to 11 enterprises, which opened the pace of private capital entering the telecommunications field, which triggered a round of applause at that time.
If the vision is limited to 2013, this is undoubtedly a win-win Pareto improvement, which will not only help stimulate the vitality of the telecommunications market competition, but also provide more choices and better services for consumers, and provide a signpost for further institutional reform of the telecommunications market.
In fact, after 2013, the three major operators have indeed promoted large-scale "speed-up and fee reduction" and optimization of services, and it is difficult to say that there is no private operator promotion. It's just that the later stories are not all such a good side.
Private operators have a more popular name , virtual operators , and the vast majority of the harassing calls we've ever received come from. Therefore, a considerable part of the draft anti-telecommunications network fraud law submitted in October last year is to rectify the chaos of virtual numbers. Most of the private operators who received the approval at the beginning stopped investing in the communication field.
But on the other hand, it is this chaos that highlights the perseverance of a small number of players such as Xiaomi Mobile.
On January 17, 2022, Xiaomi Mobile upgraded its brand and officially announced its brand proposition with simplicity and trustworthiness as the core, intending to connect users with a new brand image, positioning and better service in the new stage of development. At this time, Xiaomi Mobile has served five million users in total and is the largest private communication operator in China.
It is never the solution that can solve the problem, but the person who is willing to solve the problem.
First, oranges are born in Huainan, why is it a citrus?
Worldwide, the communications resale business is a sunrise industry.
In the 1990s, the British government first began to censor the long-standing "duopoly" of the telecommunications market. In the following years, European countries have also promoted the opening up of telecommunications services, in this wave, The First Telecommunications Leasing Network Operation Model, Sense was established in 1998, followed by Virgin Mobile, Tesco Mobile, Giffgaff, NEUF and other mobile virtual operators (MVNO) in European countries mushroomed, by 2010, the global virtual operators have reached more than 1,000.
Although the market has entered a mature period, the communication resale business is still rapidly developing under the impetus of governments, between 2018 and 2020, the number of global virtual operators increased by about 180, and the market share in Western Europe and North America reached 26.3% and 22.3%, respectively, while in the Asia-Pacific region, including China, the virtual operator user share was 4.2%, lagging behind the global average of 5.8%.
Why is it that virtual operators in Europe and the United States can occupy a quarter of the country, but in China, they are not doing well?
Among the reasons, first of all, the scale of China's Internet market is huge, the system is not complete, which leads to the development of private operators inevitably accompanied by the phenomenon of gray production, mainly applied to the 170 section of the virtual number, malicious phone accounted for 8.6% of all malicious numbers, that is, an average of 12 malicious numbers are 170 numbers, so many virtual number user communications are easily intercepted by various software, which leads to more virtual number spam information, poor user experience, hindering popularity. In turn, the delay in the popularization of virtual accounts has further deteriorated the user experience, and this negative cycle is an important reason hindering the development of private operators.
Second, virtual communication operations are themselves a long-term business, with low profits and slow development in the short term. The first foreign private operator, Sense, went bankrupt that year, and went from a pioneer to a martyr. The U.S. virtual operator user market share was only 0.5% in the first year of business start-up, and only reached 1% in the third year, and the average profit margin was only about 11%, far lower than the 30% of traditional telecommunications services.
Therefore, although the original intention of introducing private operators was to open up the telecommunications industry, this does not prevent it from still being a business with a very high threshold. If it is not with sufficient strategic patience and sufficient capital, pay the "sunk cost" in the early stage of market development, slowly expand the scale of users, but rush to make quick gains, hoping to get a high return immediately after getting the market access certificate, then it will soon be eaten by the market.
From this point of view, as the largest private operator at present, Xiaomi Mobile can play all over the world with simple and clear packages and business models, and steadily develop to today, which is not a "simple" thing in itself.
Second, because of the ugliness, it is simple, or to reduce the void?
The simple premise is "trustworthy".
As mentioned earlier, one of the core obstacles to the development of the current virtual operation market is the telecom harassment fraud represented by illegal access, illegal authorization, falsification, cloning, behavioral fraud, etc. If this problem cannot be solved, on the one hand, the virtual operator cannot be trusted, and on the other hand, it will greatly reduce the user experience - many security software directly identifies the virtual number as a fraudulent call.
Xiaomi Mobile, is one of the few private operators who try to make changes to the status quo, since its inception, Xiaomi Mobile has invested heavily in anti-harassment and anti-fraud, and its research and development of the "GreyHound" harassment fraud prevention and control system, effectively for the opening of the card into the network before, during and after the establishment of anti-harassment, fraud and other abnormal behavior trigger mechanism, to avoid the number is used for harassment fraud, spam SMS and other purposes. Higher security standards are met under secure and compliant data protection.
On the basis of security, Xiaomi Mobile has built a product and service system that saves consumers worry and effort and money.
Many of us have such an experience: the services provided by the basic service provider are for all telecommunications users, and the needs of users are varied, so the content of the basic service package can only pursue large and complete, and it is impossible to meet the specific needs of users.
Conversely, the "too refined" product design for all different users and use scenarios that are satisfied with the corresponding packages will make the package series become huge and complex, especially after a series of changes, it is impossible to choose except for professional service personnel. In addition to increasing the difficulty of service, such a situation can also easily lead to consumers being confused, or choosing a large circle but not much discount.
The Internet gene of Xiaomi Mobile determines that it has this innate advantage in insight into users, and is good at accurate positioning and grasping the "commonality" behind the needs of many different users, so as to meet the "greatest common divisor needs" of different users with the simplest product functions. At the beginning of its launch in 2015, Xiaomi Mobile only released two core products, which are not only cheap and generous, but also meet the needs of different occupations and different scenarios through "micro-customization".
Simple product design not only facilitates users, but also expands the user scale of the same product, reducing the maintenance and operating costs of operators with marginal effects, which is also one of the important reasons why Xiaomi can achieve price advantages in similar products. In addition, another core advantage of Xiaomi Mobile is that it attaches importance to operating services to give users a high-quality experience, from 3 minutes to minimize the threshold for processing, to the whole online process to eliminate offline "back and forth", to concise package instructions and free switching.
Therefore, Xiaomi Mobile's uniqueness in market positioning, product design and service experience is essentially an impact of the Internet's product thinking on the traditional telecommunications market, injecting new vitality and vitality into the communication market.
It can be expected that the share of Xiaomi Mobile in the communication market will grow steadily in the future, but in addition to digging deep into the market segment, private operators have more room for development.
Third, the era of the Internet of Things
What can make the industry overtake in curves is not acceleration, but new markets.
Why are China's private operators slow to develop? One of the main reasons is that the communication market is mature and the increment is small. In 2003, when the mobile communications resale business in the United States started, its mobile communication coverage rate was only 31%. In contrast, in 2013, when China approved the private operator license, the coverage rate of mobile communications has reached 91%, so even if a large part of the new users come from private operators, its overall market share is still small.
Therefore, the development direction of private operators is not to compete with traditional telecommunications for the stock market, but to move towards the new increment of the Internet of Things.
According to the report data, the number of IoT platform companies worldwide increased from 260 in 2015 and 450 in 2017 to 620 in 2019, an increase of 2.4 times, but from 2019, this number decreased for the first time to 613 in 2021.
According to ioT research institute IoT Analytics' recently released 2021 IoT Platform Company Insights Report, the number of IoT platforms has stopped growing after growing from 260 in 2015 to 613 in 2021. But this does not mean that the IoT tide is receding, but rather a symbol of its end of the obscurantist period and the official opening of the race: cloud-based IoT platforms have driven the growth of the entire IoT market, with IoT platform spending reaching $5 billion in 2020, and by 2026, this figure is expected to grow to 28 billion, with a compound growth rate of 33%.
In the future, the Internet of Things will be ubiquitous, and it will also bring more opportunities to the industry. A large number of products that originally had nothing to do with the Internet will be able to operate or transmit data through the Internet of Things, which is expected to build a terminal network that is nearly 3 times larger than that of mobile phones. Bring multiple values of connectivity, application, and data. This is undoubtedly an opportunity for virtual operators. Some insiders said in an interview that the future development of private operators will focus on enterprise-level cloud service solutions and 5G Internet of Things services, and these services will be gradually commercialized in the future.
It is foreseeable that as the largest private communication provider, Xiaomi Mobile's more flexible business mode and experience-oriented service capabilities will play an important role in interconnection in the field of Internet of Things ecology and gain a larger incremental market.
Therefore, Xiaomi Mobile's continuous improvement of service capabilities and promotion of its own brand upgrade is not only a long-term demand in the communication market, but also a "technical reserve" for greater development in the future, and such a future is not far away.
The market will eventually choose those brands that have chosen the market.
Author: Qian Hao
Edit: Angela