The author | Zhang Zerui
Editor| Zhao Yuan
In an industry, if there is a giant that has fallen and there is no possibility of recovery in the short term, then it is a godsend for other players in this industry.
Over the past two years, this opportunity has emerged in the smartphone market.
In the second quarter of 2020, the US ban on Huawei has not yet officially taken effect.
At that time, Huawei reached its highest point: its share of the domestic high-end smartphone market reached 47%. After the ban came into effect, Huawei's mobile phone business shrank rapidly, which also means that half of the high-end market space will be released in China.
Huawei's absence, who can make up for it?
Xiaomi, OPPO, vivo, honor and other domestic smartphone manufacturers have launched a new round of struggle, they all want to take the opportunity to eat the cake of the high-end market.
By the second half of 2021, reality had poured cold water on them: Huawei's vacated high-end mobile phone market had almost been eaten by the more powerful Apple.
According to CINNO Research data, in November 2021, apple accounted for 85.6% of the sales of models with Chinese mainland more than 5,000 yuan, Huawei accounted for 7.9%, and other brands accounted for 6.5% in total. Further back, in the same period of 2020, this data is 60.6% for Apple, 31.1% for Huawei, and 8.3% for the other.
This means that in this rare industry change, although they are all trying to hit the high end, they have lost to reality.
01 Why rush to the high end?
The domestic smartphone market, from the early backgammon to the later OPPO, vivo, OV has completely experienced the transformation of mobile phones from feature phones to smart phones.
Therefore, taking OV as a sample to explore the high-end of domestic smart phone brands has certain enlightenment significance.
In the past two years, OV has significantly increased its high-end layout, for the following reasons:
First, from the perspective of the general environment, after 2016, the smartphone market ended its high growth trend and entered a cold winter.
According to the data of the Academy of Information and Communications Technology, the domestic mobile phone market shipments in 2017 were 491 million units, down 12.3% year-on-year, and then in the first 11 months of 2018, the shipments were 379 million units, down 15.6% year-on-year.
At the end of 2018, LeTV, Coolpad, Gionee and other manufacturers are on the verge of extinction, Meizu, Hammer, 360, etc. have also reported layoffs, Meitu defected to Xiaomi, TCL mobile phones were stripped out of listed companies, Duowei, Nubia and so on have long declined.
Under the stock market, mobile phone brands need to find new growth logic.
Second, the market provides a good opportunity to hit the high-end.
The first opportunity is the replacement window brought by 5G.
On the one hand, the transition from 4G smart phones to 5G smart phones will bring new market increments in the short term; on the other hand, the Red Sea situation in the mobile phone market will not change in the long run, and the impact on the high-end is the only way for manufacturers to resist the pressure of the existing market.
The second opportunity is the market gap left by Huawei's sanctions.
IDC data shows that in the third quarter of 2019, Huawei's market share in China's smartphones was 42%, followed by vivo's 18.3%, OPPO's 16.6%, Xiaomi's 9.8%, and Apple's 8.2%. As mentioned above, by 2020, Huawei's share of the domestic high-end smartphone market will reach 47%, and it has also once reached the top of the global smartphone market.
But Huawei's fall is irreversible and rapid, and the technical blockade + geopolitical factors have forced it to sell the market, which provides a once-in-a-lifetime opportunity for Mi OV.
Third, from the perspective of OV itself, the competition in the middle and low-end market has intensified, and the differentiated advantages have been smoothed out.
For a long time, OV's aces were the R series and the X series, and their positioning was similar: focusing on the offline market, focusing on shape design and camera functions.
The biggest common denominator between the two series is that the processors they use are often not the Most Commonly Used Snapdragon 8 Series in the Android camp, but are more mid-range.
At that time, OV's strategy was to mainly attack the mid-range market, and the playing style was to give full play to the advantages of offline channels and cooperate with aggressive star marketing.
It really gave them a taste of sweetness. Taking OPPO as an example, from 2013 to 2018, the R series has undergone 8 major product iterations, and in most media reports, the cumulative sales of this series exceeded 100 million units.
But there is one biggest problem with this style of play: the moat built by relying on marketing and channels is not deep, and it is easy to be chased.
After 2015, the mobile phone industry began to enter homogeneous competition, and under the general situation of insufficient innovation, mobile phone manufacturers have increased their layout in channels and marketing, resulting in the differentiation advantages of OV being gradually erased.
02 Didn't meet the standard but tried my best
In order to impact the high-end market, OV has taken the following measures:
The first approach is to increase research and development efforts, with more emphasis on scientific and technological innovation.
In November 2018, OPPO founder and CEO Chen Mingyong said that in 2019, OPPO will increase its R&D budget from 4 billion to 10 billion; in December 2019, Chen Mingyong said that OPPO's R&D investment will reach 50 billion yuan in the next three years.
Vivo changed its brand attribute from "fashion + technology" to "technology + fashion" at the supplier conference in May 2018. Later, Hu Baishan, executive vice president of vivo, told the media, "The brand is the impression of consumers, and the impression of consumers on vivo in the past is younger, which will lead to a little more business people's good feelings for vivo, and the attributes of technology + fashion are blessed, which is bound to cause young people to love the vivo brand more." ”
On this basis, OPPO findX's periscope camera and vivo NEX's pop-up camera are among the few surprise innovations in the mobile phone industry in those years.
Then last year, OV joined the army of self-developed chips. OPPO released the NPU (neural network processor) chip MariSilicon X, and Vivo released the ISP chip vivo V1.
In this regard, Chen Mingyong said, "If a technology company does not have the underlying core technology, it cannot have a future; and the flagship product without the underlying core technology is a castle in the air."
The second approach is to further increase the number of high-end models.
OPPO cut the R series in 2018, replacing it with Reno, while restarting the find series and releasing the find X with a starting price of 4999 yuan. Vivo also launched the NEX series in June 2018, focusing on the high-end market.
Now, OPPO's high-end models include the findX series, sub-brands (Reno series, one plus series, realme series) of some models - their Pro version, the price has been explored to 4000 yuan price bracket. Vivo's high-end models include some models of nex series, IQOO flagship series and X series, the latter two of which will also raise the price of higher Pro versions to 4,000 yuan.
The third approach is to adjust the channel side and marketing layout.
According to media reports, for low-end models, OPPO has lowered the rebate and subsidy amount of offline dealers, and for Reno 10x zoom version and find x series, it will give dealers a higher rebate ratio.
After the restart of the find series, OPPO has also changed in the choice of spokespersons, such as Han Han of the find X2 series and Jiang Wen of the find X3 series.
For another example, when the NEX 3 model was released in 2019, Vivo said that it undertook the mission of vivo channel reform. It abandons vivo's previous offline channels and is only sold in less than 10,000 high-end sales points and flagship stores.
Hu Baishan once said, "For high-end users, they are accustomed to shopping in high-level and shopping malls, or stores with better experiences like Gome and Suning." We rationalized the entire channel so that NEX 3 appeared where high-end consumers would like to go, which is our understanding back to the essence of sales. ”
But these attempts by OV have not helped them go more smoothly in the high-end market, as mentioned above, the market released by Huawei is basically eaten by the more powerful Apple.
03 Why is it difficult to rush to the high-end?
In the global smartphone market, there are no more than three players who have gained a foothold in the high-end market or have gained a foothold: Apple, Samsung, and Huawei.
Discussing why it is difficult for OV to soar to success, one observation perspective is: compared to Apple, Samsung, Huawei, what are they missing? What are the detours?
First, the early focus on the high-end market was not enough, and the best time to impact the high-end market was missed.
Back in 2015, Huawei just opened the high-end market with the MATE 7, but OV made the opposite move: OPPO stopped the two product lines of N and Find, and Vivo also stopped this product line after launching xplay 6 at the end of 2016.
In the smartphone market at the time, they were one of the few high-end models. From the price point of view, the last models of these three series are OPPO N3, OPPO find 7, vivo xplay 6, with starting prices of 3999 yuan, 2998 yuan and 3998 yuan, respectively.
Looking back, it was a missed opportunity for OV to rush higher.
On the one hand, 4G was fully liberalized in 2014, and data from the Ministry of Industry and Information Technology showed that by the end of December 2015, the penetration rate of 4G users among mobile phone users was only 29.6%.
In the face of the new replacement tide, the launch of high-end products will not necessarily be successful, but for brands, this is a good opportunity to establish a brand image.
In fact, the iPhone 6 series launched by Apple this year and the Mate 7 series launched by Huawei have later become their respective brand assets.
On the other hand, the mobile phone market in those years is still in a chaotic situation, and the strategic focus of mobile phone manufacturers is mostly focused on the thousand-yuan machine and mid-range machine market, and the high-end machine market is a blue ocean.
During this period, OV cut off their respective high-end product lines and bet on the mid-range market.
Second, it has entered the comfort zone of the mid-market and relied more on marketing and channel drive. This has already been mentioned above and will not be repeated here.
Third, the machine sea tactic dilutes the brand impression.
One of the biggest changes in OV in recent years is that there are more and more product lines and more and more product models.
At present, OPPO's product line has find, Reno, Ace, A, K and other series, and Vivo's product line includes NEX, X, Y, S, T, Z, iQOO and so on.
OV achieves full coverage of low, medium and high-end models, but it is inevitable to fall into the situation of left and right hand fighting.
Another factor that can not be ignored is the shipment structure, OV's current main shipments are still concentrated in low-end products, in this case, the redundancy of the product line, the vague positioning between the high-end series and the high-end version of the mid-range series, in fact, will become the brand's negative assets, affecting the establishment of the brand's high-end image.
Fourth, product innovation is lackluster, and "stacking" does not necessarily produce a user experience.
At the launch of the first iPhone, Jobs can scroll the list with a swipe on the screen, double-click the URL to open the web page, the fluency of this operation, let people really begin to believe in smart phones, so even if the iPhone is not the first smart phone, but the outside world generally respects Jobs as the pioneer of the smart phone era.
The root cause is that Jobs first changed the user experience.
Moreover, iOS chose to be closed from the beginning, because Jobs believed that only closed could have a better match for the hardware experience.
One of the great benefits of the closure is that Apple can strengthen its control over application developers, ensuring the user experience while also allowing Apple to have stronger commission bargaining power for developers.
We see that the later smart phone market based on the screen form, screen ratio and other aspects of innovation, Apple are lagging behind, which once made its back to the lack of innovation ability questions, but did not affect Apple's position in the high-end market.
User experience is the real rigid demand.
04 Conclusion
Back to the growth logic of consumer goods.
Soochow Securities pointed out in a research report that there are three growth logics for consumer goods: industry growth + penetration increase, branding degree improvement + brand concentration & market share increase, and price increase.
We see that the growth of smartphones in the past followed the first two logics:
In the early blue ocean stage of the market, the focus battlefield was once a thousand yuan machine, a low-end market, and brands sought a higher market share and a scale effect;
In the medium term, the market has fallen into growth stagnation, the focus battlefield has become the number of channels, categories and the degree of refined operation, this round of war is a survival of the fittest, the industry's brand concentration is getting higher.
Up to now, the current two growth logics have failed, and the best path for existing players to continue to grow is to go to the high end.
But the high-end is not just as simple as "raising the price". Price increase is a scarce ability, which is not equivalent to a premium, there are many brands with premiums, but there are very few brands with the ability to continuously raise prices.
What OV wants to do now is to continuously improve the ability to raise prices, and whether it is channels, marketing, or self-developed chips, these are just means, and the final direction is nothing more than one point: to convince consumers.
Over the past decade, the planet's most successful high-end iPhone has only done this one thing.