Geely acquires Meizu, who is the "blacksmith" and who is the "master"?

Wen | Zhengning

Source| Bowang Finance

I have only listened to mobile phone dealers to build cars across borders, and I have never thought that there are car companies that "swim against the current" and start to build mobile phones.

According to 36Kr, Geely Group's mobile phone company is in contact with Meizu to negotiate the acquisition. A number of people close to the deal said: "The deal is still ongoing and DD (due diligence) is being done. "And because the transaction has not yet been closed, the price is not clear."

In response, Meizu said that there is no relevant news at present. Geely Holdings officially said: "Do not comment on market rumors, at present, the high-end mobile phone research and development business of the Star Era is progressing in an orderly manner, hoping to create an open and integrated ecological partnership."

If this happens, it will undoubtedly be one of the major events at the beginning of 2022. But many people also wonder: how does Geely want to make mobile phones? Being acquired by Geely, is it really the best home for Meizu?

01

The fallen Meizu

Founded in 2003, Meizu, which started with mp3, began to devote itself to the field of smart phones in 2008 and is committed to the research and development of high-end smart phones. The advent of Meizu M8 has allowed Meizu to occupy the high point of domestic intelligent mechanism in one fell swoop and become a watershed for domestic smart phones.

In 2014, Meizu began the strategy of introducing capital and expanding its product line, and in 2015, it successfully obtained Alibaba's investment and embarked on the road of rapid expansion. Between 2015 and 2017, Meizu and other mobile phone manufacturers adopted the same tactics of the sea of machines and released 25 mobile phones, of which 14 new machines were launched in 2016 alone. This year, Meizu's shipments soared to 22 million units, gaining the upper hand in a fight.

The good times are not long, and the side effects of the machine sea tactics are obvious. The extremely large number of models and almost monthly press conferences did not bring considerable sales to Charm Blue, but after the heat faded, many models were discontinued.

According to the data, in 2016, Meizu's annual sales increased by only 2 million units year-on-year, but the loss exceeded 1 billion.

Meizu's interior is also turbulent. In June 2018, Yang Zhe, a "marketing master" who had made great contributions to Huawei, was appointed as the CSO of Meizu Company, but he stepped down after a month of office. Bai Yongxiang, president of Meizu, who was once known as the "Three Musketeers of Meizu", Yang Yan, senior vice president of Meizu Technology, and Li Nan, who single-handedly created Meizu, have left Meizu. Frequent high-level changes, chaotic relationships, and even multiple scandals have made meizu, which is already difficult, even worse.

Even if the founder Huang Zhang once again "went out of the mountain", cut off the charm blue, launched flagship machines such as Meizu 17 and Meizu 18, created differentiation through the "three zero system", tried a series of actions such as the Lipro smart home brand and the Fun Exploration brand, it failed to save Meizu, which had been weak for a long time.

In February 2021, Meizu issued an internal letter indicating that Huang Zhang stepped down and the CEO was changed to his brother Huang Zhipan. The letter also pointed out that Meizu has achieved a "turnaround" in 2020 and will adhere to the high-end route in 2021.

At the end of 2021, Meizu announced that it would abandon the "three-zero system", regain the tactics of the machine sea, and resurrect the Charm Blue series, which looks the same as in 2016, but everything is different.

02

Rich and rich

The outside world usually uses "rich and powerful" to describe today's Geely Group.

As early as 2010, Geely Group began its global layout. The landmark event was the wholly-owned acquisition of Volvo in 2010 for $1.5 billion. In the years that followed, Geely acquired a stake in The British Electric Vehicle (LEVC), Proton Motors 49.9&, and a 51% stake in the luxury sports car Lotus. In 2018, Geely acquired a 9.69% stake in Mercedes-Benz's parent company, Daimler, for about $9 billion, becoming Daimler's largest shareholder.

At the same time of external expansion, Geely is also laying out its own new energy automobile industry.

In 2015, Geely Automobile launched the "Blue Geely Action" and announced the transformation from traditional cars to new energy vehicles; began to build self-developed car driving technology in 2017; released the new energy power system in 2018; released its pure electric car brand geometry in 2019, and cooperated with Baidu in the same year to announce that Geely Automobile was equipped with a Small Degree On-Board Interactive System; in 2020, Geely Holdings and Geely Holding Group and Mercedes-Benz Joint Stock Company jointly established "Smart Motor Automobile Co., Ltd." Registered and established, the world's leading high-end electric intelligent car market...

It can be said that the years when Meizu gradually declined were the years when Geely made great strides in the field of new energy.

However, the expansion of the automotive field is not enough, and Geely has focused on the mobile phone field this time.

On September 28, 2021, Geely officially announced that Hubei Xingji Times Technology Co., Ltd., founded by Li Shufu, signed a strategic cooperation agreement with Wuhan Economic and Technological Development Zone, officially announcing its entry into the field of mobile phones.

But as the outside world speculates, the mobile phone itself is already the Red Sea, and Li Shufu and Jili's goal is not here. What they really want to seize is the technological highland of future smart terminals.

03

Win-win or co-sink?

In the past, auto companies have always been at the top of the industrial chain, with absolute control and dominance. But now the enemy in front of these car companies is not their former peers, but companies in the field of intelligent hardware and system software. This not only means the failure of the technical barriers that car companies have painstakingly built, but also means the transfer of the right to speak in the struggle between car companies.

A 2015 KPMG report, "The Blacksmith or the Master: The Automotive Industry at the Crossroads of the Highly Data-Based Age," likened car companies to Internet companies. The report said that in the competition for internet of vehicle data, car companies and Internet companies are inherently rivals, unless car companies are willing to be "blacksmiths" instead of "ecological chain masters".

But almost no car company is willing to become a blacksmith sent by people, and Geely is no exception.

For the current Geely, it is facing the dilemma of changing from fuel vehicles to electric vehicles, from traditional cars to intelligent networked vehicles. There are two ways to break through the in-vehicle system. The first is to start from scratch, establish a mobile phone research and development system and supply chain, and use its own mobile phone brand to connect its own mobile phone business, and the second is to acquire an existing brand. Obviously, compared with the former, the latter is much less difficult for the "rich and powerful" Auspicious.

"Finance World" weekly reported: "Geely's interest in Meizu is the Flyme OS design and development team and some intellectual property related to human-computer interactive communication. "Meizu's biggest value at the moment lies in the relatively complete mobile phone team, which is what Geely lacks." After the acquisition, the ready-made team resources save Geely the time and economic cost of recruiting people from brands such as Xiaomi and Huawei.

Secondly, Meizu has reserves in many technologies. Meizu's unique Flyme system has always been known for its briskness, ease of use and absolute beauty, and stands out among many Android systems. This embodies Meizu's in-depth exploration of the mobile phone experience over the years and the experience and strength of continuous system optimization. In addition, as early as Huawei, Meizu launched the introduction of mback, fingerprint unlock and other functions, several years ahead of friends. Transferring these software-level achievements to automotive applications and realizing the interaction between car machines and mobile phones will undoubtedly help Geely complete the closed loop of automotive intelligent systems.

This idea is more like Huawei, which frequently enters the field of car manufacturing, and wants to optimize the car machine with the help of the ready-made accumulation of mobile phone companies in the intelligent system.

Li Shufu seems to be "going up against the current", but in fact, he and mobile phone manufacturers cross-border car manufacturing are on the same road.

What about Meizu? Can you profit from it?

For Meizu, it has long lost its ability to grow highly, and if it is not acquired, it is difficult to obtain effective support from the capital market. Without capital support, whether it is product research and development or market expansion, it will be difficult to move forward.

But it is equally difficult for Meizu to profit from this deal.

If Geely's purpose is not to build mobile phones, then Meizu's current mobile phone business does not have any value, once Geely chooses to merge Meizu software engineering personnel into Geely, and fully develop the car-machine interaction system, it is bound to cut down Meizu's mobile phone business.

For Meizu, the acquisition is just the beginning, and the farewell is the end.