Geely made a mobile phone, will it be the next Gree?

For the sake of the Internet of Everything, Geely chose to build mobile phones first.

In September last year, Hubei Xingji Times Technology Co., Ltd. (hereinafter referred to as "Xingji Times"), founded by Li Shufu, chairman of Geely Holding Group, signed a strategic cooperation agreement with wuhan economic and technological development zone and officially announced its entry into the field of mobile phones. The total investment of the project is more than 10 billion yuan, positioning the high-end smart phone market.

At the end of January this year, it was also rumored that Geely was negotiating an acquisition with Meizu, and the news said that it was in the due diligence stage. Although both sides were ambiguous about the media's verification, some media confirmed from insiders that the information was true. On the eve of the incident being exposed, Former Meizu CMO Li Nan said on social media: "I hope Meizu can sell for a good price", which seems to hint at the acquisition.

Why does Geely build mobile phones? Chairman Li Shufu's answer is: in order to create an ecosystem, for the integration of vehicles and machines, in order to build software capabilities, in order to make smart cars more competitive.

Industry insiders told Red Star Capital Bureau that Geely's acquisition of Meizu is extremely feasible. On the one hand, Meizu is in a difficult situation, but has brand awareness, mobile phone research and development and manufacturing experience and perfect channels, as well as the ready-made Flyme OS operating system; on the other hand, Geely faces the general trend of automobile intelligence, and must seize the intelligent entrance of mobile phones and conquer the highland of vehicle-machine collaboration and internet of everything. "Geely's traditional OEMs must polish their software capabilities, otherwise they will become hardware foundries for technology companies."

However, the Red Star Capital Bureau noted that some consumers and dealers are worried, "Will Geely mobile phones be the next Gree mobile phones?" ”

Gree Electric Appliances (000651. SZ) since 2015, a total of 6 Gree mobile phones, performance and configuration are lagging behind the mainstream mobile phone factories, the price is not cheap, sales have always been a mystery, but also exposed to force employees and dealers to buy. Although Gree denied it, some employees and dealers said that "almost everyone has one."

The same is the traditional manufacturing industry in order to create an ecosystem, the Internet of Everything, to control the mobile phone in their own hands, Gree mobile phone did not splash in the market. Will the high-end Geely mobile phone be bundled with the car, or even eventually reduced to car purchase benefits and employee in-app purchase indicators?

Why mobile phones?

Mobile phones are the core of the smart ecosystem

Li Shufu once publicly expressed his views on mobile phones: "The mobile phone business has a bearing on the entire Geely Automobile (00175. HK) is of far-reaching industrial significance. The better development of mobile phones can bring better development of car machines, and the better development of car machines can promote the continuous improvement of the level of intelligent cockpits, which can help the competitiveness of smart electric vehicles to continue to improve. ”

He believes that mobile phones are rapid iterations of portable mobile terminals, and can transfer a safe and reliable part of the results to the application of cars, realize the close interaction between car machines and mobile phone software technology, and provide users with a multi-screen interactive life experience of the Internet of Everything.

The relevant person in charge of Geely Automobile also told Red Star Capital Bureau that the mobile phone business will give full play to and connect the experience and advantages of the Geely industrial chain, and at the same time empower each other in terms of automobile intelligence, software capacity building, and technological transformation to achieve super synergy.

Obviously, from fuel vehicles to new energy intelligent vehicles, Geely has realized that smart cars are the mobile terminals of the future, and mobile phones are the core of this intelligent ecology. If you don't want to give up your "soul", you must master this entrance to wisdom yourself.

Musk, the founder of Tesla (TSLA.US), has repeatedly mentioned in public that he wants to build mobile phones. Although Tesla's mobile phone has not yet been shadowed, Tesla's soft and hard business ecology has begun to see the beginning.

Recently, according to overseas media reports, Tesla may be developing an app store similar to Apple's App Store to create a unique in-car ecosystem and allow customers to enjoy a variety of software services. In the era of intelligence, hardware is only a one-time consumption, and software is a steady stream of revenue.

For traditional car companies like Geely, hardware manufacturing is not a problem, but software system development and content ecological operation are big problems. This is also the main reason why Geely is likely to buy Meizu.

Geely has no experience in the mobile phone business, and has built a set of mobile phone research and development, manufacturing and sales systems from scratch, polishing a set of operating systems, and the time and economic costs are too high.

Although Meizu has declined, it has brand awareness, mobile phone research and development and manufacturing experience and perfect channels, as well as the ready-made Flyme OS operating system. Meizu also has a certain accumulation of smart homes, smart wearable devices, etc., coupled with the luxury of the Star Era: CEO Wang Yong was the vice president of ZTE, supervisor Zhang Yadong served as the general manager of ZTE's PHS mobile phone product line, vice president of mobile phone research and development, and Xiaomi's former chief MIUI architect Wang Wenjun, all of which helped to realize Geely's ambitions for the Internet of Everything.

Acquisition of Meizu

Is Geely mobile phone just sitting back and relaxing?

Why is Geely's mobile phone eye-catching? The reason is that only mobile phone giants have entered the car-making industry before, but it is rare for traditional car companies to make mobile phones.

Some industry insiders expressed their concerns about the prospects of Geely's mobile phone to Red Star Capital Bureau, "Software capabilities including autonomous driving will become the core of smart cars, and in this regard, mobile phone giants have a natural advantage." In addition, traditional OEMs also have a significant gap with technology giants in terms of content operation capabilities and user experience insights. ”

In a report released by McKinsey, the relevant data show that the current automotive software accounts for 10% of the total vehicle value of large passenger cars, and is expected to grow at an annual rate of 11% in the future, and by 2030, automotive software will account for 30% of the vehicle content, and the overall market size will reach more than 400 billion US dollars.

In the future, data and software will become the core of smart car profits, and the hardware manufacturing that traditional car companies are good at will have to exit the ground. In order to create a high-quality smartphone that is closely integrated with smart cars, the acquisition of Meizu does reduce doubts, but Geely still has a long way to go.

In addition, Geely mobile phones choose to take the high-end route, which is a bigger challenge.

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. For the same period in 2020, this data is 60.6% for Apple, 31.1% for Huawei, and 8.3% for the others.

In other words, the high-end mobile phone market vacated by Huawei has almost been eaten by Apple. OPPO and VIVO did not attack the high-end market smoothly, and Meizu once failed to impact the high-end. Can Geely succeed?

Some car dealers told Red Star Capital Bureau that it is too early to talk about the sales channels, pricing and sales methods of Geely mobile phones, but they do not rule out the possibility of bundling with cars in the future. "If consumers don't buy it, mobile phones are a heavy burden on dealers," the dealer said, "It is impossible to require consumers to force acceptance, and it may eventually become a car purchase gift, and the cost is borne by the main engine factory or dealer." ”

Consumers can choose not to buy or use the mobile phones of car companies. For Miss Wang, the owner of a new energy vehicle, the mobile phone is the "remote control" that uses the car machine system, and the focus is on the software rather than the mobile phone itself. Nearly half of her home appliances are Xiaomi brand, "even if it is for smart home, I will not buy a car company's mobile phone, unless it will affect the driving experience."

In the eyes of industry insiders, geely mobile phones are unlikely to become free benefits. Geely is "short of money", and Geely mobile phones burn money.

Geely Automobile's 2021 semi-annual report shows that the operating income in the first half of the year was 45 billion yuan, an increase of 22% year-on-year; the net profit was 2.41 billion yuan, and the profit growth rate was only 3.67%. In the same period of 2019, Geely's net profit was 4.01 billion yuan, and it was close to waist in 2021.

Geely Automobile plans to sell 570,000 new energy vehicles in 2030. If every car were bundled with a mobile phone, it would undoubtedly be a gold mine.

Will Geely mobile phone be the next Gree mobile phone?

Some consumers and dealers are worried that Geely mobile phones may be the next Gree mobile phones.

Since 2015, Gree has successively launched a number of mobile phones, but the configuration is basically lagging behind mainstream mobile phone manufacturers such as Huami VO, and the price is not cheap, which is "high price and low match" for netizens.

In 2016, the second generation of Gree mobile phones was released, equipped with Snapdragon 820 processors, priced as high as 3599 yuan; in 2017, Gree color world mobile phones appeared to the outside world, still equipped with Snapdragon 820 processors, priced at 3200 yuan; in 2019, Gree mobile phones released three generations, using the snapdragon 821 processor that was lagging behind at that time, the price was still as high as 3600 yuan; in December 2020, Gree's first 5G mobile phone was on the shelves, and the brand was changed from Gree mobile phone to Dasong mobile phone. Equipped with Qualcomm Snapdragon 765G processor, priced from 2699 yuan.

The sales of Gree mobile phones have always been a mystery. The outside world has estimated through e-commerce data that by 2019, Gree mobile phone sales will be about 100,000 units in three years. According to the 2020 annual report, the revenue of the intelligent equipment segment of Gree Electric Appliances only accounts for 0.47% of the total revenue.

Gree mobile phones have also been exposed to force employees and dealers to buy. There have been media reports that the purchase of Gree mobile phones by employees has almost become a mandatory indicator, and the bonus at the end of the year is a voucher for the employee mall, stipulating that it is necessary to buy a Gree mobile phone. When selling air conditioners, dealers are forced to purchase a certain number of Gree mobile phones at the same time to sign orders. Even Gree's air conditioner installation and maintenance workers have been forced to use Gree mobile phones.

Gree Electric Appliance responded on the official Weibo and called this false news. However, some Gree employees and dealers said that "almost everyone has one (Gree mobile phone)".

The questioning and worry about Gree mobile phones on the Internet has not stopped. But Dong Mingzhu insisted that Gree mobile phones must be done, and must be done. She pointed out that in the future smart home, it is not possible without a mobile phone to control it completely. Gree Electric Appliances once said on the investor interactive platform that mobile phones, as an important connection hub of the Internet of Everything, are one of the five major control entrances of "Gree Zero Carbon Health Home". The company attaches great importance to the independent control of core technologies, and strives to create a Gree smart home ecosystem.

This is somewhat similar to what the auspicious heroes saw.

Red Star News reporter Wu Danruo

Edited by Yang Cheng

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