Xiaomi "second entrepreneurship"

Works of the research group of new eyes large companies

The author | Ruan Xue

Edited | Sang Mingqiang

"The goal of our efforts is definitely not to put the market first, but to let young people like rice noodles also use high-quality products."

In 2016, Lei Jun's words at the Xiaomi press conference have so far made a number of "rice noodles" unforgettable, and among the three products released together, he was most satisfied with the Redmi Note 3. Six years later, at the beginning of 2022, Lei Jun announced that he would win the first place in the domestic high-end mobile phone market share within three years, and the high-end route became the lifeline of Xiaomi, and his favorite Redmi series also set itself up as early as 2019.

Xiaomi's change is considered to be a renegade on Lei Jun's word. In the past, no one would have thought that the comprehensive benchmarking of the iPhone would become a strategic goal of Xiaomi, if you have to say that Xiaomi and Apple have any similarities, it is probably Lei Jun to Xiaomi, just like Jobs to Apple.

Since Lei Jun founded Xiaomi, he has deeply bound himself and Xiaomi's brand image, with the magic "Are you OK?" Lei Jun gave up his identity label as an Internet gangster, was regarded as the core resource of Xiaomi, and took the initiative to walk off the altar, and as the largest "product manager" of Xiaomi mobile phones, high and low prices were once the magic weapon for him to lead Xiaomi into the smart phone market.

When Lei Jun personally overturned his past logic, it is tantamount to Xiaomi's "second entrepreneurship" and tearing off the label of cost performance, is Lei Jun's ambition to catch up with Jobs, or is it the inevitable evolution of the mobile phone market? Perhaps, the product will speak.

01

Planting and cutting down trees

It's not easy to plant a tree, and it's not easy to cut down a tree. In the past, the rice noodles attracted by the price "thick" attitude to the high-end of millet are actually complicated, and some people hold the mentality of "my family has a female first growth", expecting millet to have more breakthroughs, but some people feel that they are losing millet.

1999 yuan, is the pricing of the first Xiaomi mobile phone.

In the era of the average price of brand smart phones of 4,000 yuan, people's impression of domestic low-cost mobile phones is still stuck in the cottage machine printed with big brand logos. Xiaomi Mi 1 is equipped with Qualcomm's 1.5GHz dual-core processor and a Sharp 4-inch LCD screen with a resolution of 480x854. The main frequency reached 1.5Ghz, while supporting 32GB of memory cards, equipped with 4GB ROM and 1GB of RAM as an auxiliary, once refreshed people's stereotypes of mobile phones.

In addition to the cost performance, Lei Jun also gave Xiaomi another label: Internet smart machines. Without laying offline channels, xiaomi's official website reservation system collapsed several times, reaching the same effect as fruit powder queuing up to buy iPhones, 10 months later, the young millet sold its first million mobile phones, "born for fever" in the young crowd lit the first bonfire, and the big tree of millet also began to have real roots.

However, what provides nourishment for this tree is no longer the difference between buying and selling, but the Internet value-added business such as pre-installed APP and advertising operation of mobile phones, and Lei Jun's idea of "hardware + new retail + Internet service" has also won a good start for Xiaomi.

After that, what Xiaomi did was: sink, sink again, go deeper.

So with the bloom of the first red flower, the red rice of 799 yuan ended the cottage era of domestic mobile phones. The same configuration, less than half the price of the competitive product, the comprehensive profit margin of hardware does not exceed 5%, Xiaomi software-style play makes a number of domestic friends lose the competitive qualification at the same price, under the blessing of the Internet gene, Xiaomi has become a new Internet celebrity, and has won a large number of new fans.

Unfortunately, Xiaomi's success has not brought it a unique competitiveness that cannot be copied, excessive traffic has become the driving force behind the exposure of the problem, the supply chain is always the first to collapse, the Xiaomi 5 originally scheduled to be released in 2015, until the end of 2016 was late.

On the other side of the mobile phone market, OPPO, vivo and Huawei are also working on offline channels to establish their own physical stores, which once occupied 85% of the Chinese smartphone market, and xiaomi's Internet play method is also facing challenges from glory, that year, Xiaomi spent the most dismal double eleven, rice noodles finally failed to wait for a new round of carnival: in 2016, Xiaomi's annual sales fell by 24% year-on-year.

It wasn't until Lei Jun personally put on the battle and announced that he was responsible for research and development and supply chain that the situation improved, at least Xiaomi no longer had to wait in line for supplier parts. The laying of offline channels has also been launched, the fierce competition in the domestic market has led Millet to the road to the sea, in the Indian market, the cost-effective way of playing is more applicable, the transfer of flowers and elderly, Xiaomi has become the largest local smartphone supplier.

However, in the Chinese market, the major friends in the middle and low-end models, crazy pile hardware to improve the cost performance, which forced Xiaomi, which has no advantage in hardware, to begin to explore upwards. Xiaomi's first step is to hold a machete, Redmi is separated from Xiaomi as an independent brand, responsible for the middle and low-end markets; Xiaomi's flagship products have also risen from the original 1999 yuan to the current 3999 yuan, but the pricing is still slightly lower than the flagship models of other manufacturers 5000+.

In this case, Xiaomi has become the "goalkeeper" of high-end models.

02

Disenchantment high-end

Now the domestic mobile phone manufacturers, all see the high-end as the only way to the future, as if after entering the high-end market, there is only one Apple away from the industry throne: on the one hand, they shout to surpass Apple, and on the other hand, they regard Apple as the answer to high-end and become the new normal.

But the harsh truth is that the high-end machine market is far more complex than imagined. When Huawei relied on hard-core technology to enter the high-end machine market, it turned into a coreless quagmire, and the resulting gap in the domestic market of high-end machines was once again filled by Apple, and the share increased from 40% to 63%.

In fact, as early as the release of the Note series, it has been regarded by the outside world as the first attempt to upgrade Xiaomi's high-end upgrade. The poster of the film emperor Liang Chaowei holding the Xiaomi Note2 business flagship machine was hung high, and the curved screen once earned enough attention from the audience, but in the end, it attracted many condemnations due to the endurance problem caused by hardware castration, which made the fans who used to rely on "thick road" not buy such products.

Note2 did not as Lei Jun envisioned, to achieve the same epoch-making influence as the iPhone 4, Xiaomi's high-end road has not been able to move from stock to quality logical, even if later the Xiaomi Mix series took over the positioning of the note series of high-end, but also entered the French Art Museum, but in 2020, Lei Jun's depressed things are still the same: "After ten years, everyone thinks that Xiaomi is still low-end." ”

Although high-end has become a high-frequency word at the Xiaomi conference, Xiaomi 11, Xiaomi 11 Pro, Xiaomi 11 Ultra, MIX Fold folding screen mobile phones have also been trying to consolidate the high-end brand tone, the price of the model is set between 3,000 yuan and 10,000 yuan, but it is still difficult to escape the quality control controversy, and the xiaomi motherboard problem has rushed to the hot search.

In fact, leaving aside the quality problems faced by Xiaomi, starting from the high-end itself, the products of domestic high-end machines are more like the products of smart phones.

Take the new machine released in October last year, OnePlus released the flagship model 9RT series, the selling point is equipped with Qualcomm Snapdragon 888 processor, 120Hz high brush Samsung custom screen; Xiaomi released the Redmi Note 11 series, upgrading the screen, camera and fast charging function; at the end of November, OPPO Reno7 series was listed, Sony jointly designed the IMX709 super sensitive cat's eye lens, which has become the biggest attraction, and the idea of domestic mobile phone manufacturing high-end machines is still very similar: roll screen, roll camera, Volume charging speed, do the addition and subtraction of mobile phone configuration.

But for consumers, the price of 4,000+ is not to buy a luxury upgrade of a mid-range mobile phone, and the business machine pays more attention to stability than function. Chips with Qualcomm, screens with Samsung, in the case of supply chain sharing, domestic smartphones are difficult to bring consumers a unique experience, which also increases the difficulty of high-end. Correspondingly, price diving has become the norm in the mobile phone industry last year, and behind it is often the dilemma that it is more difficult to freeze than to price.

At present, successful high-end models often have a distinctive feature: occupying the highest point in a core area and forming product characteristics. Apple relies on the smooth system, Samsung relies on screen technology, and Huawei relies on collocation and self-developed chips to win a place in the field of high-end machines.

In contrast, the current millet, in addition to the cost performance, there is no product force related label at present, which is also a hard injury that Lei Jun has not mentioned, and it is also a pain that cannot be cured by any first start.

03

Behind the second venture

In the past, when Lei Jun talked about his entrepreneurial philosophy, he mentioned three companies: Tongrentang, Haidilao and Costcao, and regarded "focus, extreme, word-of-mouth, and fast" as the secret of Internet success, but Xiaomi has come to this day, and the market value has evaporated nearly 400 billion Hong Kong dollars from the highest point, and the repurchase plan has failed to save the decline.

Another reason for Xiaomi's firm high-end strategy comes from performance.

Global smartphone shipments rose 12 percent in the second quarter of last year, and Xiaomi ranked second with a 17 percent shipment market share for the first time, ahead of Apple, but that achievement didn't last long. If you look at sales, in the first quarter, the second quarter and the third quarter, Xiaomi's smartphone performance was 51.4 billion yuan, 59 billion yuan and 47.8 billion yuan, respectively, and the third quarter fell by about 18% compared with the second quarter, ranking fifth in China's market share, ranking after OV.

When the Internet faith and commercial efficiency is no longer enough to support the future development, escaping the low-end of the inner volume is taken as the primary goal, Lei Jun began his second venture, it is not surprising, perhaps in his vision, high-end is likely to become a new engine to boost Xiaomi's stock price, so the "mobile phone + AIoT" dual-engine new strategy has also been put on the agenda.

Xiaomi's first target is still Apple, although Lei Jun declared at the press conference, "Decided to officially benchmark Apple in terms of product and experience, learn from Apple, and surpass Apple step by step in the next period of time." But he should be very clear in his heart that the iPhone is just a more vivid fruit on the apple tree, and users want to buy it, valuing the overall value of the apple tree, and beyond the apple, they must also plant another tree."

In the past, Huawei relied on self-developed chips and self-developed operating systems to tear open the mouth in the high-end market, becoming a new hope for Xiaomi, so the Mijia ecology naturally became the starting point, the Internet of Everything became Xiaomi's new belief, and Xiaomi, which hovered between the Internet and manufacturing, finally had a relatively clear direction.

However, as mentioned earlier, the transformation of cost performance to high-end machines means that Xiaomi will change from a company that sells "conscience" to sell technology. But the crux of the matter is that core technology is not as easy to obtain.

Lei Jun announced in 2020 that he plans to invest 50 billion yuan in research and development in the next 5 years, including the development of the Mijia Internet of Things ecosystem, while Huawei's R& D expenses invested in 2018 alone have reached 101.5 billion yuan, and the gap in R&D expenses makes the technical strength of the two companies incomparable. If the original millet story was born from a bowl of millet porridge that several founders sat around and drank together, then the new millet story needs real money to invest.

Xiaomi is changing, and so are users. In the past 2021, Xiaomi has experienced up to 35 organizational restructuring adjustments, the year of the tiger began, the vice presidents in charge of Xiaomi product planning Chang Cheng and Shang Jin left, and the 12th employee of the founding team Li Weixing also announced his departure recently.

The only constant is lei jun's identity as a tree planter, what kind of fruit millet will bear under the cultivation of Lei Jun and his high-end strategic working group, which has become the suspense left by millet for 2022, but for rice noodles, after waiting for three years, the fruit is not sweet, it seems to be the most important.