The cumulative global shipment volume exceeded 200 million units, and it is crucial to choose the right direction.
Wen 丨 Qi Jielun
The continuous increase in public attention to sports health is driving the rapid penetration of increasingly powerful wearable devices. Or you can say that the increasing power and intelligence of wearable devices is also driving the public's attention to health.
Numbers don't lie. According to the data recently disclosed by the international research agency IDC, in the fourth quarter of 2021, the global wearable device shipment reached 171 million units, a record high, an increase of 10.8% year-on-year; in 2021, the global wearable device shipment volume was 533.6 million units, an increase of 20% year-on-year. In contrast, smartphone shipments increased by only 5% in the whole year.
IDC also mentioned that smart headphones, smart watches, and smart bracelets are the top three in 2021 shipments, and smart headphones are still the largest category, while smart watches have further opened up the gap with smart bracelets in market share because they are more distinctive and more customized.
On the evening of March 17, Huami Technology (NYSE: ZEPP), the world's leading smart wearable and health cloud service company, released its fourth quarter and full year 2021 financial results. According to the financial report, in the whole year of 2021, Huami's private-brand smart watch Amazfit and Zepp shipments increased by 59.6% year-on-year, and revenue increased by 45.8% year-on-year; as of December 31, 2021, Huami's cumulative global shipments of smart devices have exceeded 200 million units.
From the establishment of the company to the shipment of more than 100 million units, Huami took more than five years; and from 100 million units to 200 million units, it took only more than two years.
Huami CFO Deng Cheng said that Huami's revenue in the fourth quarter of 2021 was 1.662 billion yuan, and the annual revenue in 2021 was 6.250 billion yuan, of which its own brand products contributed 46.5% of revenue and more than half of the gross profit.
According to IDC data, in the fourth quarter of 2021, Amazfit and Zepp shipped more than 2.182 million units, an increase of 22.9% year-on-year, ranking in the top three in brazil, Turkey, Italy, Indonesia, Spain, Russia and other countries; in 2021, the cumulative shipments of the two were 6.816 million units, ranking among the top five in the world, an increase of 53.8% year-on-year, exceeding the overall growth rate of the market.
As a representative of the innovative latecomer force in the wearable device track, Huami's evolution path is quite interesting.
Unlike the industry giants Apple, Xiaomi, Samsung and Huawei, which are especially influential in terms of shipments, which are obviously much larger, Huami, which was founded at the end of 2013, is more known as a strategic partner of the xiaomi bracelet, which is a big seller, and its own brands Amazfit and Zepp are in the product side of the long delay in 2015 and 2020 respectively.
This, of course, is far from the end. It is based on the accumulation of technology and products in the past many years, and thanks to the rising demand of global users in sports and health, Huami still successfully launched its own brand. In the past few quarters, Huami's global shipments have remained in the top five; and now, its ranking in the wearable device strength list is expected to continue to climb upwards.
2021 is an important year for Huami. A number of decisions and layouts related to its future card slots and market space began here. The effects of these key arrangements are already partly reflected in the earnings report, and their more far-reaching impact needs to be broadened and slowly watched.
01
Re-inject the underlying technology
Huami, which has a distinct technical gene, has been paying great attention to R&D investment since its official establishment at the end of 2013, and its underlying technological innovation around the source of the wearable device industry chain in 2021 has continued to increase and make many breakthroughs.
It is particularly worth mentioning the landing of important achievements such as the "Huangshan 2S" chip, Zepp OS operating system, PumpBeat blood pressure engine, and portable MRI nuclear magnetic resonance technology.
The importance of chips and operating systems is now widely known.
Affected by quite complex geopolitical factors, in recent years, countless domestic technology companies, large and small, have reported that they are trapped in the upstream overseas chip supply. Under the dilemma of "a core is difficult to find", the downstream production and manufacturing links have either been greatly slowed down, or have to be terminated, and the rumors of buying chips from the black market at a high price of hundreds of times to save the emergency have made the core robbery war even more sad. And such a pain in the neck of the card has made many people in the domestic industry and academia have a more profound reflection than before.
While continuing to seek global division of labor and collaboration, enterprises with scientific research and financial strength should also strive to explore underlying technologies such as chip development. The operating system does the same. In this regard, Huawei, which has launched the Kirin chip and the Hongmeng operating system, is undoubtedly a model.
Huami has begun to lay out the chip self-research as early as 2015. In 2017, Huami established the Artificial Intelligence Lab, launched the research and development of RISC-V chips, and then invested in RISC-V chip startups SiFive and GreenWaves Technology in 2018 and 2019.
An important move of Huami on the chip in 2021 is that at the Next Beat conference held in Hefei, Anhui Province in July of the same year, the "Huangshan 2S" chip was released. This is huami's action in the chip field after "Huangshan No. 1" in September 2018 and "Huangshan No. 2" in June 2020. The Huangshan 2S is the first wearable artificial intelligence processor to use dual-core RISC-V, which has 18% better performance than Huangshan 2, reduced operating power consumption by 56%, and reduced sleep power consumption by 93%.
Chip research and development is both knowledge-intensive and capital-intensive innovation direction, which requires extremely high investment, but even higher investment does not necessarily lead to Dacheng. The Huangshan 2S chip is equipped with a convolutional neural network acceleration processing unit, so that a chip can quickly identify the type of disease after being placed in a smart watch and worn by the user. In the case of atrial fibrillation, for example, it is 26 times faster to be recognized than purely software calculations. The Huangshan 2S is one of the core chips of the third-generation Amazfit smartwatch. Huami's R&D expenditure for products and technological innovation, including chips, exceeds an average of 400 million yuan per year. This is 2-3 times that of most emerging Internet companies or IoT smart hardware companies in China.
The insight and trading ability of managers is so important.
This requires mentioning the background of the team. Huang Wang, founder, chairman and CEO of Huami, is a serial entrepreneur, and Huami is his fourth venture. Huang Wang graduated from the University of Science and Technology of China in 1997, and returned to Hefei to start a business after working briefly at Huawei for more than a year at the beginning of graduation. For more than 20 years, Huang and his team have been engaged in the development of embedded systems, including underlying chips, sensors, low-power technologies, algorithms, operating systems, etc. In other words, they know the difficulties of chip development and the importance of doing it.
Looking back at huami's development trajectory, it can be seen that by around 2018, its smart ecological products have covered smart bracelets, smart watches, sports headphones, treadmills, weight scales, body fat scales and other kinds, and these products need chip support. The key to success in competing with friends is also here. Self-developed chips are possible for Huami, and from the perspective of long-term application costs, it is also cost-effective.
Released at the same time as the Huangshan 2S chip, there is also the operating system Zepp OS carried by the chip.
Huami started with smart wearables, but the core of its strategy has always been health, and its new mission at the end of 2019 is "technology connects health", and the company is positioned as "a cloud-based health service provider". ZeppOS is designed to focus on health, it is simple to use, has a long battery life, occupies little memory, and is easier for developers to develop applications. This is very different from Apple, Samsung and other related operating systems that consider how to narrow the smartphone experience to the wrist.
Huami's development of the underlying cutting-edge technology around health in 2021 is also extremely important, such as The Blood Pressure Monitoring Engine Pump Beats, which can achieve 30-second one-click monitoring, and the world's first portable MRI MRI device that can cover the whole body.
02
Update the product matrix
Huami's unique change and expansion strategy on the product matrix in 2021 has received a lot of positive feedback.
In terms of adult smart watches, the launch and iteration of Amazfit T-rex Pro, Amazfit GTR 2 eSIM version, and Amazfit PowerBuds Pro cannot be ignored.
The AmazfitT-Rex Pro, unveiled on March 24, 2021, is the second outdoor smartwatch launched by Huami, which is an upgrade from Huami's first outdoor smartwatch, the Amazfit T-Rex, launched in January 2020. Amazfit T-Rex Pro continues the Rigid T-Rex design style, while adding trendy and fashionable elements, more importantly, adding blood oxygen detection, NFC function, and has been upgraded in terms of waterproof level, military quality, etc., durability and stability are better.
The Amazfit GTR 2 eSIM edition was released on April 2, 2021. As you can see from the name suffix, it has an additional communication module compared to the Amazfit GTR 2. At present, it can support the eSIM services of China Mobile, China Unicom and China Telecom. After the user purchases the product, without carrying a mobile phone, he can realize 4G independent calls and quick reply text messages on the watch side, which can meet the user's brief communication needs when going out to exercise.
Amazfit PowerBuds Pro is a true wireless noise-cancelling headset that debuted on October 12, 2021 at Huami's annual global new product launch. According to Haike Finance, this product focuses on sports heart rate monitoring, cervical spine protection, hearing health, noise reduction and other functions. In terms of noise reduction function, it can support active noise reduction and perspective modes, and can switch between indoor, travel, sports, and adaptive noise reduction modes, and the maximum noise reduction depth can reach 40dB.
Happy Duck Children's Health Watch was released in August 2021, at this time, the children's watch market is already a red sea, Huami has come in, the reason is two: one is that Huami in the field of adult smart watches has been laid out very mature and perfect, there are sufficient manpower, material resources, technical reserves to polish a high-quality children's watch boutique; the other is that they found that almost just needed children's watches are biased by some manufacturers, they are made into learning machines, children are not only difficult to learn the real knowledge, And the eyes stare at such a small screen for a long time, which is harmful to vision.
Huami eventually launched a smart watch to encourage children to play outdoors and enhance their sports ability, hoping to make children healthy and happy, so it was named Happy Duck Children's Health Watch, which combined "happy" and "healthy".
The much-loved Amazfit GT3 series is an urban fashion watch that was released at Huami's annual new product launch in October 2021. It includes three smartwatch products, the Amazfit GTS 3, the Amazfit GTR 3 and the Amazfit GTR 3 Pro. It is worth mentioning that the next month after the release of the series of products, amazfit GTR 3 Pro launched a blood pressure screening function, and the project was initiated by the First Hospital of Peking University and jointly carried out by the People's Hospital of Wuhan University and the Tenth People's Hospital of Shanghai.
On the basis of monitoring heart rate, blood oxygen, sleep and other health indicators around the clock, users can monitor blood pressure changes in real time through this smart watch Amazfit GTR 3 Pro equipped with Pump Beats blood pressure monitoring engine. It is said that the blood pressure data measured by the watch will be automatically analyzed on the research platform, once it meets the diagnostic criteria for suspicious hypertension, after review by a specialist doctor, it will issue a warning of suspicious hypertension on the user APP, and users such as in Beijing, Wuhan, and Shanghai will have the opportunity to be imported into the hypertension specialties of the above three hospitals for free examination.
And that's not all.
In January 2022, the Amazfit GTR 3 Pro added a continuous blood pressure monitoring function at night, supporting blood pressure monitoring every 5 minutes during sleep, which can wake up users in time through vibration and alarm to prevent danger.
03
Synergistic capital power
In addition to making a lot of efforts in technology and products, Huami has also made an important layout at the capital level in 2021.
Huami's acquisition of 29.99% of the shares of E&P Technology, an A-share listed company, is one of the items.
Founded in 2001, headquartered in Changshu, Jiangsu Province, E&P Technology is a relatively traditional manufacturing enterprise, successfully listed on the Shenzhen Stock Exchange GEM in May 2011, for many years mainly engaged in radio and television equipment manufacturing, and Huami's main products include chips, sensors, operating systems, etc., as well as artificial intelligence, big data, algorithms and other aspects of resources and innovative experience can provide direct help or transformation for the former.
On January 5, 2021, Huami's Anhui Shunyuan Xinke Management Consulting Partnership (Limited Partnership) signed an equity transfer agreement with Wang Zhenhong, the controlling shareholder and actual controller of E&P Technology, to transfer its 29.99% equity interest in E&P Technology to the former for a cash consideration of approximately RMB960 million.
The transfer of this equity transfer was completed on February 4, 2021, and Anhui Shunyuan Xinke Management Consulting Partnership (Limited Partnership) became the controlling shareholder of E&T Technology, and Huang Wang became the actual controller of the latter. On February 24 of the same year, Huang Wang became the chairman of E&T Technology through the election of the board of directors.
After Huami joined E&T Technology, it has brought many benefits to the latter.
According to the 2021 annual report released by E&P Technology on March 14, in 2021, E&P Technology's revenue was 249.68 million yuan, an increase of 206.83% year-on-year, and the net profit attributable to common shareholders was 28.4633 million yuan, an increase of 208.36% year-on-year.
New forces and new possibilities have also been introduced into E&T Technology.
On February 28, 2022, E&P Technology issued an announcement that after the nomination of Chairman Huang Wang and the qualification review of the Nomination Committee of the Board of Directors, the Board of Directors agreed to appoint Sun Peng as the general manager of the company.
According to the announcement, Sun Peng, born in 1978, studied computer science at the University of Science and Technology of China, joined the Microsoft Asia Engineering Institute in Beijing after graduating in 2005 as a software engineer, joined Xiaomi in May 2010, and has been working in Xiaomi since then until he joined E&T Technology.
According to Haike Finance, Sun Peng is one of the 13 members of Xiaomi's founding team, and one of the founding leaders of Xiaomi MIUI and Xiaomi Ecological Chain, who has rich experience in IoT, operating system and other fields. After Sun Peng takes charge of E&P Technology, it may open up a new situation for the company in technological innovation and business expansion.
The outside world is quite concerned about how Huami will coordinate with its important partner, Xiaomi, an A-round investor.
As you can see, the in-depth cooperation between Xiaomi and Huami is as always, Xiaomi affiliates still hold 21.2% of Huami's equity, and Xiaomi's support for Huami in its own brand and independent development is also creating a more open space for the latter's development.
On March 16, Xiaomi's official Weibo "Xiaomi Sports Health" posted that in order to encourage ecological chain companies to develop their own brands, Xiaomi agreed to rename the existing APP "Xiaomi Sports" to "Zepp life" and become Huami's sports health application, which will be operated independently by Huami.
It is mentioned in the article that Xiaomi will continue to deepen cooperation with Huami in product development, self-developed chips, algorithms and other aspects in the wearable field, and jointly provide high-quality and leading wearable software and hardware products for rice noodles.
Huami founder Huang Wang stressed on March 17 that while vigorously developing its own brand, Huami will continue to maintain close strategic cooperation with Xiaomi, and the two sides are actively exploring the development of new products, of which the latest generation of Xiaomi Bracelet 7 will be launched within the year.