Honor Xiaomi vs Apple?

Text/Wise Finance Li Xiang

Editor/Nan Zhang

For the benchmarking of Apple, Honor and Xiaomi are rarely on the same front.

On the evening of March 17, the Magic 4 series of Honor's flagship mobile phone in the spring was officially released in China. Honor CEO Zhao Ming said in a group interview after the conference: "After the release of the iPhone 13, the mobile phone in the domestic market has changed from the previous two poles to a pole, and Apple has become a dominant one. Glory wants to change the current situation of Apple's dominance, Magic 4 to fully benchmark Apple, we must let consumers feel that there is an experience beyond Apple. ”

Coincidentally, at the Xiaomi 12 series conference held on December 28, 2021, Xiaomi Chairman Lei Jun also officially proposed the goal of benchmarking Apple.

In fact, Xiaomi has been interested in benchmarking Apple as early as a few years ago. "To be the first in the world, Xiaomi will have to cross the two mountains of Apple and Samsung in the next five years." At the third Internet Conference held in mid-November 2016, Lei Jun said when asked about the current situation and future of domestic mobile phones.

Prior to this, Xiaomi mobile phone shipments had squeezed into the world's top three, tightly gripping Apple and Samsung in the international market, while in the domestic market, Xiaomi ranked first with a market share of 13.7%, Apple, Huawei, Lenovo and Samsung, ranked 2nd to 5th, respectively, and even the well-known research institution IDC did not skimp on its praise for Xiaomi: Xiaomi is expected to consolidate its position as the most powerful mobile phone manufacturer in the world's most important market.

Time into 2022, the high-end market has become the key to the current smartphone manufacturers to obtain an incremental market. At the same time, the replacement cycle of smart phones has been as long as 25-30 months, in the current situation of shrinking demand and serious homogenization, the high-end market and the promotion of brand premium will help smart phone manufacturers to obtain higher profits. The high-end market has ushered in more fierce competition, although Xiaomi and Honor are accelerating to catch up, but it is not easy to break through against the trend.

First, against the standard apple, glory needs to tear off the "low-end" label first

Apple has always firmly occupied the hegemony of the high-end market. According to Counterpoint's statistics, in 2021, Apple occupies 7 seats in the top 10 of the world's best-selling smartphone list, while Samsung and Redmi barely make it to the list with low-end models, of which Samsung Galaxy A12 ranks sixth, Redmi 9A and Redmi 9 rank seventh and tenth respectively, and Honor does not have any models in the list.

In the Chinese market, the gap between Honor and Apple is also very far away. During the "Double 11" period in 2021, the top three of JD.com's self-operated mobile phone sales list were all occupied by Apple, of which the iPhone 13 ranked first with sales of 1.7128 million units, and the iPhone12 and iPhone 13 Pro Max ranked second and third with sales of 1.1461 million units and 850,400 units, respectively. In the top ten, except for the Xiaomi Mi 10S and Mi 11 Pro, the rest are redmi's low-end models, and the only model on the list is the Honor 50, ranking twelfth with sales of 157,800 units.

A fact that cannot be ignored is that under the pressure of Apple dominating most of the high-end market, Honor does not have much room to play in the high-end market.

As early as October 2020, market research agency IDC released the market share data of smartphones in China's price range of more than $600 (about 4,000 yuan) in the first half of 2020, With Huawei ranking first with a market share of 44.1%, followed by Apple with a market share of 44%, and the two occupied a total of 88.1% of the high-end market. This means that when consumers buy high-end mobile phones, they either choose Huawei or choose Apple. But with Huawei being suppressed so far, Apple has completely no rivals in China's high-end market.

"The domestic market for Huawei's mobile phones and tablets has been ceded to Apple at the high end, OPPO, vivo and xiaomi at the mid-end and low end, and Apple, Samsung and domestic counterparts overseas." In May 2021, Yu Chengdong, then CEO of Huawei's consumer business, was outspoken in the circle of friends.

The macro-level data only shows the huge gap between Honor and Apple, specifically, whether it is brand positioning or marketing strategy, Honor has never tried to enter the high-end market before, and has never had the accumulation of high-end user groups. More critically, Honor was forced to spin off from Huawei's system, and naturally could no longer enjoy the brand premium brought by Huawei.

But Glory took the first step bravely.

On August 12, 2021, Honor released the high-end model Honor Magic 3 series. "It is a product that carries the rise of honor's high-end series." Zhao Ming stressed, "In the past, Huawei and Apple were the two strongest in China's high-end machine market. The core of the future glory's high-end rise is to compete with Apple and pursue to match or even surpass Apple in mobile phone and all-scenario product solutions. Zhao Ming's expectations for the Honor Magic3 are high, calling it "the industry's top flagship product, reaching and surpassing the level of Huawei's Mate and P series."

The lack of strength of the Honor Magic3 series in the high-end market is finally reflected in its sales. As of March 27, in the Glory Jingdong self-operated flagship store, the sales of honor magic3 were 50,000+, the sales of honor magic3 Pro were 20,000+, and the sales of honor magic3 to the best version were 10,000+. For comparison, in apple products Jingdong self-operated flagship store, iPhone 13 sales of 2 million +, iPhone 13 Pro sales of 200,000 +, and iPhone 13 Pro Max sales of 500,000 +.

Glory is inferior to Apple at least two problems, one is that domestic mobile phone manufacturers have not really occupied a dominant position in the high-end market; second, it is not easy for domestic mobile phone manufacturers to grab the cake of the high-end market with Apple.

But Glory's firm belief in benchmarking Apple is still worth looking forward to. Zhao Ming said, "I think Apple's advantages can not be changed in a day, and Huawei has also gone through several years when it has achieved the two strongest in the high-end market." Apple is in a very leading position, in fact, the glory is a spur and incentive, the release of the glory Magic4 series, is once again the use of products to win the support of consumers, I hope that Chinese consumers to use the most critical eyes to evaluate and compare our experience with Apple, we hope to use products to win more high-end users and consumer recognition. ”

At the same time, Zhao Ming also revealed that Honor will fully launch overseas markets in 2022, and the teams in Europe, America, Latin America and other markets have been formed, and a number of products will be released overseas next. "We want to be an iconic technology brand in the global marketplace, and that goal is unwavering." Zhao Ming said.

Second, the benchmark Apple first year, millet results are average

On February 13, 2020, at the "Dream of The Tenth Anniversary of Xiaomi" conference, Lei Jun, founder and chairman of Xiaomi, announced that the Xiaomi 10 series officially impacted the high-end market.

Fortunately, Xiaomi has won its first battle in the high-end market. Just one minute after the sale, the sales of the Xiaomi Mi 10 series exceeded 200 million yuan. Data from the first mobile phone industry shows that in the second quarter of 2020, Xiaomi 10 won the global mobile phone [phone] yuan best-selling model TOP3, and the Xiaomi 10 Pro won the global mobile phone 4000 yuan + best-selling model TOP13.

The Xiaomi Mi 11 series, as the second high-end model of Xiaomi to fully impact the high-end market, has also achieved great performance. According to xiaomi's official sales report data, Xiaomi 11 sales exceeded 1 million units 21 days after its release.

However, two years after Xiaomi hit the high-end market, it unexpectedly showed fatigue.

According to the first sales report, the sales of the Xiaomi 12 series exceeded 1.8 billion yuan in 5 minutes of omni-channel sales, but compared with the Xiaomi 11 series, its first month sales fell by nearly 60%. According to Counterpoint statistics, the first month of sales of the Xiaomi Mi 12 series was only 460,000 units, while the first month of the Xiaomi Mi 11 series was 1.12 million units.

Although the momentum of the Xiaomi Mi 12 series has slowed down slightly, overall, Xiaomi has still achieved a stage victory in the high-end market.

On March 22, Xiaomi disclosed its financial report for the full year of 2021. According to the financial report, Xiaomi's smartphone business revenue was 208.9 billion yuan, an increase of 37.2% year-on-year, accounting for 59% of total revenue. Full-year shipments were 190 million units, up 30% year-on-year.

The average selling price (ASP) is a direct indicator to assess the degree of high-end of the product, and it is worth mentioning that Xiaomi's ASP has a clear upward trend. According to the financial report, in 2021, Xiaomi's global shipments of high-end models priced at 3,000 yuan in Chinese mainland or more than 300 euros abroad exceeded 24 million units, exceeding the 10 million units in 2020.

In terms of shipments, the proportion of high-end models increased from about 7% in 2020 to about 13% in 2021. Due to the increase in high-end model shipments, the ASP of Xiaomi mobile phones increased by 13.3% year-on-year to 1143.6 yuan in the fourth quarter of 2021.

If you look at the horizontal comparison, Xiaomi's performance in the high-end market is still not satisfactory. According to the U.S. Market Research Institute for Strategic Analysis, in the fourth quarter of 2019, Samsung's ASP was $225 (about 1505 yuan), Huawei's was $243 (about 1625 yuan), and Apple's ASP was the highest, at $786 (about 5257 yuan). In contrast, in 2021 two years later, Xiaomi's ASP still has a big gap with its competitors.

Xiaomi's impact on the high-end market is not as simple as imagined. At the 2021 Xiaomi Investor Day event, Lu Weibing, senior vice president of Xiaomi, mentioned that any high-end strategy requires 3-5 years of climbing. 2021 is Xiaomi's second year. At the same time, the market investment in high-end is very large, "if the high-end does not have scale, it is difficult to make money, it is a huge loss." ”

Despite the stage victory in the high-end market, a fact that cannot be ignored is that Xiaomi is still difficult to benchmark against Apple.

According to market research agency Canalys data, in the second quarter of 2021, Xiaomi briefly surpassed Apple to become the second in the world, and then was surpassed by Apple for two consecutive quarters. In the fourth quarter of 2021, Apple topped the first place in the Chinese market with a market share of 25%, and the market share of millet in the same period was 16%, and under the strong return of glory, millet was also surpassed for two consecutive quarters, squeezing out the top three in the Chinese market and ranking fourth. How to break through the front and back of Apple and Glory is still a problem that Xiaomi must face.

However, it is worth affirming that in the matter of benchmarking Apple, domestic mobile phone manufacturers have chosen to step out of the comfort zone and try to break through from multiple angles, such as honor restarting the Magic series of positioning black technology; OPPO has come up with a self-developed image-specific NPU chip "Mariana X"; vivo is also announcing that it will focus its potential energy on the X series.

At present, "benchmarking Apple" may be just a slogan, but at least Glory and Xiaomi have taken a difficult step, and it is especially difficult to grab food, and domestic mobile phone manufacturers still need to work very hard.