More than 3,000 yuan is a high-end mobile phone? Can Lei Jun lead Xiaomi to break through the "class barrier"

For xiaomi, the overseas market and the high-end market "long slope thick snow", the former has let millet taste the sweetness, while the latter is like an invisible "class barrier" blocking millet, "di silk artifact" can achieve the "class barrier" of the chicken woman?

For Xiaomi, the high-end strategy of mobile phones must be successful, but not necessarily successful.

Xiaomi Group's (HK:01810) 2021 financial report showed a polarization trend.

Some people believe that under the macro environment in 2021, Xiaomi's revenue and net profit growth rate is very good; while others believe that Xiaomi's high-end mobile phone strategy has not really succeeded in 2021, such as it will be priced at more than 3,000 yuan of mobile phones as high-end mobile phones.

The former looks at the current figures, while the latter looks at future expectations.

The most core link of Xiaomi's ecology is the smartphone, and the internet service is equivalent to the gross profit of the smartphone.

So much so that in the prospectus a few years ago, Xiaomi positioned itself as an Internet company.

Whether it is a smart phone or an Internet service, in order to maintain a high growth rate, it is necessary to take the high-end strategy of smart phones as the starting point to break down the "class barrier".

The road is long and long.

1. The potential of the Internet is hidden in the high-end strategy

In 2018, Xiaomi positioned itself in the prospectus as an "Internet company with mobile phones, smart hardware, and IoT platform as the core". For a while, public opinion was in an uproar, "You are obviously a mobile phone seller, how can you say that you are an Internet company?" ”

But if you look closely at Xiaomi's performance from 2015 to 2017, it is not difficult to understand its positioning.

In 2015 and 2016, the gross profit contributed by Xiaomi's Internet service segment accounted for the absolute majority, and the gross profit of the smartphone segment exceeded that of Internet services for the first time in 2017, but it was overtaken in the first quarter of 2018, and the gross profit of the Internet service segment and the smartphone segment is still between Bozhong today. Therefore, from the perspective of financial data, xiaomi's position as an Internet company, although somewhat abnormal, can also justify itself.

From the perspective of business logic, Xiaomi's smart phones, smart hardware, and IoT platform can be seen as a moat built for Internet services, and if users want to use Xiaomi mobile phones, they must use Many software and services such as Xiaomi's built-in video, music, games, browsers and application markets. Hardware such as mobile phones can be seen as a means for Internet companies to obtain and retain customers from their own profits, just like Jingdong does logistics and Meituan does takeaway.

In 2021, Xiaomi achieved very bright results when the Internet world was wailing: total revenue reached 328.3 billion yuan, an increase of 33.5% year-on-year; adjusted net profit reached 22 billion yuan, an increase of 69.5% year-on-year.

But the positioning of Xiaomi Internet is becoming more and more unstable.

In 2021, the gross profit margin of Xiaomi's Internet services segment hit a record high of 76.1%, but the segment's revenue increased by only 18.8% year-on-year, far lower than other segments, while the gross profit contributed by Internet services to Xiaomi was once again surpassed by the smartphone business.

The high gross profit margin of the Internet services segment in 2021, in addition to the "increased contribution of advertising business" disclosed in the financial report, there is also a very important reason: Xiaomi transferred the consumer finance business in its financial technology business to Xiaomi consumer finance (Xiaomi accounted for 50% of the shares).

Why should consumer finance be separated? Isn't consumer finance fragrant? Ant Group earns tens of billions of dollars a year by consumer finance! For Xiaomi, consumer finance may really not be fragrant.

2020 is the most serious year of the epidemic, the entire consumer finance industry is facing the risk of overdue increase, millet naturally can not be an exception, at the end of 2020 millet loan receivables credit loss provisions increased to 1.757 billion yuan, which is only 8.9 billion yuan of loans receivable balance millet, is undoubtedly an astronomical figure, directly pulled down the gross profit margin of xiaomi's entire Internet service segment in 2020, consumer finance has become very chicken.

In February this year, the media reported that the original Personal Consumption Loan Product of Tianxing Digital Branch, the main personal consumption loan product, has been changed from Xiaomi Small Loan Company to Xiaomi Consumer Finance Operation.

At the end of 2021, Xiaomi's provision for credit losses on loans receivable fell directly from 1.758 billion yuan to 0.21 billion yuan, giving a beautiful assist to the gross profit margin of the Internet services segment.

However, the divestiture of consumer financial assets is obviously an unsustainable operation, will the gross profit margin of Xiaomi consumer finance continue to increase in the future? Not much space.

From 2015 to 2017, advertising services and Internet value-added services (including financial technology) constituted Xiaomi's Internet service segment, of which the gross profit margin of advertising services was once as high as 91.1%, and then fell to 81.8%, even if Xiaomi's advertising business can maintain a gross profit margin of 81.8% today and in the future, it is difficult to pull the gross profit margin of the entire segment from 76.1% to how much.

In December 2021, the number of monthly active users of MIUI in the world reached 509 million, an increase of 28.4% year-on-year, of which the number of monthly active users of MIUI in mainland China was 130 million, an increase of 17.0% year-on-year.

Who is using the MIUI system? Of course it is a user of Xiaomi mobile phones.

Therefore, in the current market, the future of Xiaomi's Internet service segment is hidden in Xiaomi's high-end mobile phone strategy.

2, Xiaomi's tortuous mobile phone high-end strategy

How much do you think a phone is a high-end machine? Xiaomi's answer is to price more than 3,000 yuan, and the word "pricing" here needs special attention.

This answer is more or less dog blood.

In 2011, the price of Xiaomi 1 was 1999 yuan, focusing on cost performance; ten years later, the price of 3000 yuan became a high-end watershed? The CPI of this decade has risen in vain for Xiaomi.

Although dog blood, it has to be admitted that Xiaomi has made stage progress in its own definition of "high-end".

Xiaomi's financial report pointed out: "In 2021, the global shipments of high-end smartphones priced at RMB 3,000 yuan or more in mainland China and 300 euros or more overseas will exceed 24 million units, far exceeding the level of about 10 million units in 2020." In addition, the gross profit margin of Xiaomi's smartphone segment also soared to 11.9% from 8.7% in the previous year, which also made Xiaomi's smartphone segment once again surpass the Internet services segment as the highest gross profit contribution business.

Although certain achievements have been made, the high-end process of Xiaomi's mobile phones in 2021 does not seem to be optimistic.

Lin Meibing, chief analyst of WitDisplay, pointed out four reasons why Xiaomi's high-end is not successful at the sharing meeting launched by the "Understand" Mini Program: First, Xiaomi's so-called high-end mobile phones are to achieve sales increases by reducing prices, and some models have begun to reduce prices in the first few months of listing; from the average price point of view, the average price of Xiaomi mobile phones in 2021 is 1097.5 yuan, an increase of only 52 yuan year-on-year, and last year's various adverse effects, such as chips and material prices, may be more than 52 yuan From the perspective of the average incremental price, the sales volume of Xiaomi mobile phones in 2021 increased by about 44 million units year-on-year, the revenue increase was 557.6 billion yuan, and the average price of the increment was also not high; finally, although xiaomi's research and development expenses in 2021 were very high, the quality of high-end models was not so high, such as Xiaomi 11 last year.

Since 2015, Xiaomi has always wanted to impact the high-end market, but due to channel restrictions, insufficient product strength, has not been successful, but broke through the price of 3,000 yuan, there is still a distance from the real high-end mobile phone market. Similarly, it is difficult for Honor and OPPO and Vivo to achieve high-end, especially under the price pressure of Apple, companies that lack core innovation can only maintain in the low-end market. Lin Meibing said.

In addition, another dimension of Xiaomi's high-end strategy is difficult to evaluate is the price of a single product, the highest price of Xiaomi 12PRO is only 5399 yuan, and the glory magic4pro that was once benchmarked with Redmi started at 5499 yuan, the highest match is 6499 yuan, and the price of magic4 to the best version is 7999 yuan.

This is simply a dimensionality reduction blow to Xiaomi's high-end strategy.

Although there are many doubts and the road ahead is difficult, Xiaomi must succeed in the high-end strategy of mobile phones, just like xiaomi's expansion in overseas markets must be successful a few years ago, both of which are the only way for Xiaomi to maintain a high growth rate.

If the high-end strategy is successful, it means that Xiaomi's smartphone segment can obtain higher gross margin improvement space, in addition, high-end mobile phone users often have high commercial value, and these users can contribute more revenue and gross profit to Xiaomi's Internet service segment, which is not a quantitative change for Xiaomi, but a qualitative change.

In February this year, Lei Jun released a letter from all employees, saying: "Xiaomi Group officially set up a high-end strategy working group, under the traction of the "three-year mobile phone sales world first" strategy, clearly defined the high-end strategic goal: products and experiences should be fully benchmarked iPhone, and the first domestic high-end mobile phone market share should be won within three years. ”

This goal is high and difficult, but it does not mean that it cannot be achieved.

Author's Note: Xiaomi lacks high-end genes from the bottom up.

In 2021, a topic needs to be understood "What brand of mobile phone supports WeChat face brush payment?" "Why does the same brand of mobile phone support Alipay face brush payment, but do not support WeChat face brush payment?" " and other issues.

The author and colleagues have called the customer service of all mainstream mobile phone brands, and the answer given by Huawei and Honor is "For the sake of payment security, only mobile phones that support 3D face recognition function support face payment." In addition, their customer service also gave a lot of technical terms to explain 3D face recognition and translated these terms into human words.

At this time, the author thought that it was a research and development personnel who answered the phone, and after repeated confirmation, he learned that they were ordinary customer service.

The answers and professionalism given by other brand customer service are different, but they are not as certain and professional as Huawei and Glory, and the lowest is Xiaomi customer service, either "don't know" or "our mobile phones are supported." ”

To do a little science, hardware face recognition is divided into 2D and 3D, and the camera of 3D face recognition is more expensive and more accurate. If you want to support face payment at the mobile phone level, you must have the ability of 3D face recognition, at present, only apple, Huawei, honor flagship machines have, other brands such as OPPO, VIVO, Xiaomi all mobile phone models, do not support this function.

This time to seek verification, let the author really began to identify with Huawei, glory of the scientific and technological capabilities, after all, a customer service has a sense of professionalism of engineers; but also disappointed in Xiaomi, whether it is service or professionalism is too low.

Why is it that Xiaomi lacks high-end genes from the bottom up? Because compared to entrepreneurs, Lei Jun seems to prefer to be an Internet celebrity, although these two identities are very successful, but always feel that this dual identity together, there is less of a high-end feeling.