Extreme rice is trapped in change

Image source @ Visual China

Text | Financial external reference

According to relevant industry statistics, in 2021, the sales volume of the national intelligent projection market (excluding laser TV) reached 4.803 million units, an increase of 29.0% year-on-year, and the market sales reached 11.61 billion yuan, an increase of 32.2% year-on-year. Behind this high growth, on the one hand, the consumption concept of young people represented by Generation Z is changing, and more and more consumers regard smart projectors as another choice in addition to TVs, and their prices have also declined in recent years with the expansion of scale and cost decline.

On the other hand, the intermittent epidemic has also spawned new use scenarios such as online competition, remote office and online education, and the diversification of use scenarios has brought more demand while continuing to improve consumers' awareness of intelligent projection.

But overall, in 2022, China's intelligent projection market will maintain a steady pace of development, and multiple factors are promoting consumers to release demand: at the policy level, the state calls for an increase in content supply; at the supply level, mainstream brands accelerate product iteration, and new brands continue to add vitality to the market; at the supply chain level, localization is advancing in an orderly manner; at the product level, core indicators continue to upgrade.

The variable in market development is that in today's environment of repeated epidemics and deteriorating world politics, the uncertainty of economic development and consumer sentiment has greatly increased. In addition, the availability of DLP chips and unpredictable future changes are still disturbing. In such a changing market environment, the mainstream domestic intelligent projection manufacturers led by Jimi are constantly exploring how to split the thorns and climb over the barriers to develop a new way forward.

The industrial situation is mixed

The market environment faced by Jimi is more complicated, which is in the context of the late start and rapid development of China's consumer electronics, the foreign brands that enter the game first grasp the technical advantages and first-mover advantages, and the domestic brands that enter the market later have to take advantage of the east wind of the projector "from business to the people" and "break through" from the side.

First of all, from the overall point of view, the development trend of the domestic projector industry chain is good, and there have been progress in product layout, omni-channel, all-scene reach and supply chain localization. The data shows that China's smart projection sales exceeded 500,000 units in 2015 and 1 million units in 2017, with a compound annual growth rate of 52% from 2015 to 2021. Under the trend of technology iteration and consumption upgrading, the intelligent projection market has great potential for future growth, but it will face increasingly fierce competition for Jimi.

Secondly, the mainstream technology of smart projectors is also undergoing ingenious pattern changes, and it seems that LCD will become mainstream in terms of shipments. Jimi is a staunch supporter of DLP, but due to the shortage of DLP chips in recent years, LCD projection has taken advantage of the opportunity, and in January-February 2022 alone, the former's market share has shrunk from 42% to 36%, and the latter's market share has increased from 58% to 64%.

At the same time, the competition situation of the two major technology schools also has its own characteristics: the DLP projection market situation has been clear, Jimi, nuts, dangbei occupy the absolute share, the total share of CR4 in 2021 reached 78.1%, an increase of 7.1% over last year, of which Jimi alone accounted for more than 40%; and the LCD projection market is still in the melee stage, the total share of CR4 in 2021 reached 43.5%, but because the price of LCD projection is low, brand loyalty is difficult to build. Therefore, the brand ranking changes more frequently than the DLP projection brand.

Finally, domestic brands and foreign brands may continue to maintain the status quo of occupying different price niches in the middle and low end and high-end respectively. The domestic projector market can be divided into three grades according to product price: foreign brands occupy the mainstream of the high-end market because of long-term immersion in the projector market; domestic brands occupy the mainstream of the low-end and mid-end markets, of which low-end LCP products are the mainstream, and the mid-end is dominated by DLP products.

On the one hand, this is because domestic manufacturers choose to take the DLP and LCD technology route, which is bound to be subject to patent restrictions and technical suppression by foreign dominant manufacturers such as TI and EPSON; on the other hand, because domestic manufacturers choose to "overtake in the corner" from the blue ocean consumer market, they must reduce the price and cater to the needs of consumers. Such a status quo makes domestic manufacturers pursue technological progress while seeking overtaking in curves.

The triple dilemma faced by Ji Mi

In the drastically changing market, "while pursuing technological progress, while seeking to overtake in curves", is actually a process of "changing in change", which puts forward extremely high requirements for Jimi in technological development, market grasp, brand promotion and consumer cognition, so Jimi is under pressure from all sides.

First of all, Jimi has to face the problem of insufficient upstream supply. At present, the mainstream consumer projection equipment of Jimi has adopted DLP projection technology, and the core patents of DLP projection technology are mastered in Texas Instruments (hereinafter referred to as "TI") in the United States, and the lack of "core" in the entire semiconductor industry in 2021 is expected to continue, and even in the case of deterioration, this is likely to lead to the core components required by Jimi can not be supplied in time, which is undoubtedly not conducive to its production and operation.

Second, the decline in chip shipments has directly led to changes in the Chinese projector market, that is, low-priced LCD projectors are eating away at the market share of medium-priced DLP projectors. This situation has led to the inability of Jimi to get a share in the rapidly growing LCD projection market, and its lowest price is priced at 1799 yuan for the New Play Special Edition, but compared with lcd projectors below 1,000 yuan, it is impossible to compete in price.

Immediately after, Jimi has to face the scorching competitive situation of the head brand. In the entire intelligent projector market, the LCD projection pattern changes the fastest, although it has produced the largest sales, but the market awareness is not strong; foreign first-line brands such as Sony, Epson, etc. occupy the high-end market, known as word of mouth, but few people patronize; the backbone is the mid-range DLP projection, forming a market pattern with jimi, nuts and dangbei far ahead, when it comes to jimi, it usually carries the other two, to some extent, the three are actually bound together.

It is precisely because of this that although Jimi ranks first in the DLP market share and is far ahead, it still cannot obtain an absolute moat. According to Jimi's prospectus, its direct material costs account for more than 96% of operating costs, and based on 2019, when the average unit cost rises by 1%, the corresponding net profit will fall by about 17.37%. Therefore, once the price fluctuations of upstream suppliers or the direction of research and development deviate from the market, the leading edge of Jimi may be greatly reduced.

Finally, Jimi also faces the problem of insufficient consumer awareness. Compared with televisions, consumers' awareness of projectors is far from enough, both because the category has a short history and because manufacturers deliberately create exaggerated words for competition. This has led to a large number of consumers still confused about the concept of projectors: how to distinguish the subtle differences between products and products before purchasing, how to use the projector appropriately after purchase, etc., these are the factors that limit the development of Jimi.

The three-plate axe of the pole meter breaker

For Jimi, products, channels and brands are the key to breaking the game, of which products are fundamental, channels are the lifeblood, and brands need to be built on the basis of both. To sum up, the biggest problem faced by Jimi in the competition is that it cannot "overtake in the corners" in the same technical route, and can only defeat all opponents with a "subtle" advantage. Therefore, product iteration, channel construction and brand management are the three axes of Jimi to break the game.

As the leader of the domestic DLP projection market, Jimi is suppressed by upstream suppliers and foreign brands in terms of technology, but fortunately in the face of the consumer market, the Chinese intelligent projection brand represented by Jimi attaches great importance to the use experience of consumers, and the use experience is not all determined by hardware, of which the optimization of the operating system, the adjustment of the imaging system and other details determine the use experience, which is also the opportunity to overtake in the corner, which forms the technical characteristics of Jimi "upstream without patents, downstream optimization".

Even if there are patent barriers between TI and other manufacturers, there is still no shortcut to "upstream" technology research and development, and it must be invested in it. As early as 2014, Jimi set up an optical laboratory; in 2019, Jimi Technology realized the autonomy of optical machine technology and gradually began mass production, and the proportion of self-developed optical machines in 2021 has reached 90%.

But in the "downstream", the basic logic is that the better the consumer experience, the higher the loyalty to the product and brand. There are two paths for consumer-oriented technology research and development: One is to optimize the use of the scene, the purpose is to start up, such as "six-way automatic correction technology", "global non-inductive focus technology", "thermal out of focus dynamic compensation technology", "one-shot screen alignment technology", etc., basically can solve the oblique shooting and displacement and other ordinary consumers will encounter the situation when using.

The second is to optimize for ease of use, for which Jimi has worked the clarity of the picture, the purity of the picture and the color performance of the picture, which cannot be directly reflected in the packaging and promotional pages of the intelligent projection, but it is extremely challenging for the projection manufacturers to adjust the color and design the internal power of the optical path. In addition, Jimi's self-developed system has also come in handy, not only integrating some content resources, but also providing consumers with a familiar operation interface.

At the same time, in terms of brand management, Jimi had to make great efforts. The first is to keep the product design exquisite to distinguish it from other low-end products; the second is to cooperate with Harman Kardon, almost all the extreme meter projectors have the "harman/kardon" logo, although the joint name has long been a routine operation, but it can still show some differentiation with other brands, and can also stimulate consumers' desire to buy, but how strong this effect is is not known.

Finally, Jimi continues to promote the construction of offline channels on the basis of ensuring the safety and stability of online channels. Specifically, in the offline channels, Jimi mainly sells through 136 directly operated stores and distributors (as of June 30, 2021), but this quantity is still too small for a manufacturer with annual shipments of millions. After all, in the environment of physical stores, the establishment of consumer cognition is not comparable to one or two promotional pictures and several evaluation videos online.

Crisis and opportunity under the AIoT wave

As an emerging market, China's smart projection market is growing rapidly and crises coexisting.

"Danger" mainly stems from itself. Because standards and norms are not in place, some brands have adopted non-compliant publicity methods in order to attract the attention of consumers. These are intelligent projection manufacturers, including Jimi, in the face of fierce competition, through professional instruments and measurement methods to form a set of "talk mechanisms" that avoid the heavy and light, such as exaggerated parameters and mixed concepts, resulting in problems such as inflated core parameters and word games.

There are also some clever methods, such as: because of the use of small size DMD and low-power LED bulbs, so we have to increase the red and green to increase the brightness, and then sacrifice the overall performance of the picture; because the optical design ability is weak, or directly purchased the finished optical machine of the public optical module, and then can not guarantee the contrast, had to adjust the gamma value, so that the contrast "looks" high, resulting in no detail in the dark part, but the light part has superfluous details...

For those new pit consumers, a poor shopping experience and usage experience can directly destroy their trust in the projector, which is ultimately detrimental to the long-term development of the industry.

And the "machine" comes from the outside. At present, there are 12,000 existing "projector" related enterprises in mainland China, and Jimi is the only listed company that has run out under the consumer-grade projection subdivision track. Jimi is a typical representative of intelligence and digital transformation in China's traditional IC manufacturers: there is a subdivision track with in-depth cultivation, several core advantages, one-stop research and production, heavy marketing, strong brand, but the business model is not flexible enough, and its own development is limited by the overall scale of the market, so the possibility of outward expansion is very low.

On the whole, the smart projector is a member of the display ecosystem, in the case of four consecutive years of decline in the sales of smart TVs, smart projectors continue to grow, as a large screen, it is not only a supplement to the lack of portability and mobility of smart TVs, but also a use of the scene different from the smart TV of the flat replacement.

For the general direction of the whole house intelligence, the smart projector has become a very competitive alternative, driven by the AIoT wave, the big factory may come up with a more competitive integration plan in the future. From this point of view, jimi as a leading enterprise can not be alone, the best choice is to jointly establish sub-brands such as millet and Guangfeng cooperation, on the basis of not losing the brand personality on the basis of common development.