Image source @ Visual China
Institute of Literary | Value
On the afternoon of April 20, a huawei new product launch that took only 30 minutes was not small. In addition to launching a series of new products, Yu Chengdong, Managing Director of the Group and CEO of the Terminal Business, also announced an important decision at the meeting: Huawei's consumer business will be officially renamed Huawei Terminal Business and fully enter the commercial field.
In the last fiscal year, Huawei achieved sales revenue of 636.8 billion yuan, down 28.6% year-on-year - this amount is comparable to the revenue in 2017, and "Huawei returned to five years ago overnight" once became the focus of media discussion.
After the division of glory, Huawei's C-end consumer electronics business has become more and more obvious, and the revenue structure of the entire group has changed from previous years - the B-end commercial market is also pushed to the center of the stage by Huawei in this context.
From the perspective of the objective market environment, in the intelligent manufacturing industry, the scale of the B-end is not lost to the C-end, and the potential is even greater, and several subdivisions such as consumer electronics and smart home appliances are particularly obvious. On the track of smart home appliances, TCL, Midea, Gree, Haier and other head manufacturers have achieved certain results, which is also an incentive for Huawei.
From the launch of this series of new products, it can be seen that Huawei's first stage of entering the B-side intends to bet on electronic hardware rather than smart home appliance business.
And in this battlefield, there is also a strong opponent waiting for them - Lenovo.
On the B-side, Huawei's terminal business urgently needs to improve its hematopoietic capabilities
On the afternoon of April 20, Huawei held a new product launch conference for terminal commercial offices.
The conference, which took only 30 minutes, was not small. In addition to launching a series of new products, Yu Chengdong, Managing Director of the Group and CEO of the Terminal Business, also announced an important decision at the meeting: Huawei's consumer business will be officially renamed Huawei Terminal Business and fully enter the commercial field.
"Today, Huawei's consumer business has been officially renamed, and in the future, in addition to creating consumer products for consumers, we will also strategically and long-term investment in the commercial field to create commercial products for conquest and enterprise customers."
In the view of the Value Institute, it is foreseeable that Huawei will seek growth from the B-side - the significant decline in revenue in the previous fiscal year, the shrinkage of the consumer electronics business and the high investment in the smart car business, coupled with the inevitable recession of the C-end consumer market, various unfavorable factors are forcing Huawei to make changes.
Judging from the financial report, the performance of Huawei's revenue, profit and other data in the past year is worrying. According to the data, Huawei achieved sales revenue of 636.8 billion yuan in 2021, down 28.6% year-on-year. In terms of profit, Huawei's net profit for the whole year of 2021 recorded 113.7 billion yuan, an increase of 75.9% year-on-year.
Of course, Huawei also has something to be pleased about, and its active self-help action has played a certain effect at the end of the year, and the decline in revenue is narrowing.
On the one hand, according to the data revealed by Guo Ping, Huawei's rotating chairman, in his New Year's speech on December 31 last year, Huawei's revenue in the fourth quarter of last year was 178.2 billion yuan, down 19% year-on-year, lower than the annual average. On the other hand, according to Huawei CFO Meng Wanzhou at the earnings conference, Huawei's cash flow acquisition ability has been enhanced, and the asset-liability ratio will be reduced to 57.8% in 2021, and the operating cash flow will reach 59.7 billion.
"Our overall financial structure resilience and resilience are strengthening, and the company's ability to cope with uncertainty is increasing."
However, the revenue figure of 634 billion yuan is still quite hard for Huawei - this amount is comparable to the revenue in 2017, and "Huawei returned to five years ago overnight" once became the focus of media discussion.
In addition, the year-on-year increase in Huawei's net profit and the decrease in the asset-liability ratio have a lot to do with the reduction of the group's size and the decline in labor costs – in other words, these achievements are largely attributed to the spin-off glory.
According to official information, on November 17, 2020, the financial delivery of Huawei and Honor was completely completed, but because the two have been deeply bundled and integrated in the supply chain, research and development platform, and business personnel, the segmentation at the business level may be more complicated than the financial level and completed later.
According to sources quoted by 21st Century Business Herald, at least 6,000 Huawei employees completely "ran away" after the split, the vast majority of whom were high-quality talents on the research and development and product ends.
For a long time, Huawei's operating costs, especially the huge manpower expenditure, have been at a high level in the business. After the business and financial divestitures with Glory, the former's expenditure has decreased and profits have risen.
However, it cannot be ignored that after the division of glory, Huawei's C-end consumer electronics business has declined more obviously.
According to IDC statistics, Huawei's smartphone domestic market shipments fell out of the top five in the third quarter of last year, and have not been on the list since. Honor took advantage of the trend after the divestiture of Huawei, and as of the fourth quarter, the market share reached 17%, and the annual average share was 11.7%, a slight increase over 2020.
Guo Ping also admitted to the public that Huawei's C-end business has indeed been greatly affected in the past year, and the revenue structure of the entire group has changed compared with previous years.
The B-end commercial market is also pushed to the center of the stage by Huawei in this context.
According to the financial report data, Huawei's carrier business and consumer business revenue in fiscal 2021 were 281.4 billion yuan and 243.4 billion yuan, respectively, although it is still the main cash cow, but it has fallen sharply year-on-year - the latter is close to the waist compared with 482.9 billion yuan in 2020.
Among the major sectors, the only thing that has achieved growth against the market is the enterprise business. According to the data, Huawei's enterprise business camp recorded 102.4 billion yuan in the previous fiscal year, compared with 100.3 billion yuan in 2020.
From this point of view, changing the name of the consumer business and adding the B-end business is a reasonable move for Huawei.
The market prospect is broad, and the B-end is the new hope for consumer electronics
Can Huawei's B-side strategy succeed?
This question is actually not difficult to answer - the key to success or failure is to look at the market environment and Huawei's own competitiveness.
From the perspective of the objective market environment, in the intelligent manufacturing industry, the scale of the B-end is not lost to the C-end, and the potential is even greater, and several subdivisions such as consumer electronics and smart home appliances are particularly obvious.
Looking at the financial reports of major giants, it can be found that since 2020, the shrinking trend of the C-end consumer electronics market cannot be reversed, and it is not only Huawei that is in decline.
In the fourth quarter of 2021, Xiaomi's smartphone business shipments increased slightly by 4.7% year-on-year, and only increased by 1.4% month-on-month, and the growth rate has slowed down significantly. What is more worrying is that Xiaomi's operating profit in the fourth quarter only recorded 4.415 billion, a sharp drop of 54% from 9.602 billion in the same period of 2020.
In addition to smartphones, wearables, entertainment devices such as VR/AR, and the C-end market for PCs have also gone downhill, and the collapse of popular electronic products such as Amazon's Kindle is the best evidence.
Statistics from the Health Industry Research Institute show that the smart wearable device market bid farewell to the period of rapid development in 2019 and then entered a stage of deep adjustment, which has not eased up until now. According to data provided by IDC, the growth rate of global smart wearable device shipments fell off a cliff to 32% in 2020, compared with 89% in the previous year, and it is expected to recover around 2025.
Even in the domestic market with the greatest potential and the largest user size, the average annual compound growth rate of smart wearable devices in the period 2021-2025 is expected to be only 20%, far lower than the 37.8% in 2016-2020.
Since the recession of the C-end is inevitable, the B-end naturally becomes the new hope of the consumer electronics giant. What's more, on the track of smart home appliances, TCL, Midea, Gree, Haier and other head manufacturers have achieved certain results, which is also an incentive for Huawei.
Taking the commercial central air conditioning track as an example, the competition between the three giants of Midea, Haier and Gree has entered a white-hot stage, showing the broad growth prospects of the market.
At present, the demand for central air conditioning in large commercial shopping malls and office buildings in the city is in a downturn, which has something to do with the decline of the commercial real estate market. However, under the impetus of the "transportation power" infrastructure plan, various provinces and cities have promoted the construction of rail transit, and a large amount of demand has been released.
According to the data of RT rail transit statistics, as of 2020, the three giants of Midea, Haier and Gree account for a similar proportion of the central air conditioning market of rail transit systems, all of which are around 22%-23%.
However, if the comparison range is enlarged to more categories and vertical tracks, we can still vaguely see the leading position of mid-term beauty in this B-end war.
According to the financial report, the proportion of U.S. revenue from the B-end business will reach 25% in 2021, and it is expected to rise to 35%-40% by 2025, and the growth rate of the B-end business in the past few years has been higher than that of the C-end.
The contribution of the B-end business to the United States is not only reflected in the revenue data. Wind statistics show that in the past 2 years, the valuation center of the Midea Group has broken through the rising bottleneck of about 10 times, and once reached a high of 15 times in the third quarter of last year. What drives Midea's valuation and boosts capital confidence is its achievements in the B-end business.
(Photo from CITIC Construction Investment Securities)
The above data shows that the potential of the B-end home appliance market is beyond doubt. As for Huawei's competitiveness, it must be comprehensively analyzed in combination with the market competition pattern and the performance of other competitors.
Turn your attention back to the Huawei new product launch mentioned at the beginning of the article. At this conference, Yu Chengdong introduced Huawei's seven series of commercial products to the outside world in one go: notebook MateBook B series, desktop MateStation B series, display B series, flat panel C series, printer PixLab B series, smart screen B series and wearable Watch B series.
Although Huawei also has deep technical strength and a huge product matrix in the smart home and home appliance markets, it can be seen from the launch of this series of new products that Huawei intends to bet on electronic hardware instead of smart home appliances in the first stage of entering the B-side.
And in this battlefield, there is also a strong opponent waiting for them - Lenovo.
Benchmarking Lenovo, Huawei has advantages and disadvantages
I believe everyone has noticed that on the same day that Huawei held a press conference and announced its entry into the B-end commercial market, Lenovo also held a ThinkFamily 2022 spring new product launch.
At the press conference, ThinkPad X1 Carbon 2022, ThinkPad X1 Nano 2022, ThinkPad X1 Yoga 2022 and other new business flagship products were officially launched. Among them, the highly anticipated ThinkPad neo 14 notebook and ThinkCentre neo P780/P600 desktop that are highly anticipated and focus on high-performance computing are also officially unveiled.
Zhou Qiuhao, Chief Product Officer of Lenovo Think, is very confident about the performance and business prospects of this series of new products:
"On the road of exploring scientific and technological innovation, Think series products continue to accomplish one thing, that is, to break the limit and create the ultimate."
Going back in time, at the fourth Tech World conference in 2018, Lenovo revealed its ambition to infiltrate the B-side for the first time. Yang Yuanqing said bluntly at the conference:
"In the past, important events like Tech World, we mixed the two parts of To B and To C to discuss, so that our To B image was not prominent enough. So starting this year, we decided to discuss these two parts separately. ”
Liu Jun, then executive vice president of Lenovo, also revealed at this tech World that Lenovo's future plan is to open four or six business revenues at the C-end and B-end in China, "in the global market, the proportion of B-end is even higher."
However, from the financial report data, Lenovo is still a certain distance from the goal set by Yang Yuanqing. As of fiscal 2021, Lenovo's revenue accounted for the highest proportion of PC business, and the combined proportion of data center and mobile business revenue could not reach 40%.
But the good news is that Lenovo's business in commercial scenarios such as office, education, entertainment, and advanced manufacturing has made some progress, and its penetration rate is steadily increasing.
Among them, boosted by the explosion of demand for cloud service IT infrastructure, Lenovo ISG achieved revenue of $6.331 billion in the previous fiscal year, reaching a historical peak. According to the data sample provided by Lenovo officially, the group's ISG server business has covered a large number of large and medium-sized enterprises in the global cloud computing and artificial intelligence industry, and is gradually penetrating into the small and medium-sized enterprise market.
After four years of hard work and transformation, Lenovo has become the head player in the domestic consumer electronics and intelligent terminal B-end markets. Nowadays, Huawei has taken the initiative to enter the game, and the competition between the two giants will inevitably enter a new stage.
In the view of the Value Research Institute, if it is a benchmark lenovo, Huawei's B-end business advantages and shortcomings are very obvious, and the former has many places worth learning from Huawei.
Huawei's advantages are twofold: a strong developer ecosystem (relative to Lenovo) and a technological strength that is second to none in the industry.
The MateBook B series highlighted at the press conference features a security card and is equipped with an independent TPM2.0 security chip. According to data revealed by Yu Chengdong at the press conference, Huawei's international patent applicant ranking has been at the top of the list for five consecutive years, with a total of 6,952 patents filed last year – a figure 1.8 times that of the second place.
In addition, all commercial products launched at the press conference can rely on Huawei's Hongmeng system to provide customized services for enterprise users with terminal equipment, and leave customers with space for independent development.
Objectively speaking, although Huawei entered the game late, its hardware ecology is not worse than Lenovo, and Huawei's various business lines are also actively cooperating with the development of B-end business to provide assistance for the latter.
As the world's leading ICT infrastructure and intelligent terminal provider, Huawei still has a large number of business layouts in the B-end market. As the announcement on the official website: Huawei's vision and mission is to bring the digital world to everyone, every family, and every organization, and build a fully connected and intelligent world.
The "organization" mentioned in it is aimed at the B-end market.
At last year's All-Connected Conference, Huawei released a set of data: As of the third quarter, Huawei released a total of 11 scenario solutions for customers in the five major industries of government/institutions, finance, transportation, energy, and manufacturing, and plans to help more than 800 enterprise customers achieve digital upgrades in the next five years.
With a long history of deep cultivation in the ICT B-end market, Huawei has accumulated deep contacts and channel resources, as well as rich experience in B-end operations, which are valuable assets for the future development of terminal business.
In addition to hardware, Huawei's software strength is also very prominent. Not long ago, Huawei Pay, which was independently launched, took the lead in applying it to the B-side scenario, providing customized all-scenario payment solutions for government agencies and small and medium-sized enterprise customers, providing a full set of services including payment, clearing, fund management, and account management.
However, Huawei's problem is that it has long lost the opportunity to start first, Lenovo's user stickiness is not low, and it is not easy to eat into the latter's market share.
A similar plot has been staged once in the PC market.
In the fourth quarter of last year, Huawei released more than 10 PC terminal products in one go, covering tablets, notebooks, desktops, etc., in an attempt to launch another round of general attack on Lenovo. However, the results have been seen by everyone, according to Canalys statistics, Lenovo's shipments in the domestic PC market still rank first, with a market share of more than 40%, followed by established PC manufacturers such as Dell, HP and Asus.
Of course, the market situation is constantly changing, compared with the whole year, Huawei's Hongmeng ecosystem is more powerful, the performance of commercial terminal products has been upgrading, and the strength and ambition are beyond doubt.
In the C-end market failed to defeat Lenovo's Huawei, can it succeed this time?
Write at the end
Some people in the industry are not surprised by Huawei's big fanfare entering the B-end market.
At the inaugural meeting of the second batch of ten corps at the end of last month, Ren Zhengfei said that he would "actively adjust the formation and adopt flexible and mobile strategies and tactics", which was widely interpreted by the outside world as a signal for Huawei to turn the bow and develop new business.
And this time, Huawei has high hopes, and it is Ren Zhengfei's Yu Chengdong, who has been extremely trusted in recent years, and everything seems logical.
For Ren Zhengfei, who advocates wolf culture and high-pressure management, Yu Chengdong is like a mixture of "angels and devils", which makes people love and hate at the same time. On the one hand, Yu Chengdong has a flamboyant personality, an enterprising style, and is full of hard work, but on the other hand, he does not choose his words and provokes public opinion wars everywhere. After taking over consumer BG in 2011, Yu Chengdong once released the "three years of super Apple, five years to destroy Samsung" rhetoric, forcing Ren Zhengfei to issue a "ban on speech".
But turning his head, when Huawei needed people to charge in front, Yu Chengdong still stepped forward again and again.
This time, the consumer business changed its name to enter the B-end market, which is also a hard battle for Huawei, and the difficulty is not lower than that of challenging Samsung and Apple.
According to a number of media reports, more than a year ago, HUAWEI CLOUD proposed to catch up with Alibaba Cloud's goal, but it has been making slow progress. Until Yu Chengdong came to HUAWEI CLOUD and Computing BG, the morale of the employees in the business unit soared, which showed its popularity and prestige.
The successful experience in the past and the appeal within Huawei are Yu Chengdong's advantages. If you want to win the hard battle of terminal To B, Yu Chengdong is also the "nuclear weapon" that Huawei relies on the most.