Written by Harry Zhang
The general environment of the domestic mobile phone market is cooling in 2022
The downward trend at the beginning of the game has deepened further.
How domestic mobile phone manufacturers turn the situation is no longer the icing on the cake, but a matter of their own life and death.
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For Chinese mobile phone manufacturers, the alarm has been sounded: according to the China Academy of Information and Communications Technology, the Chinese market shipments of mobile phones in February were only 14.864 million units, down 31.7% year-on-year, the lowest value in more than a year. In the first two months of this year, the Chinese market mobile phone shipments were 47.886 million units, an overall year-on-year decline of 22.6%, and 5G mobile phone shipments also rarely declined, down 11% year-on-year.
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For mobile phone brands, finding a second growth curve is no longer the icing on the cake, but to the edge of life and death, and it is urgent. For mobile phone manufacturers, the continuous introduction of multi-screen and folding screen products to attract customer attention and promote brands to strive for more high-end brand market share is a change made by many mobile phone brands based on their own business.
Under the influence of the epidemic, the mobile phone market in 2022 is likely to continue to decline
Tianfeng Securities analyst Guo Mingji recently said on social media that China's major Android mobile phone brands have cut orders by about 170 million units this year, accounting for 20% of the original 2022 shipment plan, and orders may be further reduced in the coming months. Behind this is the impact of the epidemic, the economic downturn, and the frequency of changing mobile phones are directly affected. Counterpoint, a third-party research institute, found that the latest research data is that the average replacement cycle of Chinese users has been extended from 25 months to 31 months.
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According to data from CINNO Research, a third-party market research institute, OPPO (excluding realme) sales in February this year were only 4 million units, down 45.7% year-on-year, close to waist cut. Vivo (excluding iQOO) and Xiaomi also fell by 38.6% and 20% year-on-year, respectively, and Apple fell less, only 4%. Among the top five manufacturers in China, only Glory achieved significant year-on-year growth, but the reason was because last year's Glory had not yet fully exerted its strength and the base was low.
For domestic mobile phone manufacturers, overseas markets are also the focus of major brands. Last year, Xiaomi achieved revenue of 163.6 billion yuan overseas, accounting for 49.85% of total revenue, and the revenue growth rate for three consecutive years was more than 30%; OPPO and Vivo's overseas revenue accounted for about half. But while there are plenty of opportunities in overseas markets, the risks they breed are also growing. Due to the similar positioning, domestic mobile phone brands are also becoming more and more powerful in overseas markets. Due to the large production of mobile phones by major manufacturers, future price wars may be inevitable. Especially in the case of a cold global economy, driving sales through price cuts may become a path that many brands have to take. In addition, the increasingly elusive political environment abroad is also changing from out of reach to a situation that may occur at any time for domestic mobile phone manufacturers. Last year, the Indian government launched a large-scale tax search of Huawei, Xiaomi, OPPO and OnePlus.
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Can the high-end of mobile phones carry the second growth curve of the brand?
In the face of increasingly fierce competition in the domestic mobile phone market, blindly fighting a price war is tantamount to drinking and quenching thirst, which is difficult to last. The most critical reason why Apple can continue to lead the global high-end mobile phone market is that it has made a lot of profits through the high-end mobile phone market, and in turn has invested a large part of the relevant profits in research and development, and continues to maintain its advantages in core competitiveness. Therefore, seeking high-end products and copying Apple's road has become the primary choice for domestic mobile phone manufacturers.
From the perspective of the strategy of domestic mobile phone manufacturers, from the earliest chip running score (running points refers to the testing of mobile phones through the relevant running points software to evaluate its performance, the higher the running score tested in the running score software usually means that the better the performance of the mobile phone), to high-power charging technology, to more excellent shooting modes and algorithms and large screens, split screens and folding screens, etc., the major manufacturers exhaust all technical means to create their own product highlights. Among them, especially shooting technology has become an important stage for major manufacturers to compete.
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At present, improving the shooting ability has been regarded as an important indicator of whether the mobile phone positioning is high enough.
At the earliest, mobile phone manufacturers worked hard in terms of hardware: a larger camera sensor with a larger amount of light intake, a higher resolution sensor that can provide higher pixel results, and a mobile phone SoC chip with stronger processing power to improve the smoothness of the shooting process.
After the hardware potential is almost exhausted, mobile phone manufacturers have begun to look at the stage of "software and hardware integration system optimization". In the "software and hardware integration system optimization" stage, mobile phone manufacturers have changed from initially purchasing sensors to developing exclusive sensors with component suppliers; developing specific algorithms for chips; and introducing artificial intelligence technology to achieve new functions such as super image stabilization, ultra-high dynamic range imaging, and ultra-dark night imaging. Through these customized developments, mobile phone shooting capabilities have made great progress.
However, standing on the shoulders of "software and hardware integration system optimization", mobile phone manufacturers have found that the SoC platform chips on the market cannot meet the increasing demand for shooting. Especially in the AI algorithm chips developed by mobile phone manufacturers themselves, the SoC platform chip is not enough, which limits the continuous improvement of the shooting function. Therefore, manufacturers like Vivo began to develop a new processor V1 in addition to the SoC platform chip to achieve better camera and camera functions through more powerful processing power. It is precisely with this powerful chip computing power that mobile phone manufacturers can continue to improve their algorithm matrix to achieve better shooting results.
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However, from the perspective of actual results, these measures have not achieved the expected results. Especially in the past two or three years, the high-end process of domestic mobile phone brands has not been smooth. In 2021, Apple's market share in China's high-end mobile phone (wholesale price of more than $400) market increased from 40% to 59%, while the common share of OPPO, vivo, millet, and glory fell from 29% to 26%. Therefore, in the case that Huawei basically faded out of the domestic mobile phone market, the high-end mobile phone market share is still occupied by Apple. Therefore, for mobile phone manufacturers, high-end products are not a relatively good shortcut to solve the current domestic mobile phone manufacturers.
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Is car building a good brand second growth curve?
For mobile phone manufacturers, making a car is also a more fashionable choice.
Apple's "Titan Plan" has become the talk of many people after dinner, but Apple has never made up its mind to finalize its own car-making model. Cook has more than enough to defend, but his aggressiveness is still much worse than joe's helper. Now the smart electric vehicle market competition is becoming more and more fierce, and after Joe helped the master, Apple has almost no products that have changed history, and is still eating the old money. In this case, Apple definitely needs to build a car, and find a new development path for itself by building a car.
In addition to Apple, the two companies on the fruit chain, Foxconn and Luxun Precision, are much more radical than the old owners on the road to building cars. Foxconn not only established a joint venture with Geely to focus on the field of foundry business, but also cooperated with Yulon Automobile, which is also a local car company in Taiwan, to develop a pure electric exclusive platform, and its determination to enter the field of intelligent electric vehicles is very large; Luxun Precision is to invest 10 billion yuan to participate in Chery's mixed reform, through Chery's more mature automobile system capabilities, in the shortest possible time to help themselves achieve the ability to build cars. In fact, the two companies have made a big move into the field of car manufacturing, which is regarded by the market as a smart electric vehicle that will continue to be OEM for Apple. But now Apple's electric vehicle project is difficult to see in the short term, do not know what the next step of these two Apple's most important suppliers in China?
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After basically abandoning the mobile phone business, Huawei not only actively entered the car networking market based on its own Hongmeng system and Huawei's application market, but also had many layouts in the more difficult three-electric system and automatic driving. Especially in the field of automatic driving, Huawei HI has won orders from many brands including Changan, BAIC, and GAC, and it has been rumored that Volkswagen hopes to acquire Huawei's autonomous driving department as a whole and incorporate it into Volkswagen's structure in China, becoming a gripper for Volkswagen to promote autonomous driving business in China. It also has to be mentioned that under the premise that Ren Zhengfei did not build a car, through the control of Jinkang New Energy Automobile Company to create the AiTO brand, its ambition to share a piece of the domestic intelligent electric vehicle market has been revealed.
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Another thing that has to be said is Xiaomi. In the mobile phone manufacturers, Xiaomi's determination to build a car is relatively large, in fact, the logic behind it is very simple, Lei Jun and his team have realized that mobile phones and other businesses currently operated by the company have been difficult to support the current millet sustained growth. The grand plan to invest 10 billion yuan in the first phase and invest 10 billion US dollars in 10 years also highlights Xiaomi's determination to transform. With the investment of a large number of resources, Xiaomi began to continue to recruit talents in the domestic automotive industry. However, the key to Xiaomi's car manufacturing lies in the breakthrough of automatic driving technology, so Xiaomi has created a relatively complete layout of the automatic driving industry chain for itself through industrial capital investment. The next step is to see how Xiaomi Cars lands autonomous driving technology, and at the same time integrates the Xiaomi ecosystem and Xiaomi Cars well.
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For domestic mobile phone manufacturers, Huawei's lesson is very painful, but there is no way. Once Xiaomi and VIVO are also included in the entity list by the United States, they will face the same situation as Huawei. Since there is no way to purchase high-process chips, there is no way to continue their mobile phone business. Huawei with its strong support can support to today, but Xiaomi and VIVO after experiencing such extreme pressure from Huawei, whether they can have Huawei's technical reserves and confidence to open up a new market, but also marked a big question mark. Therefore, Lei Jun will take out 10 billion yuan in the first phase, and then invest 10 billion US dollars in the next 10 years to enter the smart electric vehicle.
For domestic mobile phone manufacturers, it is not easy to find a second growth line. On the one hand, mobile phone manufacturers have invested heavily and begun to develop their own chips at the risk of huge failures; on the other hand, Xiaomi Huawei has begun to invest tens of billions of dollars in the field of vigorous smart electric vehicles. In the future, mobile phones, in fact, may only be a part of the entire ecosystem, if there is no way to better interconnect with other hardware, simply cut off to look at the mobile phone industry, domestic mobile phone manufacturers will fall into a misunderstanding in the strategic decision-making of enterprises. That is to say, we cannot simply look for the second growth curve and look for the second growth curve, how to formulate a set of strategic planning, find new breakthrough points and continue to focus, this is easy to say, it is difficult to do.