Rejuvenating but the chill has not gone, how should the brands that compete in the stock of smartphones play?

Text: An Shu

Canalys, a market research agency: In the third quarter of 2023, the global smartphone market fell by 1%;

Counterpoint Research: Global smartphone sales increased by 5% year-on-year in October 2023;

China Academy of Information and Communications Technology: In November 2023, China's smartphone shipments reached 29.856 million units, a year-on-year increase of 34.4%;

Canalys' latest forecast: the global smartphone market will grow by 4% to 1.17 billion units in 2024......

After 27 consecutive months of high decline, at the end of the year 2023, a series of positive data seems to be writing, and the cold winter of the smartphone market seems to be finally over, and a new turnaround is just around the corner.

Chunjiang plumbing duck prophet, terminal manufacturers also took the lead in smelling this warmth, and reduced prices and discounts over and over again, and frequently released new machines on the other side to welcome spring.

But on the other side of the macro recovery and the cold winter, the data also shows that from 2023 to 2027, the compound annual growth rate of global smartphone shipments will only be 2.6%.

At the same time, this growth is mainly driven by emerging markets, such as India and Southeast Asia, which will grow by 6%.

This also means that although the smartphone market has come out of the cold winter of several years, the incremental space for the next year is still not large, and for terminal manufacturers, it is still a stock market of red sea fighting, which undoubtedly puts forward new requirements for the competition in the smartphone market in the next few years.

It's been a long time coming, and the chill is still there

After nearly three years of declining shipments, it has hit the coldest winter in the history of the smartphone market, especially in 2022, with a double-digit decline that seems to have frozen the entire industry.

The second half of 2023, which is coming to an end, seems to give the market a little respite. In particular, October 2023 saw a positive year-on-year growth of 5% for the first time since June 2021, which is not easy.

Fortunately, next, the signal that the smartphone market is back to positive growth is getting stronger and stronger. But it is undeniable that the chill is still there in the coming spring.

The first is the sluggish consumer demand and the gradual growth of the replacement cycle. From the demand side, in recent years, there has been no major breakthrough in the development of the content service side, whether it is a thousand-yuan machine or a high-end flagship, they are facing excess performance.

Some data show that the mobile phones of 4 years ago can still meet the needs of current users for smartphone use, and even large-scale mobile games with high requirements for mobile phone performance are still running smoothly two or three years ago.

There has been no major breakthrough in the superposition of overperformance and application, resulting in an accelerated decrease in users' desire to change phones. If users consider things like replacing the battery, they may be able to "wait".

According to data from analyst agency TechInsights, in 2023, the global smartphone replacement rate may fall to 23.5%, meaning that the replacement cycle has reached a 51-month low.

Secondly, although the performance of mobile phones is excessive, the price of mobile phones is getting higher and higher in the high-end strategy of mobile phone manufacturers.

According to IDC, the average selling price of smartphones in 2023 is $438, up 5.5% year-over-year. And that's overall growth.

If it falls to the perspective of a specific brand, the flagship products of the same series are all integrating the most cutting-edge technology in the upstream, but the initial price was 1999, then rose to 2999, and now it has started at 3999.

According to the mobile phone market report for the third quarter of 2023 released by GfK China, the average price of China's mobile phone market has continued to grow in recent years, and the average price has reached 3,480 yuan as of the third quarter of this year.

However, this critical moment of price increase has just hit the key node of the downturn in the macroeconomic environment and the increasing difficulty for consumers to make money, which has further led to the reduction of consumers' desire to replace their phones and the extension of the replacement cycle.

Then terminal brands should gain competitiveness in the next stock market, and price involution will be the main theme in the next few years.

In fact, since the beginning of this year, including Apple, it has been inevitable that the price of new machines will break, and domestic brands, although the price of a number of flagship products has continued to rise, but the release has been less than a month, and the price has fallen by more than 1,000 has become the norm.

Naturally, the distortion of the consumer mentality is also a practical problem that terminal manufacturers have to face. At present, domestic brands are trapped in the tactics of the sea of machines, in order to continue to make way for new products and destock, price reduction and promotion have become a continuous operation of last resort, which has led to changes and distortions in the mentality of consumers. For example, with the emergence of the "Wait and Wait Party", every user who wants to change their mobile phone has the mentality of "wait and see, the price will be reduced" after the release of their favorite new phone. This also means that although the smartphone market has shown signs of recovery, the various practical problems faced by the industry still exist, and the involution of terminal manufacturers in the next few years will continue, and the high-end strategic breakthrough is still a problem for manufacturers.

Stock competition, what brand should play?

Stock competition means that manufacturers must move from reckless and brutal marketing and performance parameter competition to the era of "high-quality" competition.

In fact, starting in 2023, the posture of terminal manufacturers has also changed significantly, for example, the most obvious is the move from Android + UI to self-developed systems.

Following Huawei, Xiaomi's surging OS has also been launched, and vivo followed suit, releasing a new self-developed operating system, BlueOS.

Secondly, Meizu also announced that the Flyme system has been officially upgraded to Flyme OS, and has completed the coverage of smartphones, AR smart glasses, and smart cars. At the same time, this system has also been officially renamed "Meizu Unbounded OS", in addition, in the past two days, OPPO also announced the tidal architecture of the chip software and hardware integration technology stack. This also means that in the context of excessive hardware performance and the gradual increase in breakthrough costs, terminal manufacturers are retreating to the next best thing and taking the continuous improvement of "soft power" as the focus of competition in the second half.

Of course, on the other side of the layout of self-developed systems and continuous improvement of soft power, cramming large models into mobile phones is also the biggest change that can be seen in the smartphone market in the next few years. In fact, since the second half of the year, terminal brands including Huawei, Xiaomi, OPPO, vivo, and Honor have all announced their own mobile phone models.

For example, in addition to Huawei's Pangu large model, Lei Jun revealed in his 2023 annual speech that Xiaomi will fully embrace large models, focusing on lightweight and local deployment; Honor CEO Zhao Ming also said that Honor is also laying out its self-developed 7 billion parameter end-side AI large model and new cloud services.

Furthermore. OPPO announced that the Andean model (AndesGPT) based on its self-training has also been officially launched, and vivo has also released its self-developed large model matrix "Blue Heart Large Model......

But at present, it seems that it is still unknown whether the large model will open a new round of revolution in mobile phone applications in the future. Because the large model has been booming for nearly a year, the shadow of the metaverse has appeared again, and there are mostly followers and stock speculators.

In addition to actively deploying soft power such as self-developed systems and AI large models, folding screen mobile phones are currently a key direction for terminal manufacturers to find incremental markets.

According to IDC's forecast, by 2023, global shipments of foldable phones will reach 21.4 million units, an increase of more than 50% over 2022.

The current folding screen mobile phone is also in the critical stage of user mentality and technological innovation position, and it will continue to output in this market, which is also an important part of the smartphone brands in the next few years.

Compared with mature markets, markets such as Africa, Southeast Asia, and India are the key markets to promote the rise in shipments of the smartphone market in the next few years.

In summary, the smartphone market has finally survived the long winter, but this upcoming spring is still facing huge challenges, such as involution, difficult breakthroughs in high-end strategies and other display problems.

At the same time, although there seem to be many breakthroughs on the whole, there are still huge uncertainties, and everyone will inevitably roll in further involution on the same starting line.