In the current 5G era, the smart hardware market is fiercely competitive, and Huawei and Xiaomi, as the two major domestic technology giants, show a sharp contrast in product positioning and market strategy.
Huawei pursues a "leader" strategy, focusing on the high-end market, and its products are known for their high cost performance. From Kirin chips and HarmonyOS systems to Mate and P series flagship phones, to the recently launched high-end cars of the Wenjie brand, Huawei has chosen to position itself in the high-end field and compete head-on with brands such as Apple and Tesla. This is based on the following considerations:
First, Huawei has strong technical capabilities. Over the years, Huawei has accumulated deep technical accumulation in areas such as communication networks and artificial intelligence, which enables it to produce high-end products with strong performance. This technological advantage is an important foundation for Huawei's high-end positioning.
Second, the high-end market has greater profit margins. Compared with the price war in the low-end market, customers in the high-end market pay more attention to the performance and brand of the product, which leaves more profit margins for the company. By providing high-end products that are more cost-effective, Huawei can achieve more lucrative returns.
Third, the brand effect of the high-end market is more obvious. After successfully entering the high-end market, the brand recognition and reputation of the enterprise will be greatly improved, which is conducive to the enterprise to open the international market. This is an important motivation for Huawei to focus on entering the high-end market.
In contrast, Xiaomi chooses to be "born for enthusiasts" as the guide, insisting on providing more cost-effective products to the general public, forming an obvious low-price strategy. This is mainly based on:
First, the domestic low-end market space is huge. China has a population base of 1.3 billion, and the low-end consumer group is much larger than the high-end group, and this trillion-level market is Xiaomi's main battlefield.
Second, reduce costs through economies of scale. Xiaomi has adopted online direct sales channels and formed strategic cooperation with the supply chain to effectively control operating and production costs. The economies of scale allow Xiaomi to offer more cost-effective products at a lower cost.
Third, strong social media marketing. Xiaomi relies on the rice noodle community and online information dissemination to conduct word-of-mouth marketing. This social marketing method is low-cost and effective, which is suitable for Xiaomi's low-price strategy.
Both of these different targeting strategies have been successful in recent years. Huawei has made great gains in the high-end market, with its P50 mobile phone sales exceeding 10 million units worldwide. Xiaomi's ecosystem is improving day by day, and in 2021, Xiaomi's mobile phone shipments ranked third in the world. But the differences are already beginning to emerge:
First of all, Huawei is facing bottlenecks in upgrading high-end products due to the limitations of key technologies. For example, the inability to introduce more advanced Kirin chips makes it difficult for mobile phone cameras to be further improved. Xiaomi's lower-priced products allow for more flexibility in the use of various components, and product upgrades are relatively easy.
Second, with the intensification of domestic competition, the market space for Huawei's high-end strategy has been compressed. Brands such as vivo, OPPO, and OnePlus have all launched flagship phones with higher cost performance, and Huawei's price advantage has been weakened. And Xiaomi's low-price strategy is conducive to further opening up the market.
Thirdly, Xiaomi is increasing the layout of the inclusive strategy. The Xiaomi WiFi 7 router uses Qualcomm chips, which are very cost-effective; Xiaomi car positioning is economical and practical, and the price is only 220,000 yuan, which further consolidates Xiaomi's inclusive image.
Finally, in overseas markets, Xiaomi's low-price strategy has also been recognized. Xiaomi's mobile phone share in Southeast Asia and India has jumped to the forefront. In contrast, Huawei's mobile phones have a limited market share in Europe and the United States.
To sum up, in the 5G era, Xiaomi's low-price inclusive strategy is in stark contrast to Huawei's high-end strategy. In the face of a complex and changeable market, enterprises need to choose the appropriate product positioning according to their own advantages and market conditions. China's large user base will provide a broad space for the development of two different strategies. In the future, national brands still need to continue to work scientific and technological innovation to compete with global giants with better products.