In the spring of 2024, there has been an unprecedented involution in the smartphone field. Major e-commerce platforms have successively subsidized promotions, and it is not uncommon for the first sale to be reduced by 100 yuan on the official price. In the spring, just at a price of about 2000 yuan, there are OnePlus Ace 3V, Realme GT Neo6 SE, Redmi Turbo 3, iQOO Z9 Turbo and many other products have been released one after another.
In addition to the price of these smartphones are around 2000 yuan, they all use Qualcomm's third-generation Snapdragon 7+ mobile platform or the third-generation Snapdragon 8S mobile platform, with a screen size of about 6.7 inches, plastic bezels, and a main camera, a wide angle, and no telephoto lens configuration are also commonly used in terms of image. To put it a little less rigorously, they are almost the same kind of products under the same product idea.
The occurrence of this situation may be a rich choice for consumers, but for the entire smartphone industry, it may be more of a helpless move under the general environment.
The industrial chain has tightened, and the upstream has continued to increase prices
According to a report by data agency IDC, the average selling price of smartphones in the world in 2023 will be 438 US dollars, or about 3,130 yuan, with an annual average selling price increase of 5.5% year-on-year, which is also the fourth consecutive year of continuous growth in the average selling price of smartphones.
Compared to the global market, the Chinese market has a higher average price due to better consumption habits and the sophistication of 5G infrastructure. According to GFK data, the average price of China's mobile phone market in the third quarter of 2023 has reached 3,480 yuan, which is higher than the global level.
Behind the increase in the price of smartphones, sales are still at a low level and the upstream supply chain is the main reason. According to IDC data, global smartphone shipments will be 1.17 billion units in 2023, down 3.2% year-on-year. In 2023, China's smartphone market will ship about 271 million units, down 5.0% year-on-year, the lowest shipment in nearly 10 years.
Although there are some signs of recovery in the smartphone market from the end of 2023 to the beginning of 2024, the current expectations of smartphone manufacturers for shipments are still in a state of cautious optimism.
In the case of low sales, manufacturers also have to face the pressure of the upstream supply chain. Xu Qi told Titanium Media APP that the trend of rising prices in the smartphone supply chain in 2024 is particularly obvious, and the increase is completely more than expected.
According to a report by TrendForce, both the global NAND flash and SSD markets saw significant price increases in the first quarter of 2024, with a maximum price increase of nearly 30%, and the price increase will continue in the second quarter, with the flash memory market as a whole expected to continue to rise by 13-18%.
In addition to the increase in flash memory prices, the price increase of smartphone SoCs is also a clear trend. According to the well-known industry information source "Digital Chat Station", the price of chips on sale such as Qualcomm Snapdragon 8 Gen3 has jumped from the previous $160 to $200, and the price has increased by as much as $40, an increase of 25%.
The pressure conveyed from the upstream was directly given to the manufacturer, and Xu Qi once told the titanium media APP that in the face of upstream price increases, manufacturers need more accurate knife techniques. "In the part of consumer needs, satisfying or even exceeding expectations to meet them. Where consumers don't pay attention, you can save costs and make a series of trade-offs. ”
Mid-range models are popular, eating up the 5G dividend
Product development in the mid-range smartphone market has always been the most challenging. This kind of product can neither dump everything like the flagship model and pile up all the materials to the consumer. At the same time, the mid-end can not be like low-end products, blindly reduce product costs, the focus is to achieve "bright spots without shortcomings", manufacturers need to create "dessert" products for target users according to their own brands and channel characteristics.
图源：Counterpoint Research
As the environment changes, so do the habits of smartphone consumers. According to data agency Counterpoint, compared with 2023, the global mobile phone price range of $150-249 in 2024 will increase by 11%, while the range below $150 will decrease by 4% year-on-year. More low-end mobile phone users will upgrade to mid-range products, which will be the next major trend in the smartphone industry.
Xu Qi told Titanium Media APP that the accelerated growth of smartphones in the price range of 1,000 to 2,000 yuan, or even more than 1,500 to 2,000 yuan, depends on the consumption upgrade and 5G popularization in many markets.
At present, the trend of consumption upgrading in India and Southeast Asian markets is obvious, and the market is also facing a strong wind outlet from 4G to 5G, including the European market and Southeast Asian market.
According to the 2022 European Mobile Economy Report released by the GSM Association, as of June 2022, 108 operators in 34 European markets have launched commercial 5G services, and the penetration rate has steadily increased, with 5G users accounting for 6% of mobile users.
The European Mobile Economy Report 2022 predicts that by 2025, the average 5G penetration in Europe could reach 44%, with the UK and Germany expected to have the highest 5G penetration in Europe at 61% and 59% respectively. By 2025, 5G network coverage in Europe is expected to increase from 47% in 2021 to 70%.
Titanium Media APP understands that the acceleration of global 5G construction has the advantage of streamlining product lines for Android smartphone manufacturers. In the past, although Southeast Asia, Europe, Latin America and other markets had a large market demand, due to the slow development of their own 5G network, consumers are more inclined to choose cheaper 4G mobile phones. With the accelerated promotion of 5G, all this is about to become a thing of the past, and smartphone manufacturers will also enjoy more dividends due to the global popularization of 5G.
On the whole, the price increase in the upstream of the industrial chain has prompted smartphone manufacturers to invest in mid-range mobile phones, hoping to exchange lower costs and selling prices for higher sales of mid-range mobile phones. At the same time, the development of 5G networks around the world has brought new consumer demand for mobile phones. Manufacturers and consumers have reached a certain sense of consistency at the product level, which has led to the state of "shopping" in the 2000 yuan file of smart phones today.
However, from another point of view, domestic smartphones, especially low-end smartphones, still have the problem of "determining the model according to the chip model". The above-mentioned OnePlus Ace 3V, Realme GT Neo6 SE, Redmi Turbo 3, and iQOO Z9 Turbo, in addition to the chip differences, are only slightly different in battery capacity, screen details, and appearance branding, which can essentially be regarded as products under one line of thought. After anchoring the SoC and price, there is not much room left for the operation of mid-range smartphones, and it is difficult to achieve differentiation is a very real problem.
In order to solve the dilemma of mid-range products, smartphone manufacturers may have to start from "deeper" efforts. In this regard, the previous Huawei is a good example: on the one hand, through brand marketing, Huawei has a good brand image and recognition in the domestic market. On the other hand, through the P series and Mate series high-end products, Huawei mobile phones have left the public with a good perception of taking pictures very early. So much so that today, most consumers are left with preconceived notions.
These advantages mentioned above directly lead to Huawei's unique advantages in the mid-range mobile phone market, even if it does not occupy the book parameters, it can also win back a city by virtue of its brand advantage. The whole thing is reversed, in fact, it can be understood that it is precisely because OnePlus, real me, Redmi, and iQOO products do not have an absolute advantage at the brand level, which has caused the situation that smartphones are squeezing each other at the price of 2000 yuan. (This article was first published in Titanium Media APP, author | Wu Honglei, editor - Zhong Yi)