In the past five years, domestic high-end machines: Huawei has made a strong return, and the competition pattern of Rongmi OV has changed again

Time Weekly

2024-05-17 08:38Published on the official account of Guangdong Times Weekly

Source of this article: Times Weekly Author: Wang Ting

Huawei's dual-flagship product strategy is back, and the window period for the high-end market is coming to an end.

In 2019, Huawei's terminal business revenue based on high-end mobile phones was about 467.3 billion yuan, and in 2020, Huawei was included in the "entity list" of export control by the United States, and then due to various influences, in 2023, Huawei's terminal business revenue will drop to about 251.5 billion yuan, almost halved.

After that, the high-end market became the main battlefield for domestic mobile phone manufacturers. Xiaomi entered the high-end market for the first time in 2020 through the Xiaomi 10 series, OPPO laid out the dual flagship strategy of "straight screen flagship + folding screen flagship", vivo improved the imaging capabilities of the X series to seek high-end breakthroughs, and Honor proposed to move towards the mid-to-high-end at the beginning of its separation from Huawei......

According to data provided by research institute IDC to Time Weekly, the share of other domestic brands in the Chinese market in the market above US$600 (about 4,330 yuan) in 2019 was 2%, and the share will rise to 20% in Q1 (Q1) of 2024.

Now, Huawei has returned to the 5G high-end market with the Mate 60 series and Pura 70 series, and the window period left for other domestic mobile phone manufacturers is facing an end. Where will they go from here?

On May 14th, a digital big V broke the news that there was a domestic manufacturer's "super cup flagship" mobile phone discontinued, and some people speculated in the comments that it was OPPO Find X7 Ultra, OPPO The relevant person in charge refuted the rumors about the news, and said to the Times Weekly reporter, "Competition and the market are objective, and no one will definitely take the initiative to give up (7000 yuan + price segment market)." ”

Source: Diagram Worm

2019

Cut-off point

，

From a lone branch to a hundred flowers

First of all, it needs to be clear, what is a high-end smartphone?

In Xiaomi's financial report, high-end smartphones in Chinese mainland refer to models with a price of 3,000 yuan and above, and the standard of some institutions is more than 750 US dollars, while market research institutions such as IDC, Canalys, and Counterpoint use 600 US dollars as the cut-off point, which is more widely recognized.

Guo Tianxiang, research manager of IDC China, divides the high-end of domestic smartphones into three stages. He told Times Weekly that the first stage was before 2017, and the domestic brand generally had a low share in the high-end market, the second stage was from 2017 to 2019, when Huawei rose, and the third stage was from 2019 to the present, a hundred flowers bloomed, but there was no brand that could replace Huawei.

Counting from the Meizu M8, domestic smartphones have a history of 15 years of development, and the history of high-end is much shorter.

If more than $600 is the high-end standard, among the current domestic mobile phones, Mate 60 series, Pura 70 series, OPPO Find X7 series, Xiaomi 14 series, vivo X100 series, and Honor Magic 6 series basically meet the standards.

"The high-end road is the only way for Xiaomi to grow, and it is also a battle of life and death." In his annual speech in August 2023, Lei Jun, founder and chairman of Xiaomi Group, said that in the past three years, Xiaomi has invested tens of billions of yuan in high-end exploration.

Times Weekly observed that the high-end of domestic mobile phone manufacturers includes many aspects such as strategy, products, channels, and brands.

In terms of products, since 2020, the flagship series of many domestic brands have made great strides to transform the appearance design, cooperated with Leica, Hasselblad, Zeiss and other brands in imaging, competed in large aperture, periscope telephoto and other fields, and some also launched self-developed image chips and self-developed battery technology.

High-end is also reflected in channel reform and brand promotion, OPPO Vice President Liu Bo revealed in 2023 that 300 experience stores or experience centers will be upgraded within the year in domestic super first-tier, new first-tier cities and provincial capitals, and vivo has hit brand advertising at the Boao Forum for Asia and the Qatar World Cup.

In addition, folding screen mobile phones have also become a powerful weapon for domestic manufacturers to impact the high-end, from horizontal folding to vertical folding, from appearance design rolling to hinge. Due to the high cost of the screen, folding screen mobile phones are in the high-end price segment as a whole.

The price of mobile phones has naturally risen, taking vivo X digital series as an example, the highest price of the X30 series released at the end of 2019 was 4298 yuan, and the newly released X100 series has 5 products, of which X100, X100 Pro, X100 ultra The highest price for the first time was 5099 yuan, 5999 yuan, and 7999 yuan respectively.

Huawei is absent, a domestic brand

Premiumization

Fill in the gaps

Recently, Huawei officially announced that the P series brand of the high-end mobile phone product line was upgraded to HUAWEI Pura and the Pura 70 series was launched, which means that Huawei's high-end product line has been upgraded.

"After Huawei comes back, the window period left for other manufacturers can be said to have passed, and the best period has passed, at least at the high-end." Li Zegang, chief analyst of Omdia's mobile terminal market, said in an interview with a reporter from Times Weekly.

Standing in the new stage of development of the industry, summing up the past, have other domestic mobile phone manufacturers seized the historical opportunity? What are the results of high-end? First of all, it can be seen from the market research data that most of the market share vacated by Huawei has been swallowed up by Apple.

IDC data shows that in the first half of 2020 and the first half of 2023, Huawei's share in China's mobile phone market above $600 will be 44.1% and 15.6%, while Apple's share will be 44% and 67.0% respectively.

Li Zegang analyzed that high-end is a very complex and systematic problem, involving technology, consumer brand awareness, whether it has luxury or scarcity attributes, etc., which can not be really solved through a window period of two or three years, and in the domestic market, it is difficult for other domestic brands to directly confront Apple.

It is worth noting that in the first half of 2020 and the first half of 2023, the combined share of Huawei and Apple in the high-end market has decreased, which means that other domestic brands have seized part of the market.

Source: IDC China

Guo Tianxiang revealed that in 2023, the share of domestic brands other than Huawei in the domestic mobile phone market of more than $600 will be 15%, and it will rise to 20% in Q1 of 2024, showing an upward trend. He commented, "In recent years, the progress of other domestic brands in the high-end market is still obvious to all, whether it is an image flagship or a folding screen, they have made some progress." ”

What is the evaluation of their own high-end achievements?

Hu Baishan, executive vice president and chief operating officer of vivo, once said in an interview that 2022 is the year when vivo's high-end breakthrough confidence is laid. Xiaomi Group mentioned in its annual report that 2023 will be a year for the high-end strategy to achieve a leap forward.

Xiaomi Group's annual report disclosed that thanks to the Xiaomi 14 series, Xiaomi's smartphone market share in the price range of 4,000 yuan to 6,000 yuan in Chinese mainland in 2023 will reach 16.9%, an increase of 9.2 percentage points year-on-year.

According to the annual report, the average selling price of Xiaomi Group's smartphones increased by 9.5% from RMB997 per unit in Q3 2023 to RMB1,091.7 per unit in Q4 2023, mainly due to the launch of the Xiaomi 14 series of high-end mobile phones in Q4. In Q4 2023, Xiaomi Group's profit increased by 50.3% year-on-year.

On May 16, the relevant person in charge of OPPO revealed to the Times Weekly that according to authoritative data, since the start of the three months of sales, the sales of Find X7 (launched in January 2024) have increased by 132% year-on-year compared with the previous generation.

According to a market survey obtained from the supply chain, from November 2022 to September 30, 2023, the vivo X90 series ranks first in China in terms of sales share in the price range of 3500-5000 yuan.

In terms of comprehensive multi-brand performance, IDC data shows that in the first half of 2023, in China's mobile phone market above $600, OPPO, Xiaomi, Honor, and vivo will have a share of 4.2% and 3.7% respectively. 3.2% and 3.0%, with a total share of 14.1% for the four brands.

Huawei

regression

The competitive landscape is changing

With the launch of the Mate 60 series and Pura 70 series, Huawei's mobile phone shipments have risen rapidly.

According to the Omdia report, from the perspective of the global market, Huawei's mobile phone shipments have achieved continuous quarter-on-quarter growth in 2023, from 6.4 million units in Q1 to 12.3 million units in Q4, and 13.1 million units in Q1 2024, doubling year-on-year. In the same period, that is, in Q1 2024, Apple's mobile phone shipments were 50.7 million units, a year-on-year decrease of 11.5%.

Looking at the Chinese market alone, in the first quarter of this year, Huawei has returned to the top five, and the statistics are no longer merged into "other". According to the Canalys report, Huawei's shipments returned to the first place in the Chinese mainland market after three years, and the Counterpoint report mentioned that Huawei's sales increased by 69.7% year-on-year, ranking fourth.

In Q1 2024, Huawei's operating revenue increased by 36% year-on-year, net profit attributable to the parent company increased by about 564% year-on-year, and the net profit margin reached 11%, compared with only 2.3% in the first quarter of last year.

The market is generally optimistic about Huawei's subsequent performance. Ming-Chi Kuo, an analyst at Tianfeng International Securities, predicts that shipments of the newly launched Pura 70 are expected to reach 13 million to 15 million units in 2024, an increase of 230% from the previous generation.

Li Zegang believes that nowadays, domestic brands other than Huawei have no way to make great progress in the high-end market, and the Mate 60 series shipments are tens of millions of units, and in the same price segment, the shipments of mobile phones of other domestic brands may only reach one or two million units.

Will domestic mobile phone manufacturers such as Xiaomi, OPPO, vivo, and Honor give up their high-end strategy?

The answer is no. According to the observation of Times Weekly, these domestic mobile phone manufacturers are still doing high-end, and some manufacturers are still exploring overseas high-end markets. Up to now, domestic mobile phone manufacturers other than Huawei have not had a wide layout in the overseas high-end market.

In the winter of 2023, Shi Shuai, president of OPPO Asia Pacific, once told the media that he hopes to achieve a breakthrough in the high-end market of more than $800 in the Southeast Asian market through folding machines. In the entire Southeast Asian market, especially above the $400 price level, there is a "two-strong" pattern of Samsung and OPPO.

Zhao Ming, CEO of Honor, also said that he would represent Chinese high-end brands to go out and fight in the international high-end market, especially in Europe. As for Xiaomi Group, in April this year, its brand Redmi announced Redmi's new ten-year goal - to fully evolve to a high-end flagship.

Guo Tianxiang believes that mobile phone manufacturers in various countries will not give up the high-end strategy, but will stick to it, but the price segment is different from Huawei. Huawei's Apple products are more likely to be above $1,000, while other domestic brands are mainly competing in the $600-$800 market, with different product price segments.

Huawei's new products Mate 60 series and Pura 70 series have a starting price of more than 5,000 yuan, which is comparable to the price of Apple's flagship new iPhone 15 series, and the starting price is far behind other brands' straight-screen flagships.

However, insiders from domestic mobile phone manufacturers told Times Weekly that the company will not give up the market with more than $1,000.

Why should domestic mobile phone manufacturers adhere to the high-end strategy? Guo Tianxiang believes that the excellent performance of the high-end market can indeed bring better profits, as well as more brand power and brand premium.

On the other hand, in the past few years, the high-end market has shown super resilience and continued to grow against the trend. IDC reported that in the second quarter of 2023, China's market share of high-end mobile phones above $600 reached 23.1%, a year-on-year increase of 3.1% against the backdrop of a decline in the industry. Also, in 2023, 22% of the world's smartphones cost more than $800.

From the perspective of the folding screen market alone, IDC data shows that in 2023, China's folding screen mobile phone market will ship about 7.007 million units, a year-on-year increase of 114.5%, and a year-on-year growth rate of more than 100% for 4 consecutive years since the first product was launched in 2019.

Counterpoint predicts that the high-end price segment ($600-$799) is expected to maintain steady growth in 2024, growing 17% year-over-year.

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