The first part of the mobile phone market has reached its peak, and the existing market has replaced the incremental market

In the first quarter of 2019, the smartphone market:

The Chinese market shrank by 3% year-on-year. The worst market performance in six years, and what has been called a cold winter for the mobile phone industry for many years, has arrived.

Huawei bucked the trend and grew, with shipments soaring by 50%, surpassing Apple and becoming the world's second largest smartphone dealer.

Xiaomi suffered the largest decline, with a drop of 13.

OPPO and vivo both declined slightly.

Source: Zhihu Gu Xiaoshuai

In 2018, Xiaomi’s mobile phone sales, sales, profits, etc. were far lower than those of its competitors, ranking last among the Big Four.

Sano data (domestic shipments) shows that in 2018, Huawei mobile phone shipments were 64.9 million units, Honor mobile phone shipments were 54.27 million units, and Xiaomi was 47.96 million units. That is, Honor’s single brand 13.2 ahead of Xiaomi.

Honor’s year-on-year shipment growth rate in 2018 was also higher than Xiaomi’s, reaching 13, while Xiaomi’s was 7.

Glory’s sales reached 78.3 billion, Xiaomi’s sales reached 65.9 billion, and Xiaomi’s sales were far inferior to those of its major competitors.

Xiaomi reached 15% market share in 2014 and 2015, ranking first in the Chinese market.

In 2016, Huawei quickly became the number one domestic mobile phone manufacturer, while VIVO and OPPO also overtook Xiaomi.

This means that although Xiaomi's overall sales have been rising since 2015, it has been standing still or regressing (in terms of market share and competitors).

Starting from 2019, the stock market will replace the incremental market. The stock market means a sharp-edged market, a market where you die or I die.

Persimmons are always picking on the weak, and domestic mobile phones have begun to attack Xiaomi in groups.

vivo’s IQOO, OPPO’s realme, OnePlus 7, etc. have begun to seize the cost-effective market.

We can’t help but think that in 2011, JD.com launched a book price war and went on a killing spree directly in the base areas of Dangdang.com, which caused Dangdang to decline all the way until it was acquired. Since then, JD.com has been making rapid progress and has become the domestic The largest B2C company.

Xiaomi stands at a life-or-death moment.

Part 2 Xiaomi Model and Ultimate Cost-Effectiveness

“Who is Xiaomi?”

Xiaomi is an Internet company with mobile phones, smart hardware and IoT platforms as its core company.

To put it simply, Xiaomi’s model combines Amazon Costco’s MUJI, which is a technological grocery store with the ultimate cost-effectiveness on the Internet, and connects it with IOT (Internet of Things) to form Xiaomi’s own Unique pattern.

This is a model that Xiaomi has always been proud of.

The core of Xiaomi IOT ecosystem lies in the number of smart device connections. The increase in the number of customers and the number of suppliers will greatly increase the number of smart device connections, which will lead to a rapid reduction in IOT platform maintenance costs. Brings great improvement in user stickiness.

Image source: Zhihu Luojie

Image source: Zhihu Luojie

Xiaomi has always positioned itself as an Internet company that does not rely on hardware profits. "Internet company", not mobile phone company.

Lei Jun once stated before the listing that the comprehensive after-tax net profit margin of the overall hardware business would not exceed 5.

Under this model and thinking, Xiaomi no longer relies solely on hardware to obtain main profits, but quickly accumulates and expands its user base by controlling the price/performance ratio brought by hardware profits, bringing high activity and high conversions. and a group of Internet users with consistently high retention rates (remaining on the Xiaomi IOT platform).

Xiaomi quickly penetrated several core categories with its cost-effective weapon: mobile phones and other hardware, e-commerce, and Internet services. It also launched a strong category expansion. TVs ranked first in the country, and bracelets, mobile power supplies, Air purifiers, balancing cars, etc. are the first in the world.

It must be said that Xiaomi’s model is forward-looking and innovative.

Xiaomi’s ecosystem has taken shape and has become one of Xiaomi’s twin cornerstones. In terms of growth momentum and contribution to profits, IOT and consumer consumer businesses have surpassed the mobile phone business. And the future is imaginative.

It can be said that 2/3 of Xiaomi’s current market value is supported by Xiaomi’s ecological chain.

However, the core of this system dependence is that Xiaomi mobile phones are not only the control hub of the AIoT strategy in the future, but also the terminal carrier of Internet services.

The mobile phone business is to Lei Jun what the search engine is to Robin Li.

The mobile phone has become a bug in the Xiaomi model!

Lei Jun believes that with the ultimate cost-effectiveness of Internet thinking, mobile phones can naturally become the first in the industry.

Indeed, in 2014 and 2015, Xiaomi mobile phones reached their peak, ranking first in domestic mobile phones.

But, were they quickly left behind by Huawei, OPPO, VIVO, Honor, etc.?

Why?

Part 3 The essence of the mobile phone industry, and Xiaomi mobile phones that deviate from the essence of the mobile phone industry

We must start from the essence of the mobile phone industry to find the answer.

What is a mobile phone?

Fashionable electronic consumer goods!

1. Fashion and social interaction

Mobile phones in the hands of modern people are more than just a mobile phone. They have become the most important and most important personal belongings and a "new organ" of mankind. .

Never leave your hand, use it anytime and anywhere, and use it in public places and on social networks. It has strong psychological value and emotional appeal.

Then it must be fashionable, classy, ??and respectable, and it must not be low.

People give life, value, ideas, and emotions to mobile phones. In turn, mobile phones also bring people a symbol of identity, status, and even values.

Once such a concept is formed in society, it is not conducive to brands that emphasize cost-effectiveness.

As for Xiaomi itself, not only has its image and appearance been lagging behind, but in terms of brand building, it has always focused on cost-effectiveness and has not created a brand resonance with consumers.

2. Electronics

Mobile phones are a high-tech product in the eyes of ordinary consumers.

Consumers do not know the technical content of many technologies promoted by manufacturers. Only when they actually see and feel them will they recognize these awesome and high-tech products. This phenomenon is more common especially in areas three, four, five and below.

This also leads to the fact that even though some of the performance of Kirin processors cannot compare with Snapdragon processors, consumers still recognize that Huawei's technology is better than Xiaomi.

And in the third, fourth and fifth tier markets, consumers will think that OPPO and VIVO’s mobile phone technologies are strong!

Consumers have not achieved clear understanding because of the information transparency of the Internet!

Xiaomi’s promotional model of running scores and performance scores is only of some use to first- and second-tier young consumers, and it also makes consumers ignore more technologies and connotations.

3. Consumer goods

Mass consumer goods, which are used by everyone, are the attributes of mobile phone products. They need to be seen and purchased by consumers everywhere, and quality problems can be solved.

Mobile phones that cost more than 2,000 yuan, especially flagship phones that cost around 3,000 yuan, are already a big and important item in life for consumers, especially for many young users, especially in third-, fourth- and fifth-tier cities. Shopping. We can truly see and feel that recommendations from mobile phone store owners, demonstrations by promoters, and perfect after-sales service are all factors that lead to purchase.

These have directly evolved into Xiaomi’s channel pain!

Since OPPO and VIVO entered the mobile phone industry in 2005, they have used the FMCG channel model to build their own mobile phone distribution channels, truly achieving in-depth distribution.

The mobile phone industry is a complex because it combines the attributes of many industries, such as fashion attributes, IT attributes and fast-moving consumer goods attributes.

Mobile phones, for most consumers, are fashion>electronics>consumer goods.

Brand reputation is the most important and top level of the mobile phone industry's essential ladder, and it is also the main factor that determines whether a company can achieve success and continue to grow. The mobile phone industry must establish a brand name to satisfy consumers' identity recognition and emotional appeal.

Xiaomi is unable to achieve optimal results in these three aspects. On the contrary, it has slipped in the opposite direction and deviated from the essence of the mobile phone industry.

Fashion has always been unable to satisfy consumers’ identity recognition and emotional demands, and is perceived by the public as cheap!

Electronics and ultimate cost-effectiveness have always been Xiaomi’s biggest selling point, not fever or ultimate technology!

Consumer goods, extremely cost-effective products, can only be sold online and in some first- and second-tier city stores, and cannot achieve deep distribution.