Dark Battle: The Eve Of 5G Replacement Tide

HUAWEI's "hegemony" performance in the domestic market has undoubtedly brought enormous pressure to the other three top mobile phone manufacturers, especially when the domestic market has been declining.

According to the Canalys analysis, according to the volume of shipments, the Chinese smartphone market has declined for the ninth consecutive quarter in the second quarter of 2019, and the last time to maintain growth is in the first quarter of 2017.

In a recent interview with the media, Hu Baishan, executive vice president of vivo, also said that Q3 will be a relatively low level of history this year. Behind this is the replacement of the tide, and the overseas environment changes, HUAWEI launched a fierce attack in the Chinese market and triggered the Domino effect.

Since the beginning of this year, two big factories in OV have launched a new sea battle through the frequent release of the new machine to fill up the short board of the product. On the contrary, the red rice has become a more active brand after its independence, and the newly released 10000 yuan price concept machine of the main brand is more gimmick than reality.

Canalys analyst Jia Mo told the twenty-first Century economic news reporter that under the influence of the unstable overseas market environment, we can see that the strategy and competitive situation of Chinese head manufacturers in local and overseas markets are undergoing dramatic changes. This will also affect the accumulation of funds and other overseas markets in the 4G-5G conversion period, and the market impact will be relatively long term.

"With the pressure from HUAWEI, other head manufacturers are facing greater challenges this year. There may be new opportunities next year, but the premise is that this year will survive. " He concluded so.

In the first 8 months of this year, the total domestic mobile phone market shipped 251 million units, of which 5G mobile phones shipped only 291 thousand, accounting for only 0.11%. - Gan Jun photo

Variables before tide change

5G mobile phones seem to be bustling, and the sales figures of "how many digits" after various starters have been released are also "pretty". But in fact, this is probably just a battle of words. Miu Wei, Minister of industry and commerce, said in public recently that he is still using 4G mobile phones, and 5G applications are mostly for industrial Internet services.

According to the latest statistics from China Communications, the total volume of domestic mobile phone market in the first 8 months of this year is 251 million, of which 291 thousand of 5G mobile phones are shipped, accounting for only 0.11%.

From the perspective of consumption habits, it is not difficult to explain: in the first commercial year of 5G, mobile phones have been gradually available, but the infrastructure is still in the process of improvement, and the overall price of 5G phones has not reached the middle end price level. The operators' fees announced in succession show that many 5G packages are priced at 200 yuan / month, and apparently have not reached the acceptable level of the public.

This has led to the fact that 5G phones will not be a driving force for sales this year. But it is embarrassing that if we consider the replacement this year, the time cycle of buying 4G phones will seem to be shortened. This will inevitably affect the overall replacement demand.

Hu Baishan said that even if the flagship model X20 launched by vivo in 2017, it would be no problem to put it back for another year. Because mobile phones have become more and more popular for the storage of rigid demand, since the beginning of 6GB+128GB, the cycle of consumers' active replacement will inevitably lengthen.

On the whole, the replacement cycle in the Chinese market is about 14-16 months in 2014, and the longest has reached 26 months. This means that the demand for mobile phone market is declining.

Li Rui was also aware of this phenomenon. He told the twenty-first Century business news reporter that although the replacement cycle of China's mobile phone market has been extended in the past three years, in the two or three quarter of this year, the replacement cycle of medium and high-end models has been further extended, and a certain degree can not be separated from the association with 5G.

Of course, this mainly refers to the Android camp, "fruit powder" long accumulated usage habits, coupled with the relatively friendly iPhone11 price performance, resulting in Apple has become the new product released after receiving the "true fragrance" reverse evaluation of the largest number of manufacturers, at the sales level is even more performance.

The biggest market variable since 2019 is undoubtedly from HUAWEI. No accident, according to the inherent path of development, HUAWEI should be in the European market large-scale expansion of the territory, but insiders told the twenty-first Century economic news reporter, due to changes in the external environment, HUAWEI's brand reputation is currently at a standstill in overseas operations. No more new machines will be released, and no more marketing will be launched. "The glory of many overseas personnel is being withdrawn, so the challenge HUAWEI is facing now is very clear, which is how to get half of its share in the Chinese market according to his plan." Insiders say.

Since the middle of this year, HUAWEI's official representatives have been constantly showing up at home and abroad, introducing enterprise strategy and technological innovation, to some extent, triggering emotional resonance.

Jia Mo disclosed that although the official did not take the "national product" label like the previous one, the retailer, represented by Gome, operated and harvested market sentiment.

Of course, HUAWEI does have its strength. HUAWEI has more competitive power than other three top brands, especially in the underlying technology, in terms of R & D strength and brand influence.

The effect is also very obvious. The Q2 mobile phone market performance released by a number of statistical institutions in 2019 shows that HUAWEI's strong momentum in the Chinese market has led its shipments to the two or three largest OPPO and vivo shipments, and even HUAWEI's performance in China's high-end machine market has been very close to apple.

"Canalys statistics found that this year, the total market share of HUAWEI Q2 shipments in China accounted for 38%, equivalent to the 1/3 market was taken by a manufacturer, which can almost be said to be a monopoly figure." Jia Mo analyzed.

Horizontally, starting in 2018, the others market share of the top five in the Chinese market was less than 10%, but the share of HUAWEI's Q2 share increased by 10 percentage points this year. It is sure that there will be a share of OV rice + apple.

The Domino effect has affected the continued strategic adjustment of other head manufacturers in the Chinese market, as well as the "repair" in overseas markets.

"This year the market continues to fall, and competition can be said to be white hot. Plus HUAWEI's "opening up" in China, the latter 2-5 will be more difficult, but fortunately overseas markets can alleviate some pressure. Li Rui said, compared with the overall strategic development of different manufacturers, the pressure will be relatively small, but the pressure on the Chinese market has been particularly large.

OV's match of machine and sea

In October 10th, Shen Yiren, vice president of OPPO in Chengdu, will "charge" what he built before. Call... " The slogan changed to "charging 5 minutes, opening 2 hours / calling 6 hours" to launch a new Reno Ace series for mobile phone users.

The new series has launched a customized version of up to 40th anniversary, and has released the first OPPO game handle in addition to regular cooperation with the electric tournament.

Its directivity is particularly clear. As the early stage of development, the "green factory", known as the "factory sister machine", hopes to make up its share in the "geek" field. And from this year's newly launched Reno series to replace the original R series, OPPO has also made great efforts in combing the product mix.

Although the high-end flagship Find X series has not released a new version this year, OPPO has released a lot of new products in this year's Reno series. In addition to the conventional flagship models Reno and Reno 2, in the first half of this year, the Reno Z series and the newly launched Ace series were also added.

Insiders told the economic news reporters in twenty-first Century that OPPO had high hopes for Reno series, but the two versions of Reno and ten times hybrid optical zoom in the two quarter were not sold well, so the Reno Z product line with relative low position was further replenish, which was close to the performance of two flagship series last year.

"Some adjustments have been made in the interior, which now seem to be in a relatively correct direction, which is already in a good state." Another person pointed out.

This has triggered the market's doubts about whether OPPO is slow or not. At the same time, the other three top manufacturers are launching 5G phones, but OPPO is not in a hurry.

In response, people in the industry generally agreed that OPPO is not a technology lagging behind, but is taking into account the popularity and strategic priority.

Jia Mo pointed out that the highest strategic priority of OPPO is not the introduction of 5G, but the stability of the new Reno series. This is also the biggest difference from the current vivo. "The new Reno of OPPO needs to reeducate users, change the positioning of the original trend, and move towards" technology ", which will expand the coverage of the crowd. Therefore, Reno has similar reasons for the sea tactical performance. It is not allowed to lose. If the market's hot spots are weak, we must push the new ones out.

However, OV now lists the position of the machine sea tactics. The goal is the same: fill in the market people who have missed or are not performing adequately, and fully enter the competition of the whole market.

A head manufacturer insiders admitted to reporters that the product lines that had been launched were actually based on the meticulous operation of the mobile phone stock market, and hoped to cover the whole population as far as possible.

If OPPO is redefined by redefining the core product, it has repeatedly pushed the new Reno series to the public. Vivo has launched a series of "alphabet" U, S, Y, etc. on the basis of sub brands in the past year.

In response, Hu responds to the twenty-first Century economic news reporter. The biggest action of vivo at the product level this year is to launch the sub brand iQOO, which is divided into two product lines. "We think this consumer group is more concerned about technology, such as parameters, performance and so on. The biggest feature of iQOO is that the first two are using water droplets. The demand for the screen is not so high, and the performance pursuit will be higher. We invest in what consumers like, which is very different from that of NEX and X. "

The other alphabet series is also the case, Hu Po Shan pointed out that in the future vivo should cover every product and every target consumer group. Of course, after subdivision, the supporting capacity requirements will be much higher, such as product R & D design and channel laying preparation.

"The overall difficulty will be greater than the original. But now that the mobile phone market is in such a state, Apple's products are also coming out three times. This apple iPhone11 series has been covered from the price segment. It shows that China is already a very mature market, and it is impossible to cover it with one model or one series. We want to use different things to set up and define different products so that we can better meet the needs. " He said so.

Li Rui also pointed out to the twenty-first Century economic report reporter that vivo's Z, U and OPPO's K series are all complements to online channels. From the perspective of price level, because of the high price of OV's flagship model last year, the price of products around 2000-2500 yuan was vacant and quickly occupied by HUAWEI's Nova, so new product lines were needed.

Balance of channel profit

After laying the product, it is also important for the channel. But when HUAWEI began to pursue OV's offline market advantage, the balance of profit and share has become the core proposition that needs to be considered. Especially this year, OV has launched various products with relatively high performance price ratio.

After many industry insiders confirmed that HUAWEI has stepped up its operation in the domestic market, some of its offline operators have changed from OV this year.

"HUAWEI has shifted some of the more difficult channels to survive in the OV system." Li Rui pointed out that HUAWEI needs to increase agency and retail channels for production and inventory release. At the same time, HUAWEI's P series really has a good performance from the product level, resulting in positive publicity and channel acceptance. Especially after this year's "6. 18" promotion, HUAWEI sales side has made a good performance.

Jia Moze told the twenty-first Century business news reporter that OV's offline channel agents adopt the grading mode, and the top level can usually get the total amount divided. Therefore, these people will not pursue the profits of individual products, or they can get a substantial proportion.

But it also means that the hierarchy to the backend is at a disadvantage. In accordance with the usual single product split mode, the higher the price of mobile phones, the higher the profits. Once OV starts to have some high cost performance products, it is also easy to gain profits from the diluted channel providers. It is not difficult to understand that when HUAWEI's high priced products attract, it will attract some channels to join.

In twenty-first Century, according to the data provided by Canalys, according to the data of the two quarter of twenty-first Century, the average sales price of mobile phones of the mobile phone decreased by 18.6% compared with that of the other three manufacturers.

Among them, the average price of millet increased the highest, reaching 37.6%, followed by OPPO average price increased by 9.9%. However, it needs to be pointed out that millet is still the lowest price among the four largest manufacturers, and the 194 quarter in the two quarter (after the renminbi was converted into dollars in accordance with the prevailing exchange rate after tax deduction), even with the sharp decline of vivo, the average price is still 210 us dollars (ibid.).

"Vivo dare to do more cost-effective products and series, in order to defend HUAWEI's competition, and compete with millet at some levels." Jia Mo told reporters that this has been more obvious, "for example, the U series of vivo is similar to the red rice location, the main line less than 1000 yuan online market is a less profitable part; the sub brand iQOO is also the standard millet Mi 9, red rice K20 and so on.

But that does not mean that vivo is breaking arm. Jia Mo further analyzed that vivo's profit at the low end product line may be complemented by software services. In particular, vivo announced the launch of payment services in September.

In September this year, after launching the NEX 3 high-end flagship series, vivo pay was launched. Since then, vivo has become the four largest head manufacturer to make up the payment business. However, unlike other manufacturers, vivo has shown the relative importance of this business.

"Vivo is also pushing its own mobile service framework. The introduction of payment business is a direct feedback on this strategy." Jia Mo believes that vivo is trying to make up for the lack of hardware profits through the profitability of software, which is a relatively obvious change of vivo relative to OPPO.

Millet Quest

The attack from HUAWEI and the adjustment of OV strategy are not difficult to see. The inherent line of millet is facing challenges, especially when the red rice brand is in full swing.

This means that the red rice series has expanded its competitors from the past glory to the OV camp, thus testing Millet's response.

From the new machine release pace can also see one or two. The realme preemptive millet system supported by the OPPO supply chain has released a thousand yuan machine product supporting 64 million pixels. The vivo sub brand iQOO preempted millet to release the new 5G machine, and the selling price of the two base was only 100 yuan.

"OV's control of the supply chain is even worse than that of millet because they are even larger in the country." Jia Mo commented that OPPO's supply chain also supported realme and Yi Jia. The two main brands in overseas markets have spent a lot of efforts this year to show their faces in the domestic market. Therefore, Xiaomi can not cope with the sea tactics, which will easily drag down the overall profit, and it is also difficult to achieve "miraculous effect" through large-scale advertising.

Especially at present, the domestic supply chain system is highly consistent. Whether pop-up camera or optical fingerprint technology can be rapidly popularized to a low price, manufacturers can not occupy too much advantage in the supply chain.

Li Rui also believes that the millet system is currently under pressure from both sides of OV and will face greater challenges than ever before. After the independence of red rice, the overall performance of red rice is even better than that of its parent brand millet. Fortunately, the millet system has been holding up pressure, and there is no obvious decline in domestic share at present.

Jia Mo pointed out that what can be seen now is that millet online stores expand further efforts, hoping to increase coverage at the channel level. But the pressure on millet is still great. "In the short term, even if there are no strategic mistakes, it will be difficult for us to make a big breakthrough."

Greater opportunities lie in overseas markets. Although Xiaomi's share in the country is at the end of the top four manufacturers, shipments in the global market are still higher than OV, slightly inferior to apple.

In emerging markets such as India and Southeast Asia, the products of Xiaomi are competitive enough, especially in other European markets where the other head manufacturers are not yet firmly based.

"Millet's strategic logic is quite clear, if we can win the European market, especially the Western European market, then the overall image of his brand will be greatly improved, which is what HUAWEI was doing before. It is also why millet is putting the European market in the first place instead of Southeast Asia. Jia Mo pointed out.

For mobile phone manufacturers, once every ten years of communication technology iteration, the industry itself is once again renewed vitality of the new cycle, but also be vigilant against the industry's major reshuffle. No one wants to see the reappearance of the only one of the "cool China Alliance", and the rapid adjustment of the four big head manufacturers this year.

Insiders once joked that "if one day, there is really only one brand in the market, so it's not fun." In fact, the real meaning behind this is that, because of the completely free competition in the mobile phone market, there are products that can satisfy various segments of consumers. This market is not only colorful but also a better impetus to technological progress.