Wen: wang qian
Xiaomi has released another phone, this time a mass-produced CC9Pro with a 100-megapixel camera.
“Someone shouted” 1999 “on weibo, this is definitely to make trouble”. At the launch of CC9 PRO, lei jun introduced the materials used in CC9 PRO and joked before announcing the price.
Although it is a joke, but also seems to say the helpless lei jun. No matter how much material xiaomi has piled up, the first reaction of netizens is still 1999. The stereotype of “cost performance” has become a double-edged sword for xiaomi, which has also become an important constraint for xiaomi’s transformation to high-end.
More importantly, the reality of the market is “very skinny” when xiaomi is trying to move into the high-end market.
According to the latest data released by third-party global research firm Canalys, xiaomi’s share of the Chinese smartphone market in the third quarter of 2019 fell from 13.1 percent in 2018 to 9 percent in the third quarter of this year, with shipments falling 33 percent year-on-year. The report showed that in the third quarter of 2019, except for huawei, which bucked the trend, other handset makers all experienced declines of varying degrees, with declines of no less than 20 percent.
In terms of data, xiaomi’s phone shipments have fallen the most among mainstream manufacturers.
Why did xiaomi suffer such a severe decline? A reporter from business school interviewed xiaomi about the issue, but received no reply as of press time.
Mobile phone business under pressure
Among the many organizational changes xiaomi has made this year, Mr. Lei personally took over xiaomi’s business in China. Behind this is the serious decline in xiaomi’s sales in China.
Since its birth, xiaomi has been labeled as “cost-effective” and “born for a fever”.
At first, xiaomi succeeded through hungry marketing. However, as mobile phone manufacturers have entered the field of smart phones, xiaomi phones in 2015 and 2016, encountered the first sales crisis. < / p > < p > in lei jun personally hung shuai, millet successfully read the crisis. But so far this year, lei jun appears to be facing a more serious challenge than last time.
Combing through xiaomi’s financial results since its ipo, it can be found that the main revenue source of xiaomi is its mobile phone business. Xiaomi’s mobile phone business accounts for more than 60 percent of its revenue, according to its previous financial statements.
Sun yanbiao, director of the first-hand computer research institute, told business school that xiaomi is still considered a mobile stock in Hong Kong, rather than an Internet stock.
According to the semi-annual report of 2019, the average selling price of xiaomi phones has increased continuously for four consecutive quarters, and the gross profit margin has increased from 3.3% in the first quarter to 8.1% in the second quarter. The average selling price (ASP) in mainland China and overseas markets increased by 13.3 percent and 6.7 percent, respectively.
But in terms of sales, xiaomi sold 32.1 million phones in the second quarter, compared with 32 million in the same period last year. This means that, without a significant increase in sales, xiaomi has increased its profits by raising prices.
Meanwhile, according to data released by Canalys, there were only 8.8 million xiaomi phones in China in the third quarter of 2019.
Xiaomi’s handset shipments have slowed. Xiaomi’s mobile phone business still accounts for more than half of its revenue, meaning it still relies on phones for most of its revenue, although its share of mobile phone revenue fell 6 percent from 67.5 percent a year earlier to 61.5 percent.
It is understandable why capital markets still see xiaomi as a mobile phone company, not an Internet company.
One issue that can’t be ignored is that xiaomi’s sales in China have not been mentioned for several quarters in a row. Instead, xiaomi has been sparing no effort to promote its sales in India.
Everbright overseas research notes that xiaomi’s mobile phone business growth is under pressure, there is a small margin decline is possible. In its risk warning, there is such a description, the domestic medium and high-end mobile phone did not succeed in volume; Overseas mobile phone market development; IOT device penetration slows down; The Internet realization process is not as expected.
Ding daoshi, an Internet analyst, expressed the same view, because xiaomi’s Internet concept is not well recognized by the capital market, and it is treated as a traditional company that makes phones and hardware. “If you look at the hardware companies, you can’t support that kind of valuation.”
Hard to change “stereotypes”
Hermann Simon, a famous German pricing scientist and the father of the “hidden champion”, told the business school in an interview that when xiaomi started, it was in line with the market background at that time to choose the low-price strategy to hit the market. He captured the mentality of some people at that time, “wanting to buy a smartphone without paying a high price”.
“After all, at the time, no one could compete directly with apple, only with this strategy.” Herman Simon.
However, with the upgrade of consumption, xiaomi’s users always remain in this part of the population. In Herman Simon’s view, once this kind of thinking fixed, users will form a mindset: low price = millet, once the price of millet, users will not accept.
Zhou ying, a professor in the department of marketing, antai school of economics and management, Shanghai jiao tong university, believes that companies that start with marketing and achieve success through marketing must develop products in the later stage, and the core of retail must be products.
Ding Daoshi talk of rivals like millet, such as huawei, apple, samsung made chips or operating system or other core technology breakthrough, and millet are both chip and the operating system, camera, screen and so on all is the use of products provided by third party companies, he did not make more technical breakthrough. In zhou’s opinion, if xiaomi doesn’t make breakthroughs in core technologies and only talks about shipments, it can’t be compared with huawei, apple, samsung, etc., and its stock can’t improve much.
“You have to have something different, but what about xiaomi?” “Said ding daoshi.
In the opinion of Herman Simon, if xiaomi wants to go up, it must carry out dual-brand or multi-brand strategy, because the original brand image has been deeply rooted in the hearts of the people, and it cannot achieve success only by relying on the brand of xiaomi. “Every brand from bottom to top has failed.”
Overseas markets are good, but will they last?
Compared with the declining domestic market, xiaomi’s overseas market is relatively good. According to the Counterpoint report, xiaomi’s market share in India in the third quarter of 2019 was 26%. Xiaomi group’s financial report for the second quarter of 2019 showed that xiaomi’s total revenue in the first half of the year was 95.71 billion yuan, up 20.2% year on year. Xiaomi’s overseas market revenue was 38.6 billion yuan, up 33.8% year on year, accounting for more than 40% of the total.
At the same time, xiaomi continues to carry out offline layout. Sun yanbiao told reporters that in addition to the domestic market, xiaomi has overseas market this option.
Industry insiders believe that xiaomi phones in the Indian market is still a thousand yuan model, relying on the upgrade of the smartphone to boost sales.
But an important question is, when the overseas market replacement bonus disappeared, how should xiaomi choose? These will be the future of xiaomi phones have to face the challenges.