Looking back at the ups and downs of domestic mobile phones in the past four years, they still rely on these three tricks to turn things around

Let’s first review the evolution of domestic mobile phone brands:

• Phase 1: In 1995, Bird produced pagers, and in 2000, it launched mobile phones, which were called "Bird phones, the fighter jets among mobile phones"; at that time, the domestic mobile phone market was still dominated by foreign mobile phone brands such as Motorola, Ericsson, and Nokia, and China was a processing factory for foreign mobile phones;
• The second stage: from 2005 to 2009, Huaqiangbei became the world of copycat phones. Domestic mobile phone manufacturers such as ZTE, Coolpad, TCL, Alcatel, and Huawei were weak in technology and mostly focused on OEM or customized phones;
• The third stage: 2009-2013, Apple brought 3G mobile phones, Motorola, Nokia, Samsung and other foreign brands dominated, and domestic mobile phones tried the water. After Google launched the Android platform, domestic manufacturers saw hope; during this period, Xiaomi and Huawei successively launched their own brands;

Until 2014, this was the year when domestic mobile phones underwent revolutionary changes. China Mobile Communications evolved to 4G, Huawei's high-end MATE7 was launched, Lenovo acquired Motorola, and OPPO also launched the OPPO Find 7 in the 4G era.

Although China was still the world of Apple's Steve Jobs at that time, in the next four years, domestic mobile phones were like wild horses that had broken free from their reins, successively squeezing out the market share of strong brands such as Nokia and Motorola.

Today, Samsung's market share in China has fallen from 20% to 0.8%, and Apple's is less than 10%. Huawei, Xiaomi, OPPO and Vivo, the four major domestic mobile phones, occupy more than 80% of the market. So, what is the reason for the domestic mobile phone to turn around?

Relying on "innovation" to break through

With the Matthew effect in China's mobile phone industry, a mature situation has basically formed in the market with Huawei, Xiaomi, Oppo, vivo and Apple, which have basically occupied more than 90% of the domestic market share. Second-tier mobile phone brands such as Gionee, Coolpad, Meizu and ZTE are facing a life-and-death crisis of broken capital chain or lack of management ability and have to lay off a large number of employees. There may not be many opportunities for second-tier brands in the future domestic low-end market, and the market of second-tier brands will continue to be eroded by the multi-tier pricing strategy of first-tier brands.

As a result, Xiaomi, Huami, OPPO and Vivo have to deal with the challenges from high-end mobile phones such as Apple and Samsung, and also deal with the penetration of second-tier brands such as Meizu and Gionee into the middle and low-end population. Therefore, this "innovation movement" needs to focus on market strategy and technology research and development:

First, in terms of market expansion strategy, on the one hand, it relies on the "combination arrangement" brand to broaden the high-end market product line, and on the other hand, it relies on brand sinking to squeeze out second-tier brands and eliminate the mid- and low-end markets.

First, in terms of high-end models, Huawei Technology will compete with Apple and Samsung, while in the mid-range, OV and Xiaomi will compete with Huawei, thus forming a consumer echelon for the mid-to-high-end population. Judging from the outflow of Huawei users in recent years, they mainly go to Apple, and fewer go to OV and Xiaomi. Therefore, Apple is Huawei's main competitor. Huawei's overall focus is on high-end brands, and its brand effect has received a good response over the years. Its P20pro and MATE series directly compete with Apple and have achieved good results. In contrast to the price of Huawei's P series between 3,000 and 4,000, the price of Xiaomi 8 is not far behind, hovering around 3,000; OPPO's FIND X series has raised the price to around 4,000, further competing with Huawei.

Secondly, expand the market with low- and medium-priced models to stabilize the chassis first. Some people say that the real China is hidden in Pinduoduo's model, which implies that the low- and medium-end market is still a huge volume. The First Mobile Phone Industry Research Institute once released a report that counted the changes in sales share of China's offline mobile phone market at various stages. The sales of 1000-1999RMB mobile phones are still in a relatively obvious rising stage, and in the past six months, 2500-2999RMB mobile phones have also shown an upward trend. The stamina of low- and medium-end phones is relatively obvious. In order to seize this market, Huawei launched a separate brand "Honor Series", focusing on cost-effectiveness, which is a layout for a consumer group market; OPPO and vivo are vigorously seizing the township market and laying out offline networks; Xiaomi's Redmi, MIX, NOTE series, etc. have always been based on "enthusiasts" as their fundamental foothold and focus on youth.

Second, in terms of technological innovation, the industry has made slow progress due to certain technical barriers and the need for time to make breakthroughs, but it is able to act quickly. In terms of processor chips, the industry has gradually given up purchasing MediaTek products and switched to Qualcomm's Snapdragon series, which shows that it attaches more importance to technical software. Huawei has also independently developed the Kirin series and has independent intellectual property rights.

Of course, it is not easy to break through this kind of core technology similar to chips, but there are still great innovations in the domestic innovation environment and hardware level. For example, Apple's notch screen, vivo's screen fingerprint unlocking, Xiaomi's AI dual camera and OPPO's starry purple color scheme, while Huawei is working hard on transformative experience and competing with Samsung for the first launch of foldable screens.

It is precisely because of the pragmatic attitude towards innovation that domestic mobile phones have gained the energy to compete head-on with foreign brands such as Apple and Samsung.

2. The dream and practice of “ecology”

Why are physical enterprises such as Gree, Konka, Haier, and TCL, whose main businesses have nothing to do with mobile phones, all manufacturing mobile phones?

This era is a trend revolution. No matter it is the PC era, the mobile Internet era, or the future AI and IOT era, changes in the times ultimately require the support of the people. The concept of user ecology is deeply rooted in all walks of life. Mobile phones, as the basic entrance to mobile Internet, naturally become a field of competition for technology-related companies.

In recent years, Huawei, Xiaomi, OPPO and vivo are all playing the same game. Compared with Meizu, which failed to retain users despite high prices, the Internet ecosystem construction of Huami, OV is much better, while Meizu, which failed to build an ecosystem, is in a much worse situation and has recently been reported to have made large-scale layoffs. Traditional industries such as Gree and TCL have strong product interaction ecosystems and are planning to enter the mobile phone industry in the hope of seizing the future trend of the intelligent society of "Internet of Everything".

Huami, OV and others are working on the dream of creating a user ecosystem from four aspects:

First, product positioning and product line. Taking Huawei as an example, it adopts a full-coverage market strategy, which is a typical two-legged approach. Huawei's direct line focuses on high-end and craftsmanship, and its main bidding targets are Apple and Samsung. Its sub-brand Honor series is differentiated by cost performance, and is benchmarked against Xiaomi, OV and other series. It is worth mentioning that despite being a big brand, it has not given up the low-end market of thousand-yuan phones. For example, the Enjoy series launched by the direct brand and the Play series launched by Honor.

Second, product personality and marketing strategy. Compared with Huawei, OPPO, vivo, and Xiaomi have stronger attributes of vertical segmentation. OV belongs to the same camp, using distinctive product labels and personality images such as "camera", "music", and "fashionable shell" to attract young female groups and form communities. They also manage physical stores at a unified price across the country and form brand image through standardized marketing; while Xiaomi plays with the concept of "enthusiasts". From the beginning, it has been using personality labels to distinguish community characteristics and lay the foundation for ecological construction. In addition, each brand also uses cross-border marketing to shape its image, such as Xiaomi and Watsons, Honor and Adidas, and OnePlus and Superdry.

Third, the deployment of peripheral products. It may not necessarily be the mobile phone that makes money, but its marginal business. This feature is most obvious in Huawei and Xiaomi. Huawei focuses on technical strength and tries to build and optimize the application ecosystem with the advantages of the Android system itself. It is the same path as Apple. It’s just that Apple uses the closed IOS system, while Huawei adopts the open Android system. The two have similarities. Huawei is playing a chess game covering the entire industry; relatively speaking, Xiaomi is much simpler. It is deeply cultivating around this group of "enthusiast Mi fans" and launching marginal products such as Xiaomi bracelets and Xiaomi headphones. The Xiaomi Home that blooms everywhere is a good proof.

Fourth, after-sales service. This is the most fundamental basis for the four major domestic mobile phones to gain a foothold in the market for a long time.

Therefore, whether it is focusing on high-end products or expanding the market with low prices in the future, everyone still has the dream of creating an "Internet ecosystem" in their hearts. Perhaps, the results of this thought and effort can be seen from the user mobile phone retention rate: Apple ranks first with 58.82%, followed by Huawei 36.49%, VIVO 35.16%, OPPO 33.40%, Xiaomi 31.41%, and the remaining brands are all below 30%.

Third, seize the future "AI+IOT" high ground and expand the incremental market by "going overseas"

Perhaps the next epoch-making change will take place in the field of "AI+IOT", with mobile phones being the smart gateway to the trend of the Internet of Everything. The advent of the 5G smart Internet era requires it to use "Internet of Things, edge computing, cloud computing, big data and artificial intelligence" to deeply integrate with various industries, which may trigger a new wave of phone replacement.

Therefore, in the context of globalization, seizing the global market is a new requirement for domestic mobile phones. In fact, when the 4G era came, various mobile phone manufacturers were already making global layouts. On the one hand, it was to temporarily make up for the lack of domestic power replacement momentum, and on the other hand, it was to seize the entrance to the global smart Internet and build a larger ecosystem.

Although the method is old-fashioned, "going overseas" may be the opportunity for domestic mobile phones to achieve a real turnaround in the future.

Currently, under the sniping of US trade policy, the target can only be adjusted to the European and Southeast Asian markets. According to the research organization GSMA Intelligence, by 2025, the number of new smartphone users will increase by about 2 billion, while only 22% of people currently own smartphones. The economic affordability of residents in Southeast Asian countries such as India and Indonesia is similar to the economic situation of Chinese smartphones during the popularization process. Some people in the industry conducted a survey on online consumers who purchased mobile phones on JD.com, and 70% of them paid attention to "hardware configuration" and "cost-effectiveness". High configuration and low price have become a major weapon for domestic mobile phones to break into the domestic market. Therefore, compared with Apple and Samsung, domestic mobile phones have a first-mover advantage in the developing countries in Southeast Asia such as India. China's market share in India has accounted for more than 67%, surpassing Apple and Samsung in all aspects, which has become a matter of great interest in the industry.

On the contrary, in the European market, although the expansion of the situation is relatively more difficult, due to years of accumulation in 5G communication technology, AI, and software and hardware technology, the acceptance is relatively good.

Compared with the price-performance ratio in the Indian market, the focus in Europe may be on brand power and channel expansion. Overall, expansion in the European market is beneficial to the construction of the domestic brand ecosystem because it will promote the further improvement of the entire technology. However, in terms of channel layout, domestic mobile phones also need to pay more attention to the maintenance of scattered consumers, especially in terms of experience, in order to connect the two major domestic and foreign ecosystems.

Although Apple's market share in the domestic market continues to decline and it has not gained an overwhelming advantage in the Indian market, Apple still ranks first in the Chinese market in terms of domestic user retention rate. Apple's brand value and premium remain high. It is reported that Apple's market value has exceeded one trillion US dollars. Domestic mobile phones are more like competing with a giant elephant.

Samsung has publicly adjusted its market strategy and aggressively entered the Indian market, focusing on mid- and low-end mobile phones, which has brought huge pressure to domestic mobile phones. It seems that the competition between domestic and imported mobile phones is still confusing.

However, after four years of ups and downs, domestic mobile phones have laid a solid foundation with these "three strategies" (innovation, ecology, and going overseas), and they also have first-mover advantages in Southeast Asian markets such as India and Indonesia. Therefore, in order to compete with international brands such as Apple and Samsung, domestic brands such as Huami VO still have the ability to give it a try.