Between the inside roll and lying flat: no need to be pessimistic about the mobile phone industry

Title Picture ｜ Vision China

Have you ever thought about this problem: You and me, and more ordinary people like you and me, they do not want to change behind mobile phones, with a specific law of some corporate operations?

This year's global mobile phone market is absolutely optimistic -in the past, there was a voice in the industry that consumers' replacement cycle has been extended to an incredible 36 months, and another latest number comes from China Xintong Academy. They collected by them. Data show that from January to May this year, China's mobile phone shipments decreased by 27.1%year-on-year. We can of course find many reasons for this phenomenon: from epidemic to global supply chain to 5G itself, and so on.

But instead of blaming the environment, it is better to calm down and see the industry's own problems: innovation.

Is the mobile phone industry sick?

"In order to maintain a leading position, many companies will strive to develop products with greater competitiveness, but these companies do not realize that as they are competing to participate in higher performance and higher profit margin market competition, they chase high -end markets and improve products. The speed of performance has exceeded the actual needs of old customers. "

Management experts, known as the "Innovation Master", have commented on the relationship between technology research and development and market size in the famous "Dilemma of Innovatives". Opportunities for enterprises. In the mobile phone market we are concerned about, several phenomena this year are particularly appropriate. A typical manifestation is the chip two years ago, the multi -generation CIS (image sensor), and even the old mobile phone a year or two. As long as it is placed at a suitable price, it can become a good option this year. For example, this year you can still see the new machine of the Snapdragon 870 chip or the Sony IMX766 sensor, or the Vivo X70 Pro+last year's mobile phone, this year, is still a strong enough image flagship.

Some consumers have some benefits from this lag, but of course, for the industry, it means that the overall market space is declined and exposed the overall negativeness. To some extent, this is also one of the universal problems encountered by the smartphone industry today -the confusion of product competitiveness. On the one hand, it is the previously mentioned actual needs, and the performance and design in some areas are excessive. On the other hand, many innovations come from the upstream suppliers, but the giants with a layer of supply chain occasionally sneezed. Any shortcomings in the product will quickly convey to mobile phone shops in third- and fifth -tier cities.

Relying on technical supplier giants, of course, is not the characteristics of the mobile phone industry. In fact, as early as many years ago, especially when mobile phone shipments fell for the first time around 2016, many consumers and commentators believed that mobile phones, a broad -sense computer, would also move towards the PC market today's way : Hardware listening to Intel Nvida AMD, there is only one Windows without differences. The cost volume volume of the downstream manufacturer volume volume volume volume is marketing, until the market is rolled into a mature industry with a single digit.

Does it look serious? Is there no future in the mobile phone industry, right? Innovation is all upstream giants, mobile phone manufacturers can only look at the economic environment to eat, until the next generation of personal terminals are born with destructive innovation, right?

Don't worry, the mobile phone can't be PC

Looking at the innovation of mobile phones today, we must first look back at the once magnificent information revolution.

The birth of the PC concept stems from the late 1970s and early 1980s. At that time, computers had entered many industries, but they usually appeared in front of the office staff with expensive servers worth tens of thousands of dollars, or early laptop computers priced at nearly 10,000 US dollars. Is it a good idea for more people to use a computer? When IBM's CEO he heard the personal computer system manager proposed to build a computer no more than $ 1500, he immediately determined that "a prototype will bring me a prototype one month later."

This prototype, relying on the Intel 8088 processor bought, and MS-DOS system produced by Microsoft, eventually became a masterpiece that swept the world's informatization. From the first day of the PC's incubation, the selection of ready -made parts and standardized systems and extreme control costs are written in the genes of such products.

Forty years later, the PC industry still did not get rid of the products defined by the Wintel Alliance, and PC upstream suppliers represented by Microsoft, Intel, AMD, and Nvidia have also become factors. The company that has recently benefited the stock price of the PC recently, and looking at the computer terminal brand, the gross profit margin is 10%-20%, and the net profit margin hovers online and down the number 0, becoming the norm for the downstream of the industry.

Financial data of a computer brand listed company

From the first day of the birth of smartphones, it has embarked on a completely different path from the PC. The most critical factor is differences. In the former PC market, the system is highly unified (the user experience is close, and can only be rely on hardware performance), the underlying technical standards (X86, DirectX, etc.), and the competitive barriers of assembly manufacturers are not high. The product selection, and the innovation of product appearance, material, process and design, therefore, it has formed a competitive logic for compression costs early. On the other hand, the smartphone industry, the former iPhone era has multiple technical routes in hand, and under the iPhone and Android camps, based on the different manufacturer's concept genes, the height customized system and functional modules immediately showed the mobile phone industry to present the mobile phone industry. The situation of all flowers. The innovation of mobile phone products, even if many of the supplier's capabilities are improved (faster chips, higher -definition cameras), in the final analysis, the innovation definition of products is still attributed to end manufacturers. They must understand consumer demand and construction technical capabilities. Therefore, a higher proportion can be obtained in the value chain, which is the key to the PC.

The story of HTC is a typical case of the smartphone industry: from the early Windows Mobile system PDA, to the Android era, relying on the accumulation of software interfaces to continue the difference in competitiveness; In front of Samsung and other manufacturers with in -depth research and development capabilities, they gradually lose their competitiveness.

At this point, the reader may have a question: On the one hand, you need to do differentiated research and development on the one hand, and on the other hand, you said that you should not get excess performance at the beginning. Can mobile phone manufacturers still get better?

No matter how difficult the industry is, it is not poor to develop and develop

The answer to the question is: the innovation of the terminal cannot be stopped, and the progress of the industrial chain will not slowly slow down because consumers do not need to use it. However, the definition of the product really needs to be in technology development and user needs. Find a balance.

Just as our core judgment -because the mobile phone industry creates a key experience difference, it is still attributed to the terminal manufacturer, so the mobile phone industry is different from PCs to a simple "cost -effective inner volume" logic.

At this year's Boao Forum for Asia, Hu Baishan, executive vice president and chief operating officer of vivo, explained this:

"Scientific and technological innovation is the fundamental path for the improvement of the competitiveness of science and technology enterprises. It is possible to have a long -lasting vitality for continuous research and development in the future."

Can we say that HTC has not developed? In fact, they do have CNC cutting, early exploration of dual -lens, and naked eye 3D mobile phones. These innovations cannot be said to be meaningless, but in the end, they have not brought long -term business success to HTC. In the final analysis, the operation of mobile phone companies still need to provide consumers with effective experience advantages. Therefore, investing in research and development, establishing competitive advantages, diluted research and development costs, and excess value, that is, Apple is steadily sitting high -end, the global Android market Samsung eliminates HTC, in the Chinese market, in the Chinese market Huami OV eliminates the core reasons for many industry stories such as operators and Huaqiangbei brands.

In fact, in the mobile phone industry cycle, it is not idle to participate in the market today. The Huawei bench has a series of self -developed products such as Kirin Chip for ten years. In the post -Huawei era, vivo deeply cultivated the "long track" research and development, set up the Vivo Central Research Institute, pre -research mobile phone cutting -edge technology. The plan indicates the direction, and the first self -developed video chip V1 was launched last year.

Pre -research and advanced research and development are the first strategies for manufacturers to establish technical reserves to expand the market quickly when technology mature.

Taking the folding screen mobile phone as an example, in the first year or two of the birth, it may be closer to a conceptual product. The actual factors such as the creases of the screen, the performance of the flagship mobile phone, and the high price of the screen are not enough to make it successful. product. However, this year, according to the report of the research institution DSCC, in the first quarter of 2022, the total shipments of the global folding screen smartphones were 2.22 million units, an increase of 571%over the same period last year, and the shipments increased by nearly 6 times year -on -year.

The listing of a new generation of more mature and more satisfying consumer needs has promoted this result. The Vivo X Fold mobile phone released earlier this year, the internal and external dual 120Hz main screen, new hinge structure of non -creases, flagship image and performance, etc., are key factors that attract more new players to choose folding screen phones. The successful folding screen mobile phone is by no means born from the stone. The VIVO of the folding screen mobile phone at the latest in the mainstream manufacturers is not to learn from and waiting for the supply chain to mature, but at a more basic level such as materials science. I have done longer technical pre -research and product definition work. According to the information revealed by vivo before, as early as four years ago, vivo has begun to develop folding screen mobile phones, but this year, these advanced research have been implemented.

In order to see the "suitable product" in order to make the bottom. It requires industry competitors to accurately grasp the intersection of the path of technological development and consumer needs, and establish a competitive advantage to better meet user needs, rather than so -called advanced innovation and invalid innovation.

According to CONTERPOINT statistics, even if the industry's overall development is limited, in 2021, Vivo became the first place in China's smartphone market with a market share of 22%. And vivo's product portfolio does conform to our definition of "suitable products" -especially in the past two years, vivo's flagship X and sub -flagship S series mobile phones, with accurate positioning, create fashionable design and powerful images (Especially video and portrait performance) Different differences continue to become Vivo's explosive models. It is a player that cannot be ignored in the mid -to -high -end market in China. This is derived from the four "long tracks" of Vivo focusing on the four major "long tracks" of images, performance, system and design, and the technology accumulated around them has become the core capabilities of vivo today. The most eye -catching achievements of the video track are naturally V1 and V1+professional image chips, and Weiyuntai anti -shake technology that leads the industry trend. The reserves of the performance track have become a key factor in the IQOO series to gain the trust of the player.

Is there a room for evolution? The answer to this question comes from technical supply from the industry upstream. Even in the small cycle of one or two years, many factors may be subject to advanced process, chip design plan, and even the operating decision -making of upstream companies, which may slow down, just like the performance of the processor and sensor in the past year. But in fact, we always have enough performance reserves to cope with most of the scenes. After a short dormant, in the second half of this year, we have ushered in the batch listing of a new batch of "real incense" parts, and things will always be better. Just like in the PC market, Intel and AMD, manufacturers and users are entangled in thirty years, until today we see a series of heterogeneous chips, super nuclear display, Apple M series ARM cores, etc. s things.

The other half of the answer lies in the terminal of the terminal, and they are the definers of direct product innovation. Even when the global epidemic is impermanent and the industry is facing a collective dilemma, technology companies such as vivo who "stand on the day after tomorrow" and other technology companies are still maintaining research and development and investment in the future -for example, the vivo global R & D headquarters in Dongguan, in Hangzhou R & D towns such as AI R & D headquarters are under construction.

We believe that the mobile phone industry is different from the PC. The value of the industrial chain is concentrated in the upstream and the terminal at the same time. Even though the global environment is difficult, as long as the mobile phone manufacturers do not "lie down", they still maintain long -term continuous investment in technology research and development, we can always look forward to the birth of new products and new concepts.

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