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Briefing Jul 24, 2020 02:08 pm EqualOcean

IDC: China's Public Cloud Service Market Tops USD 3.92 Billion

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Sep 28, 2020 05:45 pm ·

Alibaba Global Investor Conference: 70% of New Users are from the Sinking Market

On September 28, Alibaba's 2020 annual global investor conference was held online. Jiang Fan, the President of Tmall, outlined how, in the first quarter of 2020, Tmall's physical product transaction growth rates reached 27%. And the growth rate of core categories such as apparel, fast-moving consumer goods, and consumer electronics significantly exceeded the growth rate of the Chinese retail market. The annual active consumers of Alibaba's retail market in China reached 742 million, and the monthly active users increased by 119 million, of which 70% of new users came from the sinking market. The two paid memberships of '88VIP' and 'Taobao Money Saving Yueka' have continued to grow. The brand flagship store has been an essential product for merchants on Tmall over the past ten years. Flagship Store 2.0 helps merchants use digital technology and mini-programs to draw more accurate consumer figures. As of the end of August 2020, Tmall flagship store 2.0 had covered 270,000 merchants. Taobao live broadcast has driven the boom of e-commerce live broadcast. In the past 12 months, Taobao Live's turnover exceeded CNY 300 billion. The number of live broadcast users increased by 160% year-on-year, and the year-on-year growth rate of merchants participating reached 220%. In the apparel industry where Taobao has the largest transaction scale, Alibaba's new manufacturing platform 'Xunxi' will provide small and medium businesses in these apparel fields with a data-driven, flexible manufacturing production supply chain.

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Sep 27, 2020 12:02 pm ·

Chinese Smartphone Profitability Driven by 5G, Huawei Ranks Second by Revenue

Surpassing Samsung (005930:KR) and Apple (AAPL:NASDAQ), and taking 20% of the global smartphone shipment in the second quarter of 2020, Huawei once again beat its major Korean competitor Samsung in terms of smartphone revenue volume. During the second quarter of 2020, Huawei accounted for 20% of the global smartphone revenue, ranking the second. The first position is taken by Apple, the one with apparent technology premium driven by its operating system and in-house designed processor. Apple capture over one-third of the global revenue and in the meanwhile captured around 59% of the global smartphone industry profit. According to Counterpoint Research, Huawei's considerable revenue volume is partly driven by the averaging selling price enhancement in the Chinese market, which is the result of the aggressive 5G smartphone shipments. Though according to our previous analysis, Chinese vendors have been competing for 5G smartphone market by launching lower priced phones and dragged the average 5G phone price 43% down to USD 369 from January to June 2020, the new releases of high-end 5G phones, such as Huawei P40 series flagship, Mi 10 and OPPO Reno series have significantly driven the average price up. During the second quarter of 2020, the average selling price in the Chinese market increased by 13% year-over-year. Among the top five global revenue generators, Chinese vendors took three positions, leaving Xiaomi(01810:HK) outside the list. Pledged to have net profit margin less than 5%, the company is still aligning to the low-price strategy, which present issues with the corporate profitability.

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Sep 27, 2020 10:28 am ·

OPPO and Midea to Co-create Smart Home and IoT Ecosystem

As proposed by the Chinese smartphone vendor Xiaomi (01810:HK) in 2018, the 'AI + IoT' or the IoT (Internet of Things) ecosystem strategy, has been followed and further developed by major Chinese electronics companies including Huawei. These vendors intend to take advantage of smartphone user bases by making the smartphone a control center to connect and empower other electronics products like earbuds and tablets, and white home appliances to realize remote control and some even more intelligent machine actions like auto-alarm. At the Huawei Developer Conference 2020, Huawei revealed a bunch of strategic cross-industry cooperation projects with many leading companies such as VIPKID in education and Joyoung (002242:SZ) in cooking machines to further develop Huawei's IoT ecosystem. Xiaomi has resorted to another IoT business model, whereby Xiaomi's IoT products are mainly self-branded or developed by its invested startups. Xiaomi's model has shown up a shortage of tech development among mature industries like air-conditioners – though the company could hardly compete with the traditional leading companies such Gree Electric (000651:SZ) and Midea (000333:SZ). OPPO chose Huawei's IoT model and announced that it would release its smart home products in cooperation with Midea, one of the largest home appliance vendors in China. Except for the hardware product cooperation, OPPO also planned to have R&D partnership with Midea to develop user portal and Midea appliance controlling apps based on OPPO smartphone's operating system ColorOS. Last, the two agreed to share business data in terms of users, sales, products and operations, to realize optimal product designs.

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Sep 24, 2020 09:50 am ·

Huawei Would "Rather Fight and Die than Surrender and Live"

► The impact of chip supply interruption is very significant. ► The enterprise business is likely to become the focus of Huawei in the future. ► HMS, the company's home-grown operating system, has made progress since it was established in 2019. In May 2019, Google (GOOG:NASDAQ) stopped providing GMS authorization certification to Huawei mobile phones, negatively impacting Huawei's consumer business in Europe. At the end of 2019, Charles Peng, CEO, Huawei and Honor India, Consumer BG, said that "Huawei has its own HMS and is trying to build a mobile ecosystem. Most of the key apps such as navigation, payments, gaming and messaging will be ready." One year later, the United States government announced that companies containing American technology cannot ship to Huawei without permission after a 120-day transition period. The sanction is equivalent to cutting off Huawei's sources of chips. On August 7, 2020, CEO of Huawei Consumer Business Group, Yu Chengdong, said (in Chinese) that due to US sanctions, Huawei's Kirin series chips will not be able to be manufactured after September 15. By now, only Intel (INTC:NASDAQ) and AMD (AMD:NASDAQ) are allowed to supply chips to Huawei. It is reported that semiconductor companies, including Qualcomm (QCOM:NASDAQ) and SMIC (688981:SH, 00981:HK), are also applying for permission.  Between two waves of bans across two axes, namely software and semiconductors, the smartphone business is impacted the most. On the chip side, the company is connecting Chinese companies in different areas of the semiconductor industry and helping them improve their technologies based on its own experience in this field. However, after so many years of development, the global semiconductor industry has been formed. The difficulties in the semiconductor industry don't make the software field easier to enter; the two are not linked that tightly. From speeches and interview content on Huawei Connect 2020, we conclude that Huawei is likely to put more effort into enterprise business, forming a full-industry ecosystem by HMS, just what it has been doing since last May. "Chip reserves for business partners are full. Huawei is still looking for solutions for mobile phone chips," Guo Ping said. In May 2020, it was reported that Huawei had stockpiled chips as the United States government tightened sanctions. There are two key insights from what Mr. Guo stated during the media press conference after his speech at the conference: • The smartphone business is indeed blocked because of chip restrictions. As we analyzed in the former paras, on the one hand, it is hard to form a totally domestic semiconductor supply chain in the short term. For instance, the most advanced processing techniques are owned by TSMC (TSM:NYSE, 2330:TW) and ASML (AMSL:NASDAQ), which is the developer of 7nm EUV machines, whose techniques both contain American technologies and have a narrow supply chain problem as some raw materials for manufacturing chips are monopolized by overseas companies. On the other hand, it is not the most cost-effective option. Chips manufactured by this supply chain are not competitive in the market in terms of price. • The enterprise sector (so-called '2B') is likely to be the focus in the future. According to Huawei's annual report in 2019, the enterprise business contributed 10.45% of total revenues while 54.41% of revenues come from consumer business. As a solution provider for companies in different areas, Huawei provides software and hardware for their customers at the same time. Considering the difficulty in making revenues from smartphones sales in the future and the high demands from enterprises' business transformation, turning focus to the enterprise service segment is a highly logical choice. Huawei enterprise BG president, Peng Zhongyang: “Business in the digital age is a positive-sum game, not a zero-sum game.” There are three key elements for realizing scene digitization. The first is 'technical' – and Huawei must be good at integrating multiple ICT technologies with core business. The second is to 'know the industry,' 'revere the industry,' gain insight into the industry, and understand industry know-how. Finally, 'true practice.' The digitization of the scene is not achieved by talking about it on paper, but by combining knowledge and action, exploring and creating in practice. Huawei proposes to build a 'digital ecological cube' in three dimensions. Firstly, Huawei aims at the digital future and deeply explores the unsatisfied demands of various ('N') types of sub-scenarios in various industries, which is the prerequisite for making the cake bigger. Secondly, N capabilities need to be aggregated. Each partner will give full play to their expertise, the basis for making a bigger cake. Finally, companies must create N cooperation methods and business models to achieve symbiosis, co-creation and sharing. This is the source of power to make the cake bigger. “Huawei would rather die one step forward than live half a step backward”: Zhang Pingan, Huawei consumer cloud service president. From the performance of HMS presented by Mr. Zhang, we can see that it has attracted a bunch of developers to join its ecosystem. In one year, Huawei opened five engines including payment, advertising, browsing, map and search to developers and partners around the world. By now, there are 96,000 applications integrating HMS Core. The monthly active users of Huawei's application market have reached 490 million. The number of applications distributed from January to August this year exceeded 261 billion. Judging from what HMS has achieved in one year, we expect Huawei to dive deeper into the enterprise business in the near future. Read more about the challenges facing Huawei in our previous article.

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Sep 28, 2020 04:14 pm ·

Alibaba's DingTalk Re-Structures, CEO Leaves

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Sep 27, 2020 03:55 pm · Jiemian

AI Unicorn Megvii to Resume IPO and Consider Dual Listing

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