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Briefing Aug 10, 2020 04:22 pm EqualOcean

Xiaomi Claims to Be Top Five in 47 Countries

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Sep 23, 2020 02:56 pm ·

Xiaomi to Release Its First '8K + 5G' TV Series

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Sep 20, 2020 03:27 pm ·

China's Smart TV: IoT, 5G and Smartphone Vendors Revitalizing 'Old' Market [2/2]

► Smartphone vendors, such as Huawei and Xiaomi, consider TVs as control centers in their smart home ecosystems.  ► Xiaomi TV, as the current market leader in China, is expected to drive the revenue of other IoT products and the TV Internet services. ► The relatively large overseas customer base of Xiaomi makes it the fifth TV shipper globally with its current prevalence in India and the strategic focus in Europe.  ► Huawei's TV products are strongly bonded to its 'smart home' and 'mobile office' application scenarios; however, the well-positioned TV products still need time to gain user recognition.  ► OPPO has also started to build its IoT products through earbuds, smart wearables and the upcoming TV products.  ► OnePlus and realme have chosen the Indian market as a start point to promote their smart TV products, where OnePlus focuses more on the high-end and realme sticks to its young and innovatively affordable product positioning.  As discussed in the previous article, the Chinese TV industry is embracing growth space squeezed by the transition from cable TVs to Internet connected ones. The appearance and functions are also evolving to the next stage. With the better capacity of content presenting and interaction with users, the new entrants, exemplified by smartphone vendors Huawei and Xiaomi (01810:HK), in the TV industry, are attaching more meanings to their TV products for better market positioning and cracking the big brand advantage of traditional TV brands such as Skyworth (000810:SZ) and Hisense (000921:SZ). The following will touch upon the TV strategies of 'newcomers' of the Chinese TV industry, namely Xiaomi, Huawei, OPPO-affiliated companies who actually revitalized the declining market. Xiaomi TV – Beyond TV: Planning big for the IoT and Internet services Xiaomi, the smartphone vendor who markets itself as a software and IoT company, considers the TV product as a crucial portal to the all-connected and smartly controlled home appliances blueprint made by the company in 2017. (For more insights on Xiaomi IoT products and strategies, please check EqualOcean's upcoming case study report on Xiaomi Technology) The reason for the electronics leaders like Xiaomi and Huawei choosing TV products as their IoT strategy focus is that televisions could function as an interface portal, or a command center at home, with their embedded display features and some ready-to-be-added complex input functions such as operating systems and speech recognitions. Besides, as mentioned in the first part of our TV series, the replacement period of TVs can be as long as ten years, which the user stickiness is inherent. And if the Xiaomi TV, which could control other appliances and be connected to other appliances with a shorter replacement cycle, is dominating in users' homes, it will reasonably increase the sales of other Xiaomi smart home products such as air conditioners and acoustic equipment. Except for the IoT planning, Xiaomi also intends to drive the Internet services revenue through the TV sales, as the Internet service such as the content subscription, TV applications and advertisement revenues. The revenue from Internet service enjoys higher profit margin and better sustainability, thus Xiaomi emphasizes on this part of revenue. Besides, it is likely that the quick movers could possibly enjoy a larger market in the future when it gains popularity, since the TV-based software ecosystem, which includes the operating system and the applications related, is hardly catching up with the rapid development of the 5G technology and the corresponding display industry upgrade. Partly as a duplicate of the company's smartphones, the TV products also aim for the overseas markets, especially the Indian and the European. The company first entered the Indian smart TV market in 2018 with its high-end 55'' TV with the lowest price of the same size in the market at that time. One year after its landing in India in 2019, the Xiaomi TV replaced LG Electronics (066570:KR), becoming the second largest vendor in terms of LCD TV shipments. Xiaomi in the European market is one to two years behind the Indian market in terms of entrance and market occupation. It first landed in the Eastern Europe in June 2019 and the Western Europe in November of the same year. As Omdia estimated, Xiaomi's TV shipments will reach 1.67 million units in the European market in 2020, which is approximately 60% of its Asia Pacific market (excluding China).  Following the development path of the smartphones, the company also envisions its TV products to be listed on the world's tops. According to AVC, as of the second quarter of 2020, the company ranked in the top five globally in terms of smart TV shipments. Apart from the actual shipments and the revenue generated, Xiaomi's TV products also serve a marketing purpose. Having long struggled with the brand image of low price and low quality, Xiaomi intends to enhance its brand image of 'cool products' and 'cutting-edge technologies' through TV innovations. In August 2020, the company launched the world's first mass-produced transparent TV – Mi TV LUX Transparent Edition – priced at approximately USD 7,000. The ultra-high-end TV with either screen quality innovations or the screen size enlargement up to 98 inches efficiently featured the 'Xiaomi' brand as highly innovative without interfering with the sales of its low-end and cost-efficient products. Huawei:  What's the next after its possible smartphone setback? In May 2019, the US government put Huawei and 70 affiliates in the US trade blacklist, which resulted in a key components supply shortage for its smartphones. One month later, at the Mobile World Conference (MWC), Huawei refreshed its mobile strategy to '1+8+N,' in which 1 refers to smartphones, 8 represents business lines of PC, tablets, TV, speakers, glasses, watches, autos and hearables, and 'N' indicates the unspecified products covering mobile office, smart home, fitness and health, media entertainment and smart travel. Though the smartphone accounts for the largest part of its consumer business (54% of its total revenue in 2019), Huawei by the '1+8+N' strategy showed its backups for the sanctioned smartphone segment, which is more or less in line with Xiaomi's IoT strategies. Thus, Huawei also attaches importance to its TV products. In August 2019, the company released its first TV products Honor Smart Screen in 55'' and 65'', which were installed with the company's Android substitute operating system HarmonyOS. Besides, Huawei's smart screen series are equipped with pop-up cameras. The two features mentioned turned Huawei's TV products into a huge 'smartphone' which could satisfy two biggest needs – video calls and content browsing. Currently the prices of Huawei TVs range from CNY 2,000 to 10,000 and the products are well-positioned both in smart home and mobile office scenarios. However, even with its strong branding, unique marketing position and the relatively large customer base (as Huawei's smartphone shipment in the first half of 2020 accounted for 43% in the Chinese market), the company as a latecomer in the Chinese TV market still needs more time to gain prevalence. According to Omdia, Huawei TV's 2020 shipments target is 1.5 million, which is miniscule compared with Xiaomi's 10 million shipments in 2019. OPPO 'family' – the trend follower in China and the trendsetter in SEA OPPO, as one of the top five smartphone vendors in China, will definitely strive to find a foothold in the Chinese IoT hype. After Huawei and Xiaomi made themselves the global top five wearable device companies with Huawei GT series and Xiaomi wristbands, OPPO finally joined the wearable device feast by releasing OPPO Watch in March 2020 and the OPPO wristband in June 2020. After the strong smartphone-related devices ready in the market, OPPO's TV products closely follow the steps and was reported in early September 2020 that the OPPO smart screen will face the market soon in China. Though OPPO's smartphone shipments surpassed those of Xiaomi, taking the second position in the Chinese market, the company has not yet marched into the smart home appliances arena, while many other electronics vendors have become hands on. However, the OPPO 'family' realized the importance of home appliance connections earlier than its TV product release in the Chinese market. OPPO's subsidiary company OnePlus released its first smart TV product in India in 2019, which was in line with its smartphone positioning; it targeted the high-end market, using Quantum Dot Light Emitting Diodes (QLED) and 55-inch screens. Realme, another OPPO-related company which targets the young consumer group, has been growing aggressively in the South Eastern Asian smartphone market to the top five shippers during the second quarter of 2020 and the top 3 in the Indian market. As a business expansion, realme launched smart TV products in India during the second quarter of 2020. The display sizes of 32'' and 43'' and the price – around USD 300 – suited realme's young and affordable brand image and the consumption level of the Indian market. To find more about key trends in the Chinese TV industry, click to check previous analysis of Chinese TV market recap.

Analysis EO
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Analysis EO
Sep 20, 2020 03:13 pm ·

China's Smart TV: IoT, 5G and Smartphone Vendors Revitalizing 'Old' Market [1/2]

► The transition from cable TV to 'smart' TV provides Chinese electronics companies with plenty of room for growth. ► Smartphone vendors are laying hands on the TV category, which is considered a portal to the connected smart home device arena. ► Apart from the recent onslaught of Xiaomi, the Chinese TV market has not witnessed any drastic changes over the past decade in terms of the competitive landscape. ► 55'' to 75'' TVs are mainstream in China with a wide price coverage. ► OLED/QLED screens and the 8K resolution spec are enjoying high price premiums. ► The top three vendors' ultra-high-end TVs with prices up to USD 10,000 are mainly for R&D showcasing and brand value enhancement.  As the world is overwhelmed with countless forms of high-tech terminals such as all new forms of smartphones, AR/VR glasses and robots, many consider television a nostalgic device reminding of the 20th century. Unlike various forms of communication tools which are from time to time replaced by the new generations with better portability and higher connection capacity, TV sets have been consistent in their 'irreplaceable' position in countless households worldwide. Nowadays, TVs are a default furniture item, just like smartphones have become the portable tech necessity. And the product's longevity is quite likely to continue as long as the video-based culture carrier exists, though the appearance might encounter revolutionary changes, as the wireless communication and display technologies could offer greater empowerment in terms of image quality, data transmission approaches and display screens. China, as the world’s largest electronics consumption market, could offer some hints on the direction of the tide. The following will discuss the most significant trends in the Chinese TV market, and the key players' TV strategies analysis. Gradually getting 'smart' As the TV industry has been structurally moving from cable TV and IPTV (Internet Protocol television) to OTT (Over-the-Top) TV, which have better integration with the Internet and online media, functions such as video on demand, website browsing and online streaming gave the definition of 'smart TV.' The chart above indicates that since 2015 (actually the trend started before the data could indicate), the TV sales volume has been maintaining a stable level, at approximately 50 million units per year in the Chinese market. There is no growing trend that can be detected if the segmentation is not considered. However, the TV industry still enjoys growth space even for newcomers as the transition period from traditional cable TV, which could only deliver programs via radio frequency signals transmitted through coaxial cables, to the smart TV, which functions more like a larger display screen for video apps like Netflix (NFLX:NASDAQ). In 2015, only 73% of TVs sold in China were smart TVs, and in 2019, the percentage rose to 93%. The high proportion of smart TV in sales is likely to be maintained for the next five years, as the penetration rate of smart TV in Chinese households is increasing slowly and halfway to reach the ceiling at approximately 90%. Smartphone vendors are getting in the game The growth logic in Chinese TV industry does not resemble the newly emerged wearables devices such as smart watches, wrist band and wireless earbuds because as a rather ancient type of device, the customer acceptability for new brands is comparatively low – who once dominated will be likely to dominate in the future. Besides, the replacement period of TV products in China in 2019 reached (link in Chinese) 12 years according to All View Cloud (AVC), which is much longer than that of smartphones and wearables, and the overlong replacement period of TV that means a longer return cycle, also lifts the threshold of new entrants. Despite the obstacles, the Chinese TV industry still lured intruders to join – Xiaomi (01810:HK), the world top five smartphone vendor is an example. Though the major players do not seem to change over years except for Xiaomi's dominance, more consumer electronics vendors, such as Huawei, OPPO, realme and OnePlus, are entering the TV market as strategic moves aligning the trendy concept Internet of Things (IoT) and the 5G rollout. As the Chinese smartphone market does not offer quick money anymore, the companies have to replicate the 'smartphone success' to other categories. Though it is not yet clear where to go, the Internet-empowered TV along with other home appliances are the definite areas that are worth investing. Go economical or go luxurious As indicated in the chart below, vendors in the Chinese TV market are leveraging more on 55- to 75-inch TVs. The price ranges, from approximately USD 300 to 1,100, are mainly caused by the display panel type. The top three TV vendors – Xiaomi, TCL (01070:HK) and Hisense (000921:SZ) showed homogenization in product pricing for the common choices – 55'' to 75''. The Liquid Crystal Displays (LCD) are generally applied in the economical types (mainly at around CNY 3,000), while Organic Light-Emitting Diode (OLED) and Quantum Dot Light Emitting Diodes (QLED), which have better display properties, have more synergies in middle-to-high-end TVs. The OLED TV in China for 65'' specs is on average USD 300 higher than LCD TV. Another crucial factor in the display technology is the resolution, and there has been an industrial prospect of upgrading 4K (3840*2160) to 8K (7680*4320). At the moment, only China's Hisense, Korea's Samsung (005930:KR) and Japan's SONY (SNE:NYSE) have 8K TVs on sale in China, while TCL just released in September 2020 its 8K QLED specs but not yet officially purchasable for consumers. As the 8K specs are far from popularized, the price premium caused by rarity is tremendous, lifting it to over USD 2,000. Apart from the necessity-like products, Chinese TV vendors also attached strategic importance to their luxury menus for emphasizing on premium brand images rather than increasing the sales volume. Uniqueness matters more in the segment with prices over USD 2,000. Each of the top three TV vendors finds its feature – TCL with the largest screen size, Hisense with 8K HDR and Xiaomi with the transparent display to exploit the value of the high-end market. To find more about the TV strategies and international placement by TCL, Xiaomi, Huawei and OPPO, follow the updates on the second part of Chinese TV market recap.

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Sep 18, 2020 06:14 pm ·

Chinese Vendors Erode Apple's Lead in TWS Market – Xiaomi Ranks Second in 2020

The release of Apple's (AAPL:NASDAQ) Airpods at the end of 2016, along with the headphone jack-free iPhone, defined the new electronics category – true wireless stereos. As the Airpods were the first, and the patents around realizing a 'no time lag' in data transmission between two points of Bluetooth connection are kept secret by Apple, Apple enjoyed a complete lead in this category for the first two to three years. However, as related technology breakthroughs have been made by both Chinese and American electronics companies, TWS products with lower prices and similar functions with Airpods have been invented and taken away customers from Apple. As Counterpoint Research revealed, back in 2019, Apple's Airpods took approximately 60% of the global market shipments. However, as the technologies in terms of simultaneous voice transmission and the cost reduction of the NOR flash chipset spread, Apple has started to lose advantages in the market. During the second quarter of 2020, though Apple's Airpods still ranked the first in the market with 35% of the total, the company's leadership was threatened by the Chinese smartphones and IoT products vendor Xiaomi (01810:HK) at 10% and the Korean company Samsung (005930:KR) at 6%. As the wireless Bluetooth earbuds belong to the phone accessories, the top smartphone vendors have the inherent advantages in terms of user base.

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Sep 15, 2020 06:56 pm · Counterpoint Research

Vivo Led Indonesian Market in 2Q 2020, Followed by OPPO, Samsung and Xiaomi

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Sep 23, 2020 02:56 pm ·

Xiaomi to Release Its First '8K + 5G' TV Series

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