Subscribe

News May 21, 2020 09:50 pm EqualOcean

Xiaomi Group's First Quarter Revenue Reaches CNY 49.70 Billion, Exceeding Market Expectations

News EO
News · 2
report
News EO
Aug 12, 2020 07:38 pm ·

Xiaomi’s Next Ten Years – All About Product and Internet Empowerment

Founded in 2010, Xiaomi (01810:HK) ushered in its second decade in 2020. Lei Jun, the founder and CEO of the company delivered a speech on August 12 as a memorial to Xiaomi’s achievements in its first ten years and a business blueprint for the next stage. Mr. Lei promised three principles for Xiaomi’s future development, which are technology as the foundation, price-efficiency as the key and presenting the coolest products. By announcing the mass production of the world’s first TV with a transparent OLED display panel and the promise of investing over CNY 10 billion into R&D, the CEO exemplified the company’s principles. The transparent TV edition has a custom MediaTek 9650 chipset with the company’s AI Master Smart Engine image processing that offers over 20 optimization algorithms and dedicated optimization for five major use scenarios. The product is indeed impressive – but without much public attention as the first launch of Mi MIX phones in 2016, perhaps due to the unaffordable price at around USD 7,100. For future strategies, the CEO emphasized entrepreneurship, Internet-empowered manufacturing and long-term thinking. Lei claims that Xiaomi will continue the cooperation with its ODMs. Meanwhile, it will get deeply involved with the manufacturing industry by introducing more technology empowerment to traditional production lines. To date, the company’s industrial fund has invested in over 70 semiconductor and smart manufacturing firms, seeking for its own economic moat that is comprised of supply chain dominance, fine products and customer stickiness.

Briefing
Briefing · 1
Briefing
Aug 12, 2020 12:25 pm ·

62.4% of Smartphones Sold in China Are 5G-Ready

Briefing
Briefing · 1
Briefing
Briefing · 1
Briefing
Briefing · 1
Briefing
Aug 10, 2020 04:22 pm ·

Xiaomi Claims to Be Top Five in 47 Countries

News EO
News · 2
News EO
News · 2
report
News EO
Aug 7, 2020 03:47 pm ·

Xiaomi India Response to the Government Ban – Apps Are Out and Data is Secured

Xiaomi (01810:HK) is the largest smartphone shipper in India, with around 24% of the total market. Amid the international tension, software developed by the Chinese companies, such as Mi Browser Pro, Mi Community app and Mi Video calls, are now on the Indian blacklist. On August 7, Xiaomi India, as the first Chinese company that officially responded to the Indian government regulations that targeted the company, claimed the following: 1) None of the blocked apps will be available for access on any Xiaomi phones launched in India and a new version of MIUI operating system will be built without pre-installation of any of the blocked apps. 2) Since 2018, 100% of Indian user data is stored on the servers located in India and none of this data is shared with anyone outside of India. The claims showed Xiaomi’s Indian team is trying to maintain the public image of an Indian local enterprise with social responsibilities. Following the government instruction and consequently being protected and mutually beneficial to the government and the Indian people is a certain choice. As a result of the India tax increases in recent years for electronic products, Xiaomi has been rooted in the local industries from along the supply chain through acquisitions and investments. Large independence has also been achieved in terms of marketing and operation. Though the Internet service sector of Xiaomi will be severely affected by the policies, the smartphone business might be safe in the short term. Opportunities for Chinese vendors that have been staying low-key and local as realme and OnePlus are ready. Samsung (005930:KR) has already been gaining more Indian customers since the first dispute happened in 2020 between India and China.

Briefing
Briefing · 1
Briefing
Aug 5, 2020 07:44 pm ·

Xiaomi Browser Banned by Indian Government

Analysis EO
Analysis · 2
report
Analysis EO
Aug 4, 2020 10:41 pm ·

1H 2020 China Smartphone Market Overview: 5G, New Types, Lower Prices

► The Chinese smartphone market is recovering steadily, thanks to the country's economic rebound and the excitement around 5G. ► By June, over 60% of the phones sold in China were 5G-enabled. ► During the first half of 2020, the prices for 5G smartphones got lower and lower, with a 40% decline by June. ► Chinese vendors were aggressively pushing new product series in the first half, with 216 new models being rolled out.  ► Huawei for the first time surpassed Samsung as the largest smartphone shipper globally, which is a result of Huawei's drive to expand product lines and price segment coverage. ► OPPO and vivo, as the second and the third vendors in the Chinese market, both encountered severe problems in channels and marketing. ► Xiaomi is in desperate need of a hard push in its smartphone segment.  ► Apple's lower price strategy turned out to be quite efficient: it brought the company a 35% year-on-year growth in China.  Overall shipments are rising – thanks to the economic rebound and local 5G phone hype Economic rebound On July 16, China reported its GDP of the second quarter of 2020, indicating an economic growth of 3.2%. Meanwhile, the US saw the most significant GDP recession for the past two centuries, with a 32.9% decline. The comparably strong economic rebound in China results from the successful virus suppression and the government's expansive fiscal policies. As consumer goods, smartphones lie in the scope of the government promotion plan in China and consequently saw decent overall performances during the first half-year of 2020. 5G hype Besides the favorable macroeconomic environment, the hype of replacing 4G mobile phones with 5G ones in China also contributes to smartphone sales. Though it will still take years to realize the full coverage of the next-generation network, Chinese telcos and smartphone vendors have already been lavishly promoting 5G cellular data packages and 5G-ready communication devices. “5G smartphones are thriving with 39 million units shipped in China in Q2 2020, up 260% from Q1,” said Louis Liu, a Canalys analyst. The 5G subscribers in China had already surpassed 100 million as of July 2020. The chart above reveals that the percentage of 5G smartphones is climbing rapidly, with promotion from all sides. On the one hand, the vendors are compressing their margins to compete for 5G phones market shares, which further pushed consumers to buy a 5G one since there is no price difference with 4G. On the other hand, there is actually no choice for Chinese consumers since all the newly released flagships or featured ones in 2020 are 5G-enabled, except for iPhones. The 5G function is becoming a default for Chinese vendors. In June, over 60% of phones sold were 5G-enabled. Compared with 20% in January, the growth is stunning. Though the shipments of 5G phones keep rising, the selling prices have been declining drastically as well, as a result of the price competition. From January to June, the average selling prices for 5G phones dropped by 43% from USD 645 to USD 369. The lowest price for 5G phones now is under CNY 2,000. Vendors that have already developed overseas channels have considered pushing lower-priced 5G phones to overseas markets where the 5G infrastructure is ready, such as South Korea, Japan and some European countries. For instance, OPPO is expanding to the Japanese market with its 5G phone Find X2, and Xiaomi is heading for South Korea to compete with local Korean companies on 5G terminals. Aggressive new releases Canalys believes, “a mature e-commerce channel in China is critical to the Chinese smartphone market recovery.” The online sales channels are indeed crucial for the first quarter's sales. However, for the second quarter, as most cities in China have terminated the quarantine policy since March, reopening shopping malls and pulling people back to workplaces, the online channel might not serve as the foremost contributor. Per EqualOcean's analysis, the surge in Chinese smartphone sales in the second quarter is credited to the hard work of the top smartphone vendors – Huawei, OPPO, vivo and Xiaomi (01810:HK). The phone vendors reckon the year of 2020 – the second year of the 5G era, as the key time to occupy the market since the demand for 5G-ready phones is organic as the 5G network rolls out. Consequently, during the first half-year, Huawei, OPPO, vivo and Xiaomi, along with other relative niche brands in China, released a total of 216 new models, where 5G specs account for nearly 50%. Huawei – humble and focused As the news of Huawei outcompeting Samsung (005930:KR) reveals, Huawei smartphone's milestone of championing the global shipment is primarily due to the excellent performance of the Chinese market compared with other regions in the world, which are still under the shadow of the pandemic. Though the region’s economic and health status matters a lot, Huawei mobile's success is not purely exogenous as the company's overseas shipments plummeted 27% in the second quarter due to the US-China tension and the pandemic. The substantial growth of Huawei at 8% in 2Q 2020 in the Chinese market, which is declining, is more important to address since efficient strategies could have a longer-term effect on the company's performance than the temporary market turbulence.  The first strategic move of Huawei is to satisfy the demand of ultra-low-end phones and lower the overall pricing. The pricing strategies for its spring flagship P series did not differ much from the last year – they even rose a bit higher. However, the Changxiang and Changwan series targeting the low-end segments started to draw on Huawei's marketing resources and even enjoyed their own press launches this past June. According to iyiou.com, a sister publication of EqualOcean, Changxiang 10, which is priced under CY 1,000, topped the 618 shopping festival smartphone sales and surpassed the second Huawei Nova 7 SE by 53%. The second is still about the company's commitment to the consumer business sector as the core of other segments. According to Huawei's interim press release, this sector saw a 2% increase compared with 2019, accounting for 56.34% of the total revenue. The year 2020 is a tough time, especially for Huawei, as the pressure is being applied from every direction. The company's answer is to pool all resources to boost the consumer business and cut expenditures on non-central businesses such as the investment in optical cables. Though its Huawei Mobile Services (HMS), which is a replacement of the Google one, is one of the core strategies that Huawei bears to thrive long-term, it does not affect the sales much in China's market since Chinese consumers do not depend deeply on Google services in the first place. OPPO and vivo – awaiting shifts In China, OPPO and vivo (OV) together released 16 new series in the first half-year of 2020, covering prices from USD 300 to 800. This is quite the typical style of the two company's aggressive marketing approaches. Though OV are comparably less troublesome in terms of external pressures, the shipment declines are still apparent, at around 20%. The plight for these two companies is mainly from three sides – offline sales declines, overseas market declines and the brain drain. The pandemic and the livestreaming shopping hype, to some extent, forced consumers to purchase online. The shift of people's buying behavior struck the two’s sales, which mainly happen in their offline outlets. However, with the announcement that OPPO is launching the online platform which integrated OPPO, realme and OnePlus, and life gradually going back to normal, the distribution capacity of the pair is not likely to be in huge trouble in the second half-year. The anti-China sentiment in the overseas market, especially India, the second-largest smartphone market, is more worrisome as the Chinese vendors are now contemplating a worst-case scenario whereby they could possibly lose the whole 100 million-strong Indian market. One of the foremost crises for OPPO during the first half of 2020 was the dismissal of OPPO's Vice President Brian (Yiren) Shen, a legendary figure in the smartphone marketing circle. Brian is the one who came up with a household slogan 'Charge for five minutes, talk for two hours' and pushed OPPO's marketing to a climax with lavish endorsement activities that covered almost all kinds of trendy variety shows. With Brian leaving the table, it remains suspicious whether OPPO will maintain its high exposure to the market through new approaches. Xiaomi – reserving or drained? In the Chinese market, Xiaomi's first half was rather conservative, with just the Mi 10 series and the upgraded version of last year's Redmi K30 Pro greeting the world. The price range is not as wide as its main counterparts and is perfectly included within their coverage. The marketing side did not tell a story of Xiaomi's diligent work in its smartphone sector, as the Mi 10 series does not have a celebrity endorsement while the previous two generations invited big 'cast members' (Kris Wu and Roy Wang) with high popularity in China. Quite the opposite to Huawei's strategy of focusing on the main business, Xiaomi resorted to the non-central product family by broadening the product and service boundaries. Though the interim report of Xiaomi is still in the air, it is apparent that Xiaomi's smartphone segment will stumble and the loss is likely to be compensated by the revenue from financial services and IoT products. Facing the pressure from Huawei, Xiaomi's Chinese smartphone business is desperate for denser product layout with quality. Xiaomi's management seems to have realized the pessimistic situation of its smartphone business and therefore embrace the former ZTE Mobile CEO as the smartphone division head. Apple – the best performer The performance of Apple's (AAPL:NASDAQ) iPhones in China is as gorgeous as the company's renowned designs, with 35% year-on-year growth, while Huawei is at 8% – the other top five vendors all have declined to present. The number of 35% showed the low-price strategy is really working well in China. For the first time, Apple officially participated in the middle year shopping festival in China with a 20% discount for the iPhone 11 series and a discount of CNY 200 for the iPhone SE, plus some additional installment payment discounts. If counting the channel discounts and shopping subsidies, the iPhone SE was priced under CNY 3,000 on Pinduoduo (PDD:NASDAQ). Notably, iPhones are the only high-end specs being not 5G-enabled and still witnessed such growth. If the upcoming iPhone 12 with 5G empowerment is still priced competitively, further growth could be expected – even when the market's patriotism is ready for Huawei. However, it is also dangerous for the iPhone to fall in the price competition trap in the Chinese market at the cost of losing the delicate design and fine quality. Balance matters.

Briefing
Briefing · 1
Briefing
Briefing · 1
Briefing
Updated 12 hours ago · 36kr

GOME Goes Online with Ex-Baidu Vice President as CEO

Briefing
Briefing · 1
Briefing
Briefing · 1
Briefing
Briefing · 1
Briefing
Briefing · 1
Briefing
Briefing · 1
Briefing
Briefing · 1
Briefing
Briefing · 1
Briefing
Briefing · 1
Read more