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Jul 29, 2020

The fall of Xiaomi: It is difficult for manufacturers to return to the top in the 5G era

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On July 27, the well-known market research agency Counterpoint released the “Domestic Smartphone Market Report for the Second Quarter of 2020”, showing that China’s smartphone sales in the second quarter of 2020 decreased by 17% year-on-year, but sales increased by 9% month-on-month. The smartphone market appeared Signs of recovery.

Relying on the vigorous promotion of 5G by smartphone manufacturers and operators, the sales of 5G mobile phones in this quarter accounted for 1/3 of the overall sales, that is, one out of every three mobile phones sold is a 5G mobile phone.

Among the segmented vendors, Huawei’s overall market share reached 46%, Vivo’s 16%, OPPO’s 15%, Apple’s 9%, and Xiaomi’s 9%. But in terms of growth data, in the second quarter, Apple’s mobile phone sales rose by 32% compared to the previous quarter, Huawei’s sales rose by 14%, Vivo fell by 29%, and OPPO fell by 31%; Xiaomi, ranked fifth, fell the most, with a 35% drop.

As the brand with the largest decline in sales growth this time, Xiaomi’s founder and chairman Lei Jun is again facing market pressure. After entering the market with the “cost-effective” label and “hunger marketing” strategy, Xiaomi has been bullish for many years, until 2015 began to decline and was overtaken by the Huawei and OV camps.

In September 2017, Xiaomi held a meeting. Lei Jun said that it will take two and a half years for Xiaomi mobile phones to return to the number one position in the domestic market. The time limit has passed. In the past three years, hot spots in the mobile phone industry have continued to emerge, and Xiaomi mobile phones have also adjusted their overall strategy to impact the high-end market.

On May 20 this year, Xiaomi released its financial report for the first quarter of 2020. In the quarter, Xiaomi’s total revenue reached RMB 49.7 billion, an increase of 13.6% year-on-year and a decrease of 12% from the previous quarter; adjusted net profit was 2.3 billion yuan, an increase of 10.6% from the previous year. A decline of 1.9%.

Under the changing circumstances, mobile phone manufacturers including Huawei and OnePlus have gradually shifted their focus to the country, but the country is already in a new round of fierce industry competition in the 5G era.

On July 23, Lei Jun issued a document stating that Xiaomi plans to invest 50 billion yuan in five years to continue to increase technological innovation and make artificial intelligence Internet of Things (IoT) a service that runs through the entire product, platform, and scene of Xiaomi’s intelligent ecosystem. ability.

Earlier, Lei Jun emphasized the importance of the 5G era. He said that Xiaomi’s external opportunities come from the 5G era and the AIoT era.

But the difficulty is that it is not only Xiaomi that is targeting opportunities in the 5G era. Many brands such as Huawei Honor, OV, OnePlus, etc. continue to bet on technology investment, channel construction, brand promotion, etc. Therefore, this tests the overall awareness of manufacturers, the ability to allocate resources, the level of R&D investment, and the level of investment in first- and second-tier cities. The strategic layout of the market.

Under pressure, Xiaomi also no longer blindly pursues the transformation of high-end models, and launches the Xiaomi Mi 10 Youth Edition in due course, reducing the product price to between 2,000 yuan and 3,000 yuan. Together with the main cost-effective Redmi mobile phone products, it relieves the overall sales and profit pressure of Xiaomi mobile phones and consolidates the existing consumer groups.

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