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Ren Zhengfei stressed the importance of low-end Huawei terminal to "winter"?

via:博客园     time:2018/1/5 10:32:59     readed:341


When Huawei Mate 10 and P10 series launched fierce battle with Apple and Samsung high-end machines, Ren Zhengfei, founder and president of Huawei, made a speech, emphasizing the importance of "low-end products". January 2, 2018, the industry came a copy of Ren Zhengfei in the Huawei consumer business reporting and keynote speech at the forum. Ren Zhengfei said that the value of low-end products can not be ignored. He said that low-end products are used to defend the profitability of high-end products, it is very important. Earlier in October 2017, Ren Zhengfei also stressed the importance of low-end machine in an internal speech.

In 2017, Huawei achieved a major breakthrough in its consumer terminal business. Yu Chengdong, CEO of Huawei Consumer Business, predicted in his speech for the year of 2018 that Huawei's mobile phone sales in 2017 will have amounted to about 236 billion RMB, representing an increase of about 30% as compared with the same period of 2016. Huawei and Glory brands shipped 153 million smartphones in a year, keeping their market share in China with a 10% global share and TOP3. Among them, Mate 9 and P10 series, which represent Huawei's high-end brands, have exceeded 10 million units globally respectively.

In the market share and high-end products are handed over bright transcripts, Ren Zhengfei why the old re-emphasized that the low-end? Beijing News reporter found that Huawei's revenue growth rate of consumer business has been declining in the past two years, falling from 70% in 2015 to 30% in 2017, behind the brilliant results of Huawei's terminals.

Huawei's consumer business growth slowed for two consecutive years

"The future consumer business is under greater pressure than the carrier business and we have to come up with the best in the growth of the time to deal with the future. "On January 2, Huawei's outgoing speech, Ren Zhengfei, conformed to his usual mode of thinking. At the moment when the company achieved impressive results, he spilled a bucket of cold water and pointed out the potential danger.

Renowned as the "Winter in Huawei", Ren Zhengfei talked about the crisis and the failure when his sales in Fiscal Year 2000 were 22 billion yuan and the company ranked the top 100 in the country with a profit of 2.9 billion yuan.

In the first three quarters of 2017, Huawei terminals (including Glory) shipped 120 million sets worldwide, surpassing Apple in market share and ranked the second in the world. From January to November 2017, Glory's total mobile phone sales reached 49.68 million units, with sales of 71.6 billion yuan. Sales and sales topped the share of handsets in China's Internet.

Ren Zhengfei admitted this achievement, he said that in the entire platform of Huawei's support, the advantages of Huawei's terminal business has gradually become prominent, and will be by leaps and bounds in the next year or two. Apple has no network system, Ericsson has no terminal, but Huawei across these two systems, it is an important reason Huawei terminal improvements.

However, to become the boss of the domestic mobile phone market, did not let Huawei to relax. Apple relies on new products released in the fourth quarter of 2017, easily surpassed Huawei, to become the world's second.

At the same time in the Chinese market, 2017 millet full blood revived online and offline continue to conquer new territories. OPPO and vivo old opponents rely on marketing and channel advantages have been eyeing the boss.

Beijing News reporter access to Huawei consumer business data in recent years found that its revenue growth rate is declining.

In 2014, the revenue from Huawei's consumer business reached 12.2 billion U.S. dollars. For the first time, overtaking exceeded the milestone of 10 billion U.S. dollars, up 30% over the same period of last year. In 2015, Huawei's consumer business grew rapidly, generating annual revenues of more than 20 billion U.S. dollars, up nearly 70% year-on-year. In 2016, Huawei's consumer business achieved sales revenue of 178 billion yuan, an increase of 42% over the same period of last year. According to the data released by Yu Chengdong in 2017, the revenue from Huawei's consumer business was about RMB236 billion, representing an increase of about 30% over the same period of previous year.

Huawei terminal is still triumphing, but the momentum is slowing down.

Ren Zhengfei had asked Yu Chengdong to profit as the center

All along, domestic mobile phone manufacturers are facing the embarrassment of incremental increase profits.

In early 2017, when I was interviewed by the media, Yu Chengdong mentioned: "If we have to criticize what we criticize in general, then we will criticize our profitability or lack of profits. Profit growth will be too slow. Too much profit will be earned by the channel operators." , We have become a job for channel business. This is the total more unsatisfactory. "Online news that Huawei made adjustments in the product line to reduce the low-end models, the main high profit margins of high-end models.

Xu Zhijun, Vice Chairman of Huawei, told the media that in 2016 Huawei has increased its investment in the future, researched and innovated, and built a brand chain system for mobile phones in the future. (On the specific data) terminal gross margin of not more than 30%, to B's business gross margin of more than 40%, due to the increase in the proportion of the terminal structure will naturally have a structural impact. Xu Zhijun said the terminal is not the pursuit of the future of this business as the center of the business, but profit as the center, that is, to ensure a reasonable profit is the most important.

Under the guidance of the concept of profit as the center, relying on continuous innovation "small steps", Huawei steady progress in the high-end market. Rely on the Leica dual camera technology, and unicorn chip depth optimization system to solve Andrew Caton problem, artificial intelligence technology to optimize the overall experience, Huawei from P9, Mate 9, Glory 8 and other forces, gain a place in the high-end market, and P10 and Mate 10 series introduced after the consolidation of the high-end status.

In the meantime, the profitability of Huawei's terminals has been raised. According to Counterpoint's report data, in the third quarter of 2017, Apple's mobile phone sales revenue accounted for nearly 60% of global smartphone revenue in the same period, a decrease of 26% over the same period of last year. Among the smartphone vendors in China, Huawei had the highest profit growth rate and accounted for the world's smartphones 4.9% of the market profit, ranking third in the world.

According to Counterpoint report, Huawei's profit growth of 67%, a record high, mainly due to the sharp expansion of the price of each product, in particular, is worth noting that, with the Mate and P series boosted, the average selling price of Huawei smart phones increased 6% %.

Standard Samsung Apple Huawei "use low-end security high-end" rdquo;

Huawei proud of the high-end market, in the glory of the low-end market is facing a real threat. One of the biggest threats is millet in 2017, "Full Blood Revived." Millet MIX series of full screen mobile phone reflects a more aggressive innovation offensive, while its low-end machine market also continue to erode and enhance market share, in one fell swoop to reverse the decline of the previous two years. In addition, OPPO, vivo, etc. in the low-end market is also a strong opponent.

Yu Chengdong, CEO of Huawei's consumer business, has been positioning Samsung and Apple as the target of Huawei's handsets. The industry has the view that Yu Chengdong sit tight in this position for many years, behind which is Renzhengfei his goal of appreciation and support. But Ren Zhengfei now believes that Huawei needs to do more to win over Samsung and Apple.

For example, in the huge population of India, Huawei has seen a rare weakness. Xiaomi, OPPO, vivo, and even Lenovo have achieved good results in the Indian market. Huawei is unknown in India. This is more than half of the revenue from Huawei in the international market, can be described as failure. The reason for the industry analysis is that the Indian market is still dominated by low-end machines, and Huawei is not paying enough attention in this market.

In his speech on January 2, Ren Zhengfei said that the value of low-end products can not be ignored. Low-end products should be of good quality, low cost and maintenance-free during the life cycle. Moreover, low-end products are used to defend the profitability of high-end products, it is important. Earlier in October 2017, Ren Zhengfei said in his internal speech: "Ninety percent of the world's population is poor, and low-end mobile phone operators have a poor market. Do not underestimate them." Huawei also need to do low-end machines, and our old products may be precipitated as low-end machines. & rdquo;

"Low-end machine's success, (should) be positioned as a business success", Ren Zhengfei said, "We have to correctly treat the low-end machine business value, do not think that engaged in low-end machine business is low-end talent, high-end machine Is a high-end talent ".

Not long ago, Huawei issued a glory branded mobile phone single commission bonus program, the number of sales and bonuses directly linked to glory brand mobile phone bonus = single commission * sales * acceleration incentive coefficient * contribution profit amount of completion. 13 employees can get 23 bonus, according to relevant media reports Huawei 23 employees quarterly bonuses up to nearly 1 million yuan. The industry generally believes that Huawei will launch a new round of defense under the glory brand.

Glorious CEO Zhao Ming in an interview with the Beijing News and other media revealed that from mid-2017 thinking about the overall layout of overseas, "from China's Internet mobile phone competition, the Chinese market competition, the future growth of space China will meet To many bottlenecks, it is impossible to maintain the rapid growth every year, glory has been the focus of overseas countries and regions, our glory of products and business models layout, these efforts gave us great confidence. & rdquo;

Huawei to build consumer business "strategic depth" rdquo;

Huawei 2016 annual report shows that Huawei achieved global sales revenue of 521.6 billion yuan, an increase of 32%, net profit of 37.1 billion yuan, an increase of 0.4%. Among them, the revenue from operators' operations was 290.6 billion yuan, accounting for 55.7% of the total revenue, an increase of 24% over the same period of last year; the revenue from business business was 40.7 billion yuan, up 47% over the same period of last year; the revenue from smartphones was 179.8 billion yuan, up 44% over the same period of last year.

It can be seen that the growth rate of Huawei's major revenue source operators is less than that of the other two major businesses. This has a great relationship with the gradual transition of the communications market in recent years. Huawei's carrier services rely mainly on procurement of equipment by operators around the world. The global operators are impacted by the Internet and have lowered the equipment procurement budget.

According to Liu Qicheng, a communications expert, one decade for the communications industry and 4G have all been completed, so the days of equipment manufacturers are not easy. Like all communications equipment manufacturers, Huawei is also waiting for the arrival of 5G.

Another business of Huawei is business. On Huawei HC2017, Huawei released the Cloud Service Transformation Strategy for Enterprise Services, continued to devote itself to the development of cloud professional service products and the construction of cloud platforms and cloud ecology, and provided end-to-end cloud transformation service solutions for industry customers. However, although the business growth of the fastest, but the base is small, difficult to take over the next few years.

Therefore, the most promising smartphone-themed consumer business will be the pillar of Huawei's growth in performance in the next 3-5 years. In this regard, Ren Zhengfei said, "We want to gradually build a strategic depth, in recent years although in some areas to build our core competencies, such as product competitiveness, channels, retail, service, but with Samsung and Apple Than, there is a certain gap. We are not doing enough in terms of the strategic depth of certainty matters, and even less so in the strategic depth of uncertainty. We must unswervingly continue our efforts to build an ecological chain from China and gradually build a global community. "

Industry Watch

Gradually mobile phone industry "Winter" rdquo;

As of the end of 2017, the smartphone industry chain reported that orders for mobile phone brands, including Huawei, OPPO and vivo, have shrunk by more than 10%. China Institute of Information and Communication released the latest data show that in November 2017 the domestic handset market shipments 43.2511 million units, down 20.7%. At the same time, cell phone replacement cycle has been extended to 20 months or more, all indications that the mobile phone industry is about to enter a new winter.

Chinese users switch cycle extended to 22 months

Research firm Counterpoint's report shows that the global average cell phone replacement cycle is 21 months, China's average cell phone replacement cycle of 22 months, below average. In recent years, smartphones have encountered bottlenecks in the industry, and the lack of innovative products can hardly impress consumers. January 4, a Meizu store in Xicheng District, Beijing, employees told the Beijing News reporter, by the overall offline store traffic weakness, compared with two years ago, now the phone is not good to sell.

A mobile phone offline channel agents said that the ability of users to screen mobile phones to enhance, not only look good, but also look at the configuration. Because mobile phone configuration is generally higher now, lengthen the replacement cycle, people's choices more sensible.

In the second half of last year, a full-screen product was concentrated. Almost all domestic manufacturers released their own full-screen products. Sharp Mobile Global CEO Luo Zhongsheng that the full screen is the biggest outlet before the advent of 5G. Full screen quickly became popular an important reason is that manufacturers think it is a differentiated selling point, will bring new growth points and replacement tide, consumer electronics industry observer Liang Zhenpeng said, "the major handset manufacturers more sought after concept, for like Trendy young consumers, full screen mobile phone is a new thing, more attractive. & rdquo;

However, the full-screen mobile phone did not play an expected role. According to the "Analysis Report of Domestic Mobile Phone Market Operation in November 2017" released by China Academy of Information Communications, the domestic mobile phone market shipped 43.2511 million units in November 2017, down YoY 20.7%; 77 new models listed, a year-on-year decrease of 22.2%.

A cell phone offline channel agents told reporters that offline sales are not optimistic, this year's situation will be more severe. "Chinese users buy new do not buy the old, we all say good, but the product came out for more than six months, it will not buy. Market from T1 (first-tier cities), T2, and then T3, T4, until T5, T6 those places, that is, the more backward cities, counties, rural areas, townships, the sensitivity of mobile phones out of which year will decline. & rdquo;

Mobile phone manufacturers generally adopt price cuts to stimulate the user to buy. Two months after the release of the iPhone 8, the reporter found Jingdong and Suning platforms that the price of the iPhone 8 mobile phone was over one thousand yuan lower than the Hong Kong version. Purchasing data released by market research firm Consumer Intelligence Research Partners show that iPhone 8 sales are not as good as iPhone 6s two years ago.

In last year's double-twelve shopping festival, Meizu flagship Pro 7 series straight down 600 yuan, priced at 1999 yuan. This phone is released at a price of 2880 yuan since mid-November, when the price has been 300 yuan more, was nicknamed the 2017 smart phone "diving King". Reporters saw on Taobao, some stores selling Pro 7 contract machine, the lowest price 1499 yuan.

Manufacturers are targeting overseas

In view of the domestic mobile phone market close to the ceiling, domestic mobile phone manufacturers have laid out overseas markets. Especially in the world's second largest mobile phone market in India has achieved good results in the end of March 2017 fiscal year 2016-2017, China's three major smartphone brands Xiaomi, vivo, OPPO sales in India increased substantially to 2252.7 Rs 100 million, the market share to further expand.

More and more companies use overseas business as a measure of how far a company can go. Zhao Ming, CEO of Glory, said: "In addition to maintaining domestic growth, glory aims to become an overseas market by 2018, , And the Internet model using light assets to create the top five brands in the global handset market within five years. By 2020, sales in overseas markets will reach 50%. & rdquo;

According to relevant media reports, Lei Jun said millet's international business grew by 300% in 2017 and is expected to reach 100% in 2018. "In recent years, our internationalization has highlighted the key points. For instance, India must take the first place. We have done it in three years and also entered markets such as Europe. We have already reached the fourth place in Eastern Europe. & rdquo;

According to the latest data report released by research firm Counterpoint, OPPO has become the number one handset brand in the Asian mobile phone market with a market share of up to 15%. OPPO ranked fourth in the global smartphone industry.

Domestic mobile phone market is dominated by several major manufacturers, ranked companies in the post to go in the "blue ocean" gold rush overseas markets.

Meizu recently adjusted organizational structure, the addition of overseas business unit, responsible for the company's overseas business products. The former overseas marketing department moved to overseas business department. Guo Wanyi served as Meizu vice president and served as president of overseas business department, responsible for overseas business department and team management, report to the chairman / CEO Huang Zhang. Public information shows that the overseas business unit originally belonged to the Meizu division, now largely independent of Meizu demonstrated the determination of expedition.

Offline channel war upgrade

From 2016 onwards, domestic mobile phone manufacturers fought offline, staged a shop war. According to Canalys survey data, in Q1 2017, 78% of smartphone devices were sold offline through the channel as expected share. After years of rapid growth, due to the saturation of mobile phone market, overcapacity and hardware homogenization, it can be said that the promotion of offline channels has been limited.

Late last year, online news that Meizu closed more than 500 stores, Meizu had a total of about 2,500 stores. During last year's double 12, Meizu flagship phone Pro7 and Pro7 plus high hopes of shipping 600 yuan.

Insiders said that even by relying on the rise of offline channels OPPO, vivo there is the phenomenon of closing down the line shop. Insiders said, OPPO, vivo offline shop requires huge labor costs, which are required to rely on profits to support. The supply chain of all manufacturers are similar, only artificial profit margin. However, to the user's rational level, if the configuration, the brand is similar, the user will not spend more on expensive cell phones.

In general, the main function of offline stores is sales, OPPO is trying to change the situation.

Late last year, OPPO opened its flagship store in Shanghai's pretty central business district. The flagship store's positioning is similar to that of Apple's Apple Store, which sells all its products at the same time. OPPO vice president Wu Qiang said to the media, OPPO has a lot of emphasis on sales outlets, and now open the flagship store in Shanghai, mainly to consider brand upgrades, enhance OPPO brand image.

According to related media reports, OPPO now has more than 10,000 specialty stores, with sales accounting for 10% of the company as a whole. There are 250,000 authorized stores counting other small faces. Wu Qiang said that the rapid expansion of the previous period, making brand management done is not detailed, not enough depth, the following must be changed.

A new round of reshuffling is coming

Wu Qiang said that in 2018, the first is to maintain the size of 2017 or a slight increase, but the growth rate certainly will not have too high expectations, "because the overall market environment is like that to grow even worse. & rdquo;

In 2017, millet out of the trough, back to the top five global markets. However, the task of striking the high-end market is far from over. Some analysts pointed out that the low-end low-end models account for a large part of the overall sales volume of millet. According to IHS Markit, the red rice series with the main low-end market accounts for the overall shipment of millet The proportion reached 70%.

For head players, 2018 there are still many challenges exist. For other handset makers, they have to continue struggling online.

Yu Chengdong, CEO of Huawei's consumer business, told the media that the handset industry is in a reshuffle period. Most companies will die in the future. "What I said was what I said five or six years ago. A few years later, only a few intelligent terminal brands are still developing in the world. Apple, Samsung, Huawei, others almost disappeared, or they were on the road to rapid disappearance." on. Of course, there are several brands in the Chinese market. In the future, the Chinese market will also shuffle most of them. & rdquo;

According to a report released by Kantar Worldpanel, a third-party research institute, top 5 handset makers such as Huawei, Xiaomi, Apple, vivo and OPPO accounted for 91% of the market as of the end of October last year, up from 79% in the previous year.

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