At 19:00 p.m. on August 14, 2023, Lei Jun's fourth annual speech on Growth was held at the National Convention Center.
In the more than three-hour speech that night, Lei Jun shared several important turning points in his growth around the theme of "growth", and also reviewed the growth path of 13-year-old Xiaomi. If you sort out the key points of a normal speech, the "high-end" appears many times. As Lei Jun said in his speech, as a fast-growing technology company, the biggest trouble and the biggest strategic problem of Xiaomi's growth is also the most important point to overcome in the future, which is "high-end". In the past three years, in order to enter the high-end market, Xiaomi has invested tens of billions of funds but it has not been smooth sailing, for high-end exploration, Lei Jun described it as, "This is the most painful for me in the past ten years, and it is also the biggest gain." ”
However, even if it is full of difficulties and challenges, Xiaomi still insists on defining "high-end" as the group's strategy, Lei Jun said, "High-end is the only way for Xiaomi's development, and it is also a battle of life and death." ”
So, why does Xiaomi, which started with cost performance, insist so much that it must be "high-end"?
In the past two years, with the popularization of smartphones, the mobile phone market has entered the stock market, and due to the lack of new breakthrough technology applications, consumers' replacement cycles are also increasing. When consumers' replacement cycle continues to extend, it means that their requirements for the comprehensive experience of mobile phones are getting higher and higher, which has brought about the contrarian growth of the high-end mobile phone market.
Data shows that between 2017 and 2022, the compound annual growth rate of China's high-end market reached 98%, China's high-end mobile phone sales account for more than 26% of the overall global market. In the second quarter of 2023, the global smartphone market sales fell 8% year-on-year and 5% quarter-on-quarter, showing year-on-year declines for eight consecutive quarters, but the high-end market above $600 bucked the trend and contributed to the entire market at an all-time high. With the promotion of 5G technology and AI intelligence, more and more consumers are willing to pay a higher premium for mobile phones to get a better experience and quality.
From the perspective of the overall competitive landscape, high-end is the "Achilles heel" of China's mobile phone brands. Although local mobile phone brands have the largest market share, they are not able to generate more significant profits. Counterpoint's data shows that Apple has a market share of about 17%, taking 45% of the world's mobile phone revenue and 85% of the world's mobile phone profits. With a market share of about 20%, Samsung took about 17% of the global revenue (28% less than Apple), and then took about 12% of the global profit (73% less than Apple), while the domestic mobile phone took about 38% of the global revenue with about 60% of the market, and finally only took about 3% of the global profit.
If local mobile phone brands are always competing in the middle and low end, they can only increase their profits by increasing their share, and the intensification of competition will only dilute their profitsFrom the perspective of future development, if local mobile phone brands cannot gain a larger share in the high-end market, they can only play the role of followers, and if they want to maintain a leading position in the technology industry, they must overtake in corners.
Taking China's strong rise in electric vehicles as an example, in the era of fuel vehicles, Chinese auto brands can only win in the low-end market with more functions and thoughtful services, but because of the trend of electric vehicles, Chinese auto brands can not only lead the high-end market in the electric vehicle market, but also compete with traditional foreign auto giants, and also drive the "collective upward" of Chinese auto brands. This also shows that only high-end breakthroughs can lead the consumer trend and build competitive barriers, and the competition for "ultimate cost performance" will only become more and more fierce, and the "heart-price ratio" that creates the best value will have a future.
From the perspective of consumer demand, mobile phones have now changed from a simple communication tool to a device that combines entertainment, games, shopping, payment, communication and other functions, and mobile phones contain more diverse scene needs, whether it is a large screen of mobile phones, or the ecology of building a smart life centered on mobile phones, or the ultimate experience needs in terms of image and office, etc., all make "high-end" a must for mobile phone brands, and Xiaomi obviously can't miss this trend.
As Lei Jun said in his speech, three years ago, whether Xiaomi would be high-end caused the most heated internal discussion. Xiaomi Mi 10 is the beginning of high-end exploration,The first battle was successful,And to Mi 11 encountered a major setback,Mi 12 also did not meet expectations,The ideal is very plump,The reality is very skinny,After two blows,Frustration permeates within Xiaomi,"It's too difficult to do high-end,Can you not do it?And "Can it be made high-end with the Xiaomi brand?"."Become a high-end divergence for Xiaomi.
Our dream of entrepreneurship is to make Xiaomi a world-renowned technology brand. No matter how difficult it is, we must insist on using the Xiaomi brand to do high-end. Under the repeated persuasion of Lei Jun, Xiaomi reached a consensus internally, officially defining "high-end" as the group's strategy, and high-end is no longer a choice question for today's Xiaomi, but must be stumbled to the end.
The twists and turns and difficulties experienced by Xiaomi's "high-end" are also fully illustratedIn order to create a "heart-to-price ratio" product that consumers are willing to pay, it is necessary to give consumers more experience value and different quality perceptions.
Looking at the high-end breakthrough strategy of domestic mobile phone manufacturers today, in addition to promoting innovation in many fields such as imaging, battery life, screen, security and storage, the collective has adopted the dual flagship strategy of "straight flagship + folding flagship" to seize the high-end.
With the help of new products such as the P60 series and the folding screen Mate X3 released in March this year, Huawei has performed well in the high-end market, and IDC analysis points out that Huawei maintains the second place in the high-end market above $600 (second only to Apple);In March 2023, Honor officially released the latest generation of flagship mobile phones in China - Honor Magic5 series, breaking a number of innovation barriers and stirring up waves of innovation in the industry, while the Honor Magic V2 released in July is known to bring the folding screen into the "millimeter era";OPPO has created the OPPO Find X imaging flagship series and the OPPO Find N folding screen series, while vivo has launched the X90 series products and created the X Fold to develop the folding screen market.
Xiaomi has also adopted the same high-end strategy, after experiencing the setback of Xiaomi 11 and 12, Xiaomi 13 achieved a breakthrough, and the 2023 Q1 financial report shows that Xiaomi mobile phones have the first Android market share in the 4000-5000 yuan price segment in the Chinese mainland market, with a market share of 241%。Domestic smartphone ASP hit a record high in a single quarter, with a year-on-year increase of more than 18%, all thanks to the excellent market performance of the Xiaomi 13 series. Xiaomi 13 allows Xiaomi to find the real password of high-end, that is, the shift from focusing on paper "running score" data to attaching importance to user experience.
Lei Jun said frankly that a success is not universal, and the most important thing to do high-end mobile phones is to have systematic thinking, and it is through Xiaomi 13 that Xiaomi has re-established the three principles of making high-end mobile phones: high-end no shortcomings, deep integration of software and hardware, and parameter leadership to experience first,"Experience first" means that the product is not a pile of functions and the transcendence of parameters, but a more granular insight into users and the construction of an integrated high-quality experience, which is easy to say, but difficult to do, Xiaomi also used a lot of R&D investment and trial and error to find the mystery.
With the high-end principle,Xiaomi also continued to increase the size of the folding screen mobile phone at this press conference,The new Xiaomi MIX Fold 3 has achieved an all-round breakthrough in the previous folding screen mobile phone,Bringing users the ultimate experience of folding screen mobile phones,This deep integration of Xiaomi's interdisciplinary and multi-field ability accumulation in structure、Materials,Not only continues the thin and light gene of the previous work,It also realizes the combination of light and thin folding and Leica full focal length four cameras、Ultra-long battery life、No short board flagship experience,Light and thin all-round Hoping to define a new standard for folding screens, at the press conference, Lei Jun not only compared the folding screen of "friends", but also implied that the experience of this mobile phone can be close to Apple.
The folding screen can be said to be an outlet found from Samsung to local mobile phone brands in the past two years, the reason is that Apple has not followed up, and Apple's product iteration has not brought subversive changes in recent years, which has also allowed the folding screen to find a time window, so that more high-end consumers can shine. For consumers, folding screens with larger screens have great advantages for high-definition, gaming, multitasking, etc., and folding screen phones have also created a new design style.
Apple's delay in investing in the folding screen also shows that the existing technology of the folding screen is far from reaching the "perfect experience point" that Apple can expect, Counterpoint's latest** show that by 2027, global folding screen smartphone shipments are expected to exceed 100 million units, and Apple may launch the folding screen iPhone for the first time in 2025. If this ** is accurate, then how to seize the two-year time window to lead the folding screen category, or who can become the king of the folding category trend, may be an important support point for the decisive battle in the high-end market.
Therefore, from the trend point of view, the opportunity of the high-end mobile phone market, on the one hand, is to achieve the ultimate in image experience, such as Xiaomi's Leica dual image quality and cross-screen true tone;On the one hand, it is to meet the ultimate experience of the large screen anytime and anywhere, that is, the continuous evolution of the folding screen;Perhaps the most important thing in the future is the ecological integration of "AIGC + mobile phone". Xiaomi has obviously seen this trend, and Lei Jun talked about (software and hardware) to fully embrace large models, so that everyone can better use large models on mobile phones, which will be a tough battle that must be fought to take the lead in the high-end market.
From cost-effective to heart-to-price ratio, from mass market to high-end market, Lei Jun's "growth" also represents the hurdles that an innovative company needs to overcome and surpass at different stages. At a press conference in 2018, Lei Jun once said that the overall profit of Xiaomi's hardware does not exceed 5%, and if it exceeds it, it will be returned to users. Relying on the ultimate cost performance, Xiaomi is unbeatable in the mobile phone market, becoming a dark horse and catch-up in China's mobile phone market, and also relying on the cost-effective strategy, Xiaomi layout ecological chain, now, it has hundreds of ecological chain enterprises, involved in air purifiers, air conditioners, sweeping robots, drones and other fields, Xiaomi left a mental impression on consumers, is the ultimate cost-effective technology experience.
However, for leading the trend in the high-end market in the future, when solving the problems of products and underlying technology and user experience, Xiaomi still needs to overcome the brand "mental gap" of high-end people.
For Xiaomi, which is "born for fever", the following of rice noodles and continuous consumption upgrades are obviously an important driving force for high-end products. From the perspective of brand awareness, the products of the Xiaomi ecosystem have established a certain awareness among the middle and high-end consumer groups, and the Xiaomi brand has the foundation of "high-end people". It is worth paying attention to these users who have used Xiaomi ecosystem products, and there are many users who are not Xiaomi high-end mobile phones, how to make these high-end people have a sense of identity for Xiaomi mobile phones and win the hearts of more high-end people, which is still the challenge that Xiaomi needs to face and the work that needs to be invested in brand building.
Therefore, Xiaomi's high-end battle is also a battle of consumers' minds, and how to evolve from "science and technology inclusive" to "technology leader" image will be the key to Xiaomi's ability to compete with Apple in the high-end market and surpass brands such as Huawei.
Whether it is Xiaomi or Lei Jun, they have firmly chosen to move forward in high-end exploration, this is the trend, but also a broad future, looking forward to Xiaomi's continuous growth and breakthroughs in this market. As Lei Jun said at the end of his speech, "People are great because of their dreams, and they grow up because they insist on their dreams." Only with firm dreams and down-to-earth growth, can we unfold the most beautiful imagination for this world and paint the most magnificent picture of this era. Grow, grow without stopping!This is the best answer we give to the times. ”