【Abstract】The performance of OPPO mobile phones in Q4 2023 has taken a big dive.
Since the beginning of last year, the market share that originally belonged to OPPO is being squeezed in large numbers. If the first half of the year is due to the entire market, the second half of the year can obviously feel the sharp impact of Huawei, Honor and other friends on OPPO.
The high-end mobile phone market ($600) is constrained by the rise, and the mid-to-high-end market is facing pressure from friends such as Honor, and OPPO's performance throughout 2023 is not dominant.
In fact, around 2020, when Huawei dominated the first market share in China, OPPO was determined to learn from Huawei to do digitalization and improve the efficiency of its huge dealer stores, but the implementation process was very difficult.
The reason for this is that OPPO's channel reform can't bypass a hurdle - dealers with strong voice power.
Strong binding with channels is OPPO's way of survival, and dealers are the core components of OPPO. This "princely system" channel system means that dealers have a very high right to speak, both as referees and as players.
Based on this, a reform that has been invested for a long time but does not generate profits often does not live long within OPPO. The abrupt dissolution of Zeku is one example, and Xiaomi's path to core building is more modest.
For OPPO, cutting its self-developed chip business means that its high-end product market has one less growth point. If the mid-to-high-end products perform poorly, it will lead to shrinking dealer profits, and the main company needs to subsidize it out of a strong dependence relationship, and accordingly reduce the investment in the research and development of new products.
Dealers who can't see the improvement of products will further blame the poor reform, and whether it is the reform of the product or the system, it is precisely the support of dealers, and a negative feedback will be generated.
Behind the strategic swing, the most important thing for OPPO is that the window period was missed.
Whether it is the core manufacturing strategy or internal reform, the market will not wait for OPPO in the next four years, not to mention that other manufacturers have already been eyeing it.
In the face of new competition in the mobile phone market, there is not much time left for OPPO to adjust.
The following is the main text:
A new round of war in the mobile phone market has started in the fourth quarter of last year.
This time, the pressure on OPPO is heavier than before.
In the global market, according to IDC's quarterly tracking report on the global mobile phone market, the top five manufacturers in Q4 shipments in 2023 are: Apple (80.5 million units), Samsung (53 million units), Xiaomi (40.7 million units), Transsion (28.2 million units) and vivo (24.1 million units), and OPPO has entered the others range.
Not long ago, the authoritative agency released the 2023 Q4 Chinese mobile phone market ranking, and the number of OPPO activations decreased by 15 year-on-year1%, down to fifth place; Xiaomi, Huawei, and Honor have all increased significantly, and Huawei has reached 79 with the "blitzkrieg" of the Mate 60 seriesA staggering 3% increase.
A clear trend is that the market share that originally belonged to OPPO is being squeezed in large numbers.
Judging from IDC's quarterly tracking report on China's smartphone market, OPPO will be 19The market share of 6% ranked first in the domestic mobile phone market, and fell to 17 in the second quarter7%, which slipped to 16 in the third quarter2%, the ranking dropped to second, and glory rose to first.
If the first half of the year is due to the entire market, the second half of the year can obviously feel the violent impact of friends on OPPO.
Behind the "ups and downs" of market share, OPPO is actually not a bad company. Whether it is the determination to make cores that originated in 2019, or the channel reform set off by Huawei's impact around 2020, or the long-term layout of the imaging strategy, OPPO is very willing to take over the competition during Huawei's gap period.
But why, after many years of hard work, as soon as Huawei returns, Q4's performance has taken a sharp plunge, and what kind of situation will OPPO face towards 2024?
Next, maybe it's the finals.
01 Huawei first, then glory, OPPO double-line battle
On August 29, 2023, without any notice, Huawei officially announced that the Mate60 Pro will be on sale at 12:08 am, and the industry is in an uproar.
Some say it was to give U.S. Secretary of Commerce Raimon, who arrived in Beijing on August 27, a little bit of a shock to China.
It is unknown whether Raimondo was shocked or not, and OPPO, which was scheduled to release the Find N3 Flip at 14:30 pm on the same day, must have been shocked.
Zeku's core manufacturing has been lagging behind for a while, and the Find N series, which is positioned in the folding screen market, has placed many expectations on OPPO's impact on the high-end.
As early as the first half of 2023, according to Counterpoint Research data, OPPO's Find N2 Flip ranked first in the market share of small folding screen mobile phones with a share of 31%.
However, judging from the results, OPPO's performance in the high-end mobile phone market throughout 2023 is not superior.
According to the latest data from Counterpoint Research, in the high-end mobile phone market ($600), Apple's performance has declined, but it still occupies the main share.
Huawei's share of mobile phones in the high-end market has increased from 3% last year to 5% this year, which may be related to the return of the Mate 60 series, which may continue to crowd the market in the future as production capacity recovers further. At the same time, Xiaomi grew by 1%, while OPPO remained unchanged.
Source: Counterpoint Research
In fact, relevant people in the industry believe that the current domestic manufacturers will not make too much profit on the folding machine. Samsung's profitability will be slightly stronger due to its high global shipments, and motorcycles' lower costs. "Other manufacturers still have to seize the mid-to-high-end mobile phone market."
The mid-to-high-end market is also overcrowded, and Honor has long been eyeing OPPO.
Not long ago, according to Leifeng.com, Honor China gave a death order to the provincial directors at the listing mobilization meeting in the face of provincial supervisors and provincial packages, and was determined to use Honor 100 to compete with OPPO Reno11.
*On the top, both belong to the 2500-4000 gear, positioning in the high-end. In terms of subdivision differences, 12GB+256GB products of the same specification, Honor 100 is also 300 yuan lower than OPPO Reno11.
In terms of channel mechanism, the two are also inseparable.
Honor's channel mechanism is inherited from Huawei, and the bottom only goes to municipal dealers, while OPPO has more stores in towns and villages. Therefore, once the channel is short-handed, the same product, OPPO needs to consider the budget of the township store, and the burden of glory is correspondingly lighter, just be more cost-effective in product design, for example, Honor has more space to make a fuss on the **.
As a result, OPPO's entire Q4 continues to face new challenges. High-end market strategy, high-end market channel and cost performance, now, OPPO is being eaten away by rivals once huge advantages.
02 The channel gradually fails
In fact, around 2020, when Huawei dominated the first market share in China, OPPO had already made up its mind to learn from Huawei to do digitalization and improve the efficiency of its huge dealer stores.
At that time, the dealer mechanism of OPPO and various friends was slightly different.
There are two main dealer systems.
Xiaomi dealer system:According to public information, since June 2020, Xiaomi has adjusted its offline channels, and Xiaomi Home has covered the sinking market as an official direct-operated retail experience store. Xiaomi Home is opened by franchisees and operated by Xiaomi, and the right to the goods still belongs to Xiaomi stores.
In September 2020, Xiaomi launched its retail management system "Mi Retail Pass", which digitally manages the flow of goods in offline stores, strengthening control and improving turnover efficiency.
According to the late latepost report, Xiaomi's official data shows that the average turnover period of Xiaomi Home is only 3 weeks, and it can be turned over 17 times a year", that is, franchisees can invest 1 million and can turn 17 times a year. In contrast, the channel turnaround time of other mobile phone manufacturers is usually 1-2 months.
Huawei Dealer System:The dealer bears the cost of the value of the goods and purchases according to the "appetite". The amount of money earned depends on how to operate offline, and the largest loss is the cost of goods + manpower + store expenses.
The advantage of this system is that the profit ceiling is higher when the market is good, and the disadvantage is that you need to bear the risk of pressure caused by the shrinking market.
OPPO belongs to the latter, and during the market growth period, its dealer profitability once surpassed Xiaomi. However, entering the epidemic period, the replacement cycle has been lengthened, and all manufacturers are aware of the need to improve efficiency to ensure profits.
Xiaomi's dealers are not under much pressure, the digital turnover efficiency is relatively high, and the right to goods belongs to Xiaomi stores, only if they can sell goods, they will make money, even if the loss is mainly store and labor costs.
Huawei implements a branch system, and quickly uses provincial branches to cover distributors across the country. In addition, Huawei has arranged a large number of professional audit support in the provincial company to ensure rapid overall planning across the country.
For OPPO, the two-** joint venture is a good way.
At that time, OPPO had a large number of prefecture-level and township-level **, the so-called two-** joint venture refers to the dealer withdrawing the shares from the subordinate distribution company, investing the share capital into the provincial company, and facing the competition in the way of the provincial company.
But this is difficult for OPPO.
The essence of the reform is to achieve digitalization to improve efficiency, and the most ideal result of the reform is that all systems are digitized and platformized, and dealers' profits will be correspondingly lower.
As a result, the dealers were quite dissatisfied, which undoubtedly moved their cake.
For dealers with strong ability and good local economic environment, the profits before the joint venture are determined by themselves, and the national profits are unified after the merger, and the profits must be managed. For provinces in southwest China such as Sichuan, where transportation and logistics costs are high and online e-commerce trends are obvious, they often think that offline reforms are not necessary.
Even if the reform is forced, the big dealers will always seize the profits. According to people familiar with the matter, after some of the big people involved in the reform set up a provincial company with share capital, they found that their profits fell sharply, and even suffered losses, so they naturally had strong opposition and exerted greater resistance.
In the final analysis, the uneven regional economic development has led to the different positions of the dealers, and these first-class businessmen happen to have a very high right to speak, and it is naturally difficult to complete the national overall planning.
03 Reform is burdensome
The reason for this is that OPPO's channel reform can't bypass a hurdle - dealers with strong voice power.
Strong binding with channels is OPPO's way of survival, and dealers are the core components of OPPO. OPPO contacts the sinking market through dealers, and dealers decide their own local delivery methods.
Therefore, OPPO's channel system can be described as a "princely system", and each provincial dealer has a lot of authority and resources in the local area, which is completely different from Huawei, Xiaomi, etc.
According to people familiar with the matter, OPPO has piloted the leaf system at the provincial level (OPPO retail system, similar to Xiaomi Retail Pass), and in the end, because of the different autonomy of each province, it is difficult for everyone to be satisfied with the popularization of the system (search and add Xinliu WeChat aristodemus0403, in-depth exchange of more details).
This mechanism of dealers having a strong voice mainly stems from the early backgammon genes, and employees, dealers and shareholders are actually a trinity in OPPO.
Many of OPPO's early employees were born in BBK, and at that time, BBK created a "special team" in order to improve the best business performance of the company. This group of "Einsatzgruppen" members has undergone systematic marketing training, which can improve the marketing performance of leading merchants in a short period of time.
Once this method worked, it was rolled out to dealers across the country. Basically all dealers will go through this round of baptism, if not, then the dealer from BBK to get a higher purchase price than other dealers.
Employees who do well in training may go down to the local area to become dealers, and dealers with good marketing performance will become shareholders step by step, relying on performance to get profit sharing.
In this way, dealers actually occupy a lot of shares in OPPO and have a very high right to speak. The trade union holds the equity of the employees on behalf of the company, and the enterprise check data shows that as of today, the current Guangdong Oujia Holding *** Trade Union Committee holds 6586%, and according to the research of Xinliu Think Tank, most of them are held by several major dealers, and some dealers hold nearly 20% of the shares.
This also means that when it comes to making corporate strategy and product decisions, the big dealers who hold more shares often have a very high say. These dealers are both referees and players, and it is inevitable that they will consider their own interests.
For example, when the entire mobile phone industry chain begins to be transparent, there will be a contradiction within OPPO.
For OPPO, at the moment when the most transparent is tending, if you don't raise the brand and develop to high-end models, you will suffer from the enemy. Dealers take profitability as the ultimate goal, and are more inclined to sell the most profitable models at the moment, and the power to hit the high-end is insufficient.
In this way, the interests of doing a good job and selling a good product are contradictory, once invested in research and development, it is bound to affect part of the company's short-term interests, and dealers often do not have so much patience.
OPPO is the "young Zhuang faction" in the backgammon system, and it has more motivation and genes for reform, and it is also very willing to make systematic improvements, however, it seems that it is not going well from the results (search and add Xinliu WeChat aristodemus0403, in-depth exchange for more details).
According to several dealers, at last year's dealer conference, some dealers were not satisfied with the market performance of OPPO products in 2023. According to Leifeng.com on January 4, 2024, Duan Yaohui, vice president of OPPO Group and president of the mobile phone product line, was promoted to senior vice president of the company, in charge of China. Liu Bo, president of China and vice president of the group, reported to him, which indicates that OPPO will weaken the "sales" function in China, and Duan Yaohui's product experience will make China more strategically focused on product control.
The pressure for reform can be imagined.
04 Epilogue
In this kind of situation where dealers have a high voice in the voice, a reform that has been invested for a long time but does not generate profits often does not live long within OPPO.
Take zeku, for example. After only four years of establishment, Zeku Core was suddenly defined as "the sooner you correct your mistakes, the better, no matter how big the cost is, the least price", and a group of executives even learned the news before the dissolution meeting, and the dream of core manufacturing came to an abrupt end.
In this regard, an industry insider said, "Between the ups and downs of Zeku, OPPO's strategic decision-making seems very radical, giving people the feeling that they are doing business with businessman logic, making money if they can, and cutting this business if they can't make money." ”
In contrast, Xiaomi's core manufacturing road is more gentle. Since 2017, Xiaomi launched its first self-developed SoC chip, the surging S1, its chip performance has not been satisfactory, only installed in the Xiaomi 5C has not been reused in other models, and the news of the surging S2 is far away.
However, in this process, it can be seen that Xiaomi has adopted a benign drive strategy of long cycle and slow investment, and has continuously produced surging image chips C1, fast charging chips Surging P1, and battery management chips Surging G1.
Lu Bing, president of Xiaomi Group, once said that Xiaomi's determination to invest in self-developed chips will not waver, and it is necessary to fully realize the long-term and complex nature of chip investment, respect the development law of the chip industry, and prepare for a protracted war.
On October 26, 2023, Xiaomi officially announced that it would invest 3 billion yuan to establish Beijing Xuanjie Technology***, whose business scope covers integrated circuit chip design, semiconductor sales, electronic components retail and other fields.
In terms of mobile phone core manufacturing business alone, Xiaomi has chosen a less dangerous path, but it has been continuing to walk.
For OPPO, cutting the self-developed chip business has undoubtedly made its high-end product market one less growth point.
Under the system of OPPO, which has a strong voice in dealers, if the mid-to-high-end products perform poorly, it will lead to shrinking dealer profits, and the main company needs to subsidize them out of a strong dependence relationship, and accordingly reduce the investment in the research and development of new products.
Dealers who can't see the improvement of products will further blame the poor reform, and whether it is the reform of the product or the system, it is precisely the support of dealers, and a negative feedback will be generated.
Of course, this is not just a problem for OPPO, but also for BBK's brother companies. A practitioner gave an example to Xinliu Think Tank:
When we make a headset, we must first figure out how much money this headset can make and how much it will cost, and then ask if the big ** should be connected to the headphones. If you connect this headset in a unified way, you must first give the company a certain amount of funds to share the R&D costs. This directly leads to the high pricing of products, which is difficult to handle, and the more they go on, the more reluctant they are to do it."
The same situation also occurred on the TV product line,According to relevant sources,Although it was done well at the time,But it was not popular,Not enough sales,In the end, it had to be withdrawn。 Whenever some new products or reforms are promoted, the biggest obstacle is that there is no way to fully mobilize internal resources to twist into a rope.
As a result, in addition to the fist product of mobile phones, it is difficult to form a comprehensive ecology, and it is difficult to maintain consumer stickiness on a large scale and for a long time.
Whether it is a TV, headphones or other IoT products, the product capabilities of the BBK system are the best. However, when the main company wants to promote a product, and the product manager designs a product, he needs to think clearly in advance about how not to lose money, and even needs to contact several major ** to ask for his opinions. If there is no incentive to sell new products on the market side, it will be difficult to open up the ecosystem.
Behind the strategic swing, the most important thing for OPPO is that the window period has been missed.
Whether it is the core manufacturing strategy or internal reform, the market will not wait for OPPO in the next four years, not to mention that other manufacturers have already been eyeing it.
How the major manufacturers of mobile phones will fight in the new season, Xinliu Think Tank will continue to pay close attention.
*Yu Xinliu Research, author Kai Lin.
Kejihui Zhang Zipeng newsmedia007
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