The two knots between Xiaomi and Lei Jun in the historical turning point

On the evening of November 24, Xiaomi released its financial report for the third quarter of 2020. From the data point of view, this is the most dazzling financial report in Xiaomi’s history. Xiaomi’s 15 performance indicators, including revenue and net profit, hit record highs in a single quarter, far exceeding market expectations.

After the financial report was released, the market was full of praises that “Xiaomi is stable”. However, that night, “Xiaomi Wangmei said that those who are diaosi will win the world” appeared on Weibo’s hot search, adding a touch of embarrassment to this dazzling financial report.

On November 21, Wang Mei, the vice president of Qinghe University of Xiaomi Group, said in a public event, “Those who get diaosi will win the world, and those who get young people will get the world. Of course, young people will not be diaosi in the future, so we need to make high-end machines.”

Such remarks shattered the loyalty of a batch of rice noodles, and some words “I can laugh at myself, but you can’t define it”. Wang Mei’s remarks even hit Lei Jun in the face. On November 18, Lei Jun made a sincere complaint at the annual meeting of the Yabuli Forum, trying to clarify the misunderstanding that “Xiaomi products are all low-end products”. High-end mobile phones have become Lei Jun’s knot.

Lei Jun’s clarification and Wang Mei’s “randomness” made people see that Xiaomi is “hard to break the heart and thief” on the road of high-end mobile phones, and through the third quarterly report, it is not easy for Xiaomi to “break the thief in the mountain”.

The mobile phone business is picking up the banner again

For Xiaomi, good things have already happened.

Before the release of the third quarterly report, the market generally expected that Xiaomi’s revenue for the quarter was about 70 billion yuan. Xiaomi’s answer was 72.163 billion yuan, a record high and a year-on-year increase of 34.5%, reversing the sluggish situation in the first half of the year.

Xiaomi’s cumulative revenue in the first three quarters of this year reached 175.403 billion yuan, only about 30 billion yuan less than last year’s total revenue. If Xiaomi maintains the year-on-year growth rate in the third quarter in the fourth quarter, Xiaomi’s total revenue in 2020 will exceed 250 billion yuan.

The two knots between Xiaomi and Lei Jun in the historical turning point

Xiaomi’s adjusted net profit of 4.128 billion yuan in a single quarter also hit a record high, but the year-on-year increase of 18.9% is not eye-catching. In fact, Xiaomi’s profit margin has not been high, which may be related to Lei Jun’s insistence that the “hardware profit margin should not exceed 5%”.

In terms of Xiaomi’s three major businesses, smartphone revenue was 47.604 billion yuan, a year-on-year increase of 47.5%, which was Xiaomi’s biggest contributor to the quarter. In contrast, IoT and Internet services performed fairly well.

The two knots between Xiaomi and Lei Jun in the historical turning point

The high revenue of the mobile phone business is naturally due to more sales.

In the third quarter of 2020, Xiaomi’s smartphone shipments reached 46.6 million units, a record high, a year-on-year increase of 45.3%, and an increase of 64.7% from the second quarter.

Xiaomi also has a record high data from overseas market revenue. In the quarter, Xiaomi’s overseas market revenue was 39.769 billion yuan, a year-on-year increase of 52.1%; the revenue in mainland China was 32.394 billion yuan, a year-on-year increase of 17.7%.

This is the first time in Xiaomi’s history that overseas market revenue has surpassed domestic revenue. In the first quarter of 2020, the income gap between the two parts was the smallest and basically tied.

Xiaomi’s overseas market revenue mainly comes from India and Europe. Needless to say, in India, Xiaomi has won the first market share in the region for 13 consecutive quarters. The outbreak of Xiaomi’s overseas market this time is mainly due to the siege of the European market. Among the domestic mobile phone brands, Huawei has always been the leader in the European market. After being sanctioned, Huawei lost ground, and Xiaomi took the lead.

According to the financial report data, Xiaomi’s smartphone shipments in Western Europe increased by 107.3% year-on-year, with a market share of 13.3%, ranking among the top three. Among them, the Spanish market ranked first in smartphone shipments for the third consecutive quarter. The share is as high as 33.9%. Xiaomi has achieved rapid growth of more than 100% year-on-year in smartphone shipments in France, Italy, and Germany. In addition, in the Central and Eastern European market, Xiaomi’s mobile phone shipment market share reached 26.9%, ranking second.

The two knots between Xiaomi and Lei Jun in the historical turning point

Xiaomi’s dazzling financial report data did not capture the favor of the market.

On November 25, Xiaomi Group’s stock price fell by more than 5.3%, and closed down 3.68%, with a market value of 631.1 billion Hong Kong dollars. Since 2020, Xiaomi’s stock price has risen fiercely. From the beginning of the year to the day before the release of the financial report, Xiaomi’s stock price has risen by more than 150%.

Lei Jun’s heart knot is difficult to solve

However, good things have not happened to Xiaomi’s high-end machines, which is also the knot of Lei Jun.

According to Canalys statistics, in the third quarter of 2020, Xiaomi’s smartphone shipments ranked third in the world. This achievement made Lei Jun dream back to 2014. However, the strength of Xiaomi’s mobile phone shipments cannot cover up the weakness of Xiaomi’s high-end mobile phones, although Xiaomi has repeatedly stated that it has established a high-end position.

On November 18, Lei Jun clarified three misunderstandings about Xiaomi from the outside world at the annual meeting of the Yabuli Forum. The first misunderstanding is that “Xiaomi products are all low-end products”. Lei Jun said: “After we have worked for 10 years, some friends still think that Xiaomi is doing low-end products, which makes me very depressed.”

Therefore, Lei Jun decided to make a high-end mobile phone with a clear-cut stand. Since the release of the Xiaomi Mi 10 series in February this year, Xiaomi has released two generations of high-end mobile phones, the most expensive of which is 6,999 yuan. Lei Jun said that this is one of the best-selling mobile phones this year.

Are Xiaomi’s high-end phones really selling well? According to data released by Xiaomi, as of the first 10 months of 2020, the global sales of high-end mobile phones exceeded 8 million (the high-end mobile phones referred to by Xiaomi refer to smartphones priced at more than 3,000 yuan in mainland China and more than 300 euros overseas).

Although I don’t know how much Xiaomi’s high-end mobile phone shipments are, according to the financial report, the global cumulative shipment of Xiaomi’s mobile phones in the first nine months has reached 104.1 million units. It is conceivable that Xiaomi’s high-end mobile phones account for a small proportion.

What kind of performance should a truly “stable” high-end mobile phone have? At present, the sales volume of Huawei’s latest P40 and Mate40 series is not known, but the P30 series released last year exceeded 20 million units in 8 months of listing. In 2019, Huawei’s Mate and P series mobile phone shipments exceeded 44 million units. In 2019, Huawei (including Honor) shipped more than 240 million smartphones.

There is also a data that is difficult to say that Xiaomi’s high-end mobile phones are stable. According to the third quarterly report, the average selling price of Xiaomi mobile phones was 1,022.3 yuan, a year-on-year increase of 15.8 yuan. It is worth noting that in overseas markets with excellent sales performance, the average selling price of Xiaomi mobile phones dropped slightly by 1.5%. Xiaomi said that this is affected by the rhythm of product releases, and the best-selling Xiaomi entry-level model.

Compared with the second quarter, the average selling price of Xiaomi mobile phones dropped by 94 yuan. Since 2018, the average mobile phone price of Xiaomi in the past 11 quarters is 993 yuan, and Xiaomi has not achieved a qualitative breakthrough in this regard this year. Millet is still millet.

The most deadly thing is, what is a high-end mobile phone? Lei Jun didn’t seem to think very clearly.

Lei Jun said at the annual meeting of the Yabuli Forum: “What is a high-end mobile phone that everyone understands? Is it expensive? I don’t know.” However, Lei Jun believes that only when Xiaomi is established in expensive products can everyone truly recognize Xiaomi’s products. s hard work.

In other words, Lei Jun may feel that high-end mobile phones do not necessarily mean high prices, but the cheap ones must not be high-end mobile phones.

A recent piece of news is quite intriguing. According to 36Kr report, Yang Zhe, vice president of Xiaomi Group and chief marketing officer in China, has resigned from the signing management position and transferred to a marketing consultant in China. According to “LatePost”, Yang Zhe left because “the work was not approved by Lei Jun”.

At the beginning of June 2020, Yang Zhe announced to join Xiaomi, mainly responsible for the formulation of Xiaomi’s revenue strategy, plan implementation, brand building and promotion in China. Yang Zhe used to work for Huawei and created the “Gentleman Rulan” for the P7, the “Homecoming” for the P8, and the “Jazz Life” for the Mate 7, which has contributed a lot to the transformation of Huawei’s brand image.

Yang Zhe’s departure and Xiaomi’s Wang Mei’s claim that “the one who has the diaosi will win the world”, perhaps should make Lei Jun understand that in addition to the high-end mobile phone, it may have to add a little “temperament”.

In the next quarter, is there still a chance for Xiaomi’s high-end mobile phones?

At present, Apple has released the iPhone 12 series, and the market has responded well. At the same time, Huawei’s Mate 40 series has also been launched. Although Huawei’s supply is in short supply, it undoubtedly casts a shadow on Xiaomi’s high-end mobile phone strategy, not to mention OV is also deploying in the high-end mobile phone market.

But in the long run, as Huawei’s high-end mobile phone chips are exhausted, the market will definitely free up a lot of space, and Xiaomi can still advance in the high-end mobile phone market.

The domestic market returns to the first?

In addition to the high-end machine’s knot to be solved, Lei Jun’s other knot may be easier to solve.

On February 7, 2018, Lei Jun set a goal at Xiaomi’s annual meeting, “within 10 quarters, the domestic market will return to No. 1”.

Lei Jun said that the Chinese market is the foundation of Xiaomi, the world’s largest consumer electronics market, and the height of global industry competition. Only by winning in China can we continue to support the steady development of international business, and only by winning in China can we win the world.

Now that 10 quarters have passed, Xiaomi has not achieved the goal of returning to the first place. Instead, it has become more and more stable in the position of the “domestic fourth”.

The two knots between Xiaomi and Lei Jun in the historical turning point

According to data released by IDC, in the third quarter of 2020, Huawei ranked first with a market share of 41.4%, and Xiaomi accounted for only 13%. But it is worth noting that among the top five mobile phone manufacturers in China, only Xiaomi’s shipments have achieved year-on-year growth.

In the future, Huawei will face chip supply problems, coupled with the divestiture of the Honor mobile phone business, Huawei’s market share will still decline.

According to the latest news from the semiconductor Research Office of TrendForce, even if it leaves Huawei, Honor will still face the dilemma of tight foundry supply in 2021. %, Xiaomi and OPPO are 14%, and VIVO is 11%.

It can be said that Xiaomi mobile phones are at a turning point in history.

In the media conference call after the third-quarter results conference, regarding the impact of Huawei’s sale of Honor on Xiaomi’s future strategy, Xiaomi Group President Wang Xiang said: “We also read news about Huawei and Honor from the media, no matter what, Our strategy is to have no impact.”

Wang Xiang can say this, but he can’t be indifferent. After all, Huawei has begun to adjust its strategy.

On November 25, according to Jiemian News, an ODM manufacturer who has cooperated with Huawei for a long time said that after Qualcomm confirmed the resumption of the supply of 4G chips, Huawei restarted a small number of 4G mobile phone orders, mainly low-end models.

The above-mentioned person also revealed that manufacturers such as OV and Xiaomi have long been eyeing the vacated production capacity of Huawei, especially Xiaomi’s orders have increased a lot.

As long as Xiaomi doesn’t lose the chain, it may unravel another knot of Lei Jun’s heart and truly return to the first place in the domestic market.

Although Lei Jun has long stopped mentioning the first thing, Xiaomi will not let go of such a historical opportunity now. In other words, “returning to the first place in the domestic market” and “really standing at the high end”, Lei Jun prefers the latter to happen.

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