Can high-end be changed against the sky?
Manual labor/beast girl
Produced / Unicorn Excavator
Shen Wei, the founder of vivo, may never forget that cold spring night 7 years ago.
The Beijing Water Cube that night was built on the stage above the swimming pool. When Shen Wei walked up, he accidentally fell into the water. At that time, he was launching a new flagship model Xplay 5 platform for vivo.
Under the watchful eyes of everyone, Shen Wei’s gray suit jacket was mostly wet. This “wet body” video was quickly spread from the scene to the outside, and became popular on social media. For the extremely low-key Shen Wei, this may be a unique experience.
Although the on-site host He Jiong tactfully joked: “If you encounter water, you will die”, which temporarily resolved the embarrassment of falling into the water. But in the dark, the gears of vivo’s high-end destiny began to turn, and Xplay, which shouldered this important task, disappeared from vivo’s product series, and the splash left behind may not be as big as Shen Wei’s fall into the water.
Times have changed, and in the context of the decline in the mobile phone market, rushing to the high end has become a must-kill technique for major mobile phone manufacturers to reverse the decline.
Vivo has been working hard on high-end for so many years, but it is still the “king of the sinking market” when it returns?
Tossing back and forth in high-end
The Xplay series was once regarded as “the high-end of the high-end” by the outside world.
▲The scene of Shen Wei falling into the water.
As the founder, president and CEO of vivo, Shen Wei’s platform for Xplay 5 is the only personal focus event in the 28 years since he founded vivo.
Before and after that time, it was difficult for the outside world to see Shen Wei himself under the spotlight. Even at the launch event of vivo’s flagship new product, it was hard to find Shen Wei on the stage. Most of the time, Shen Wei was hidden from the stage, like an ordinary audience eating melons.
Over the years, Shen Wei has rarely actively appeared on social media. In the past two years, Shen Wei will give a speech at vivo’s annual meeting. For example, at the 2022 online annual meeting held by vivo in early January this year, Shen Wei said that 2022 is vivo’s “high-end breakthrough year”. The time goes back to January 2022, and at the 2021 annual meeting, Shen Wei said that 2021 is the first year of qualitative changes for vivo.
It is embarrassing that the Xplay series, which is almost the only official platform of Shen Wei, has disappeared from vivo’s product series a few years ago.
That was five years ago, when the new product NEX series replaced the high-end main machine status of the Xplay series. However, the NEX series did not escape the fate of the Xplay series. From June 2018 to March 2020, in less than two years, 4 NEX series were launched, and there were no new products after that.
In March 2019, iQOO, a sub-brand aimed at gaming and e-sports experience, was born. In addition to capturing young people, this brand originally had the mission of impacting high-end.
When the time came to March this year, iQOO was also rumored to be facing the fate of being integrated. Soon, in April this year, vivo finally released two folding screen phones, X Fold2 and X Flip.
Interestingly, in response to the news that vivo canceled the NEX business department, Jia Jingdong, vice president of vivo brand, responded on Weibo: “The original NEX series’ mission of exploring new experiences and new forms and innovating will not disappear. Product X series to carry.”
Shen Wei keeps playing and withdrawing cards in the high-end market, and now the only one he can play is the X series. Fortunately, it has been 11 years since this series was born. At present, it has not fallen into the “curse of being disappeared”.
Shen Wei predicted at the beginning of this year that the situation will be severe in the next three to five years. Its branding strategy still focuses on high-end. Shen Wei said that through high-end branding, it can get rid of the trap of low profit; use the underlying core technology to break the bottleneck of innovation; use innovation to create value.
Shen Wei also put forward his grand goal in 2021: to create great products and build a world-class great brand!
Referring to the rise of Apple, to achieve this goal, vivo must take the “Huashan Road” of high-end. But at present, for vivo, which only has the X series card, it is still a bit far away for the dream to come true.
Embarrassing “King of the Sinking Market”
The tree wants to be quiet but the wind doesn’t stop.
July is the month of the year that connects the past and the future. After half a year of fierce battles in the mobile phone industry, it is time to show the results of the battle.
In the past second quarter, vivo not only lost the title of “sales champion” of the Chinese mobile phone brand again (it had already lost in the first quarter), but was also dubbed the “king of the sinking market” by a report.
It is two sets of data disclosed recently that brought vivo back from the dream to reality.
After two consecutive years in 2021 and 2022, when the Chinese mobile phone brand “sells the most”, vivo has fallen to the third place among Chinese brands in the second quarter, and the fifth place among global brands, accounting for only 8% of global shipments. %. The top four are occupied by Samsung, Apple, Xiaomi, and OPPO, and these four share more than 60% of the mobile phone cake. This is from the report data recently disclosed by the market research agency Counterpoint Research.
Did vivo shrink its shipments in order to create great products?
In the era of mobile phone micro-innovation, 5G mobile phones are the “sharp knife” for major mobile phone brands to attack high-end. Before that, Huawei’s high-end flagship Mate series lost a large number of high-end users because they missed 5G.
In the second quarter, vivo’s 5G mobile phones still maintained a leading market share in second-tier, third-tier, fourth-tier and lower cities, becoming the well-deserved “king of sinking markets”. This title comes from the 5G mobile phone report for the second quarter of 2023 recently released by “Daily Interactive Big Data”.
At the same time, the 5G mobile phone report in the second quarter stated that vivo has obvious advantages in the 18-34-year-old market, becoming a 5G Android mobile phone brand and a well-deserved sales champion among young people.
Although the “king of the sinking market” does not equate with the low-end. But this seems to be far from the high-end road that Shen Wei has been thinking about.
According to data from Counterpoint Research, in the second quarter, the global market for mobile phone shipments continued to decline without exception, with a year-on-year decline of 11%. This is the eight consecutive quarters of decline in the mobile phone market.
In the shrinking market, vivo lost 8% of the market share, mainly relying on the cost-effective Y series and so on. Currently, vivo has the X series, S series, T series, Y series, and the sub-brand iQOO that is rumored to be integrated.
Among them, the X series is a high-end model, and the two folding screen mobile phones just released in April also belong to this series. The S series, T series, and Y series are mainly mid-range to low-end models of 1,000 yuan.
Without comparison, there is no harm. 2021 is vivo’s highlight moment. At that time, vivo sold 71 million mobile phones in China, with a revenue of 143.3 billion yuan, but its profit share accounted for only 7.4%.
In contrast, Apple sold 50.3 million mobile phones, with a revenue of 329 billion yuan, a profit share of 67.8%, and a net profit rate of 20%. Apple deserves to be a “harvester” of mobile phone profits.
Shen Wei just announced at the beginning of this year: to get rid of the low-profit trap through high-end branding, the data in the first quarter is a bit of a shame. In May, Canalys released the ranking of global high-end mobile phone shipments (US$500 and above) in the first quarter of 2023. Among the top 15 models in the global high-end mobile phone shipments, none of vivo models made the list. Among them, Apple There are 7 models on the list, Samsung has 6 models, and the remaining two are Huawei Mate 50 and Mi 13.
It is a bit ironic that in the first quarter of this year, among the models on the list of high-end phone shipments, vivo has no particles. You know, 2022 is defined by Shen Wei as vivo’s “high-end breakthrough year”.
A few years ago, Shen Wei tore off the “Factory Sister Phone” label on vivo.
A few years have passed and faced with the ever-shrinking inventory and internal and external troubles, can he tear off the label of “King of the sinking market” this time and put it on “Great product, great brand”?
How to get out of the “octagonal cage”?
Both Shen Wei and Chen Mingyong worked under Duan Yongping, the founder of BBK, in their early years. Duan Yongping is very good at quality control and marketing, grasping business opportunities and channels, as well as his “dutyism” and “dare to be the queen of the world” and many other concepts. The two are very true to Duan Yongping.
Therefore, Shen Wei’s vivo and Chen Mingyong’s OPPO, although one is low-key and the other is high-profile, but the two have very similar genes.
Put Shen Wei and vivo together, and you will find that they are like two sides of a coin. The former is extremely low-key and rarely appears in front of the public, the latter is extremely good at marketing and using traffic stars, and the latter is created by the former, thus forming a contradiction between division and unity.
In the early years, vivo took the lead and took the route of “surrounding the city from the countryside”. No matter how remote the town is, there are vivo and OPPO stores.
This route not only grabs the minds of users in the sinking market, but also gives them the label of “factory sister machine”. In recent years, vivo has basically torn off this label through various methods such as market share.
However, vivo has been on the road to high-end for 11 years, but it is still dubbed the title of “King of the Sinking Market”. What did vivo do during this period?
In the past two years of becoming the “top sales” of Chinese mobile phone brands, vivo has not gone further in the “pursuit of perfection” expected by Shen Wei, but has fallen into the “machine sea tactics” and is unable to extricate itself.
After the original few high-end models fell into the “curse of disappearing”, in 2021, vivo and its sub-brand IQOO released a total of 49 mobile phone models, 36 of the main brand of vivo, and 13 of iQOO. In 2022, vivo and its sub-brand IQOO will also release more than 40 mobile phones. In comparison, competitors such as OPPO, Xiaomi, Honor, and Huawei had fewer models than vivo in the same period.
Excessive new product releases have resulted in cross-overlap between certain models, and the differentiation competition is not obvious, which in turn reduces the brand premium mentality of vivo among users.
Being good at marketing is a factor imprinted in vivo’s genes. Every time a new phone is released, vivo and OPPO have to sign traffic stars for marketing promotion. This is understandable, but its marketing expenses have been high for a long time, and the research and development that should have spent a lot of money seems to have insufficient stamina.
Technological innovation, soft and hard symbiosis, and ecological construction are the main factors for Apple to dominate the high-end mobile phone market for a long time. The only company in China that has broken through the siege and entered the poker table with Apple and Samsung is Huawei. Although Huawei has encountered difficulties and obstacles from the outside world, it still has the ability to command a brand premium.
Learning from Huawei has become a major path for domestic manufacturers such as vivo to hit the high end in recent years.
As vivo is in a state of catching up in R&D, the effect of its R&D investment is not obvious. In 2020, vivo executives revealed that its annual R&D investment was 10 billion yuan. In the same year, vivo also invested 5 billion yuan in Chang’an Town, Dongguan City to build a new vivo R&D headquarters, which is expected to be put into use in 2025. But so far, in addition to launching the self-developed imaging chip V1 (mobile phone auxiliary chip) in 2021, vivo has not made other significant achievements in self-developed chips.
Huawei has invested ten years in the research and development of SoC chips (that is, system-on-chips), costing hundreds of billions of yuan, and finally used its self-developed Kirin chips for its flagship models, which once slammed Apple and Samsung mobile phones. Xiaomi and OPPO have also increased their investment in self-developed chips in recent years. OPPO, which finally released the rhetoric of “sharpening a sword in ten years”, recently announced the termination of its philosophy library business and will not make chips. Vivo, which was already hesitant, may not dare to invest in SoC chips.
At the end of 2022, vivo released an upgraded operating system OriginOS 3. Many users found that many old models of vivo did not support this version update. Vivo officially stated that there will be a major upgrade in 2023.
In addition, vivo is also a step behind other mobile phone brands in terms of ecological chain layout. As early as 9 years ago, Apple, Huawei, Samsung, Xiaomi, OPPO, etc. have successively set foot in and laid out the ecological chain, while vivo only started to release the first smart watch in 2020, and only proposed the “1+3+N” strategy in 2021, that is, 1 is a mobile phone, and 3 is a tablet, earphone, watch.
According to statistics, after years of precipitation, vivo has 200,000 offline stores. While focusing on store sales for a long time, there is still room for improvement in its online sales.
Mobile phones have entered an era of stock shrinkage, and mobile phone brands are constantly staging life-and-death battles. Many problems such as internal R&D investment, software and hardware integration, marketing, and ecological construction are highlighted, just like a huge “octagonal cage”, trapping vivo in it.
Obviously, vivo’s original genes have made the current vivo, and the new vivo will break out of the cocoon, and it is difficult to break through the original genes alone. Shen Wei and vivo need to start from scratch and enter the new interface of “Second Entrepreneurship”. (over)