5G mobile phones, waiting for spring

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Currently, from mobile phone manufacturers to operators, everyone is doing their best to promote the popularization of 5G mobile phones.

In March and April of this year, Xiaomi, OPPO, and vivo respectively released new 5G phones, all of which adopted a high-price strategy. When Xiaomi 10 was released, it started at 3,999 yuan, and the high-end version of Xiaomi 10 Pro was priced at 5,999 yuan. The OPPO Find X2 series 5G new phone has a starting price of 5,499 yuan and a maximum price of 12,999 yuan. The low-end version of vivo's high-end new phone NEX 3S is priced at 4,998 yuan, and the high-end version is priced at 5,298 yuan, etc.

The thinking logic behind the pricing strategies of these mobile phone manufacturers is not complicated - consumers' demand for purchasing mobile phones was suppressed during the epidemic, and with the arrival of the post-epidemic era, consumer demand will rebound in retaliation.

In addition, manufacturers feel that there are also difficulties in high pricing. A number of manufacturers have invested in 5G mobile phones, resulting in tight production capacity of high-end components in the upstream of the industry chain - memory demand has increased significantly, NOR Flash production capacity is tight, DRAM prices have rebounded, and high-end chip prices have risen. 5G is regarded by most manufacturers as a turning point battle and a critical opportunity to impact the high-end market. The price increase is both helpless and caters to the high-end strategy. This price is just to make friends.

However, the expected retaliatory rebound did not come. Consumers did not want to make friends, but hoped to buy high-quality products at reasonable prices. Therefore, the first wave of manufacturers who adopted the high-end pricing strategy after the new year did not have many followers. Later manufacturers found that the trend was not right and began to adjust their pricing strategies.

The battle for 5G users: a secret war without gunpowder smoke

Nowadays, the price of 5G mobile phones continues to drop to the 2,000 yuan price segment. For example, Honor, Huawei and Xiaomi have successively released Honor X10, Enjoy Z and Redmi 10X. In the 1,000-2,000 yuan range, Xiaomi's Redmi series has many popular 5G models - Redmi K30i, Redmi K30 5G, Redmi K30 Speed ​​Edition, Redmi 10X 5G, etc. The vivo Z6, which started at 2,298 yuan, has dropped to 1,998 yuan on JD.com, entering the 2,000 yuan range; the iQOO3's initial price was 3,598 yuan, and currently there is an e-commerce platform that has dropped as much as 800 yuan, down to 2,798 yuan; the Redmi K30 5G version, which started at 1,999 yuan, has dropped to 1,498 yuan.

5G prices continue to fall, and the market is showing signs of recovery. According to data recently released by the China Academy of Information and Communications Technology, the total shipments of domestic mobile phones in April reached 41.728 million units, a year-on-year increase of 14.2% and a month-on-month increase of nearly doubled to 91.8%, ending a 10-month decline.

Among them, the domestic 5G mobile phone market shipments reached 16.382 million units in April, a month-on-month increase of 163.6%.

Among them, 22 new 5G mobile phone models were launched in April, accounting for 45.8% of the number of new mobile phone models launched in the same period. From January to April, the cumulative shipments of 5G mobile phones in the domestic market reached 30.441 million units, and the cumulative number of new models launched reached 65, accounting for 33.6% and 47.4% respectively.

However, consumers’ purchase of 5G mobile phones may not be due to the fact that 5G mobile phones have fully met their expectations, but more due to the promotion of manufacturers and operators. Comparing the performance of manufacturers last year and this year, it can be clearly seen that mobile phone manufacturers have shifted from last year’s strategy of giving equal importance to 4G and 5G to this year’s full investment in 5G.

Since the second half of last year, we have seen manufacturers lowering prices to clear 4G mobile phone stocks and planning 5G mobile phones. This year, they are fully committed to 5G mobile phones. In addition to Apple, Xiaomi, Huami, OV and Samsung are all intensively releasing new 5G phones. Users' consumption choices on mobile phones are guided to a certain extent by manufacturers' publicity and pricing strategies for 5G mobile phones.

This is reflected in many aspects:

One is that manufacturers are constantly expanding the price range of 5G mobile phones, with corresponding 5G mobile phones ranging from 1,500 yuan to 7,000 yuan, which is almost equivalent to blocking the price range for consumers to choose 4G mobile phones.

The second is to reduce the price difference between the 5G and 4G versions of the same model. Last year, the 5G version of the same model of mobile phone was more than a thousand yuan higher than the 4G version, which made consumers hesitant and indecisive when choosing between 4G and 5G. This year, manufacturers have further reduced the price difference between the 4G and 5G versions. Many manufacturers have reduced the price difference to several hundred yuan. For example, the price difference between the 5G and 4G versions of the Redmi K30 is only 400 yuan. This is actually an anchor effect, which encourages consumers to buy 5G mobile phones through a reference price comparison.

Third, consumers tend to buy phones in one go. The current life cycle of mobile phone products is generally 1 to 3 years. In the next three years, the gradual coverage of 5G signals is already a major trend. If the mobile phone you buy does not have 5G functions, it means that you will not be able to use 5G functions and related applications in the next 1-3 years. From the perspective of the life cycle, the 5G experience covers the middle and late stages of the use of new phones. When it comes to choosing non-Apple phones, most consumers no longer consider 4G, but directly switch to 5G.

The most obvious manifestation of operators' full efforts to promote users to change their phones is the continuous reduction of 5G packages. It should be pointed out that the total price of 5G packages is still higher than that of 4G, but the unit price is cheaper than 4G. Among packages of the same price, the amount of data included in 5G packages is usually much greater than that of 4G packages.

For example, the starting price of 5G packages of the three major domestic operators was around 129 yuan, but at the end of May, the three major operators had adjusted the starting price of 5G packages to 89 yuan/month. Recently, a netizen in Henan reported that he had received a text message from China Unicom about the adjustment of 5G package fees, and the starting package fee was adjusted to 69 yuan/month, and the first month only cost 39.9 yuan.

For operators, grabbing 5G users is a secret war without gunpowder. We know that 5G mobile phones should be equal to 5G mobile phone hardware + 5G packages + 5G network, none of which can be missing. However, with the current progress of 5G network construction not keeping up, the anxiety of major operators in pushing 4G users to switch to 5G packages is exposed, and many 4G users are "forced to switch to 5G" under no circumstances.

Recently, there were media reports that some users' broadband services and 5G mobile services were bundled together for sale, and only by activating the 5G card could their broadband services be restored, and many users passively became 5G users of the operator. Data shows that the scale of 5G package users in my country has exceeded 50 million, but the shipment volume of 5G mobile phones is only half of this number. According to data from the Ministry of Industry and Information Technology, China's 5G users increased by more than 7 million in April, with an average of 230,000 new 5G users per day.

The 5G promotion of operators is obviously a change of strategy compared with 4G. We know that when the network packages from 3G to 4G were transitioned, the entire conversion period took 6 to 7 years, which was a long period. During the entire operator promotion period, the network and terminal construction matured.

Nowadays, operators cannot seem to wait that long. They all have their own calculations. The transition from 4G to 5G networks is an opportunity to break the market structure and redistribute the cake. If they wait until the 5G network construction is fully mature before starting to promote it to users, users will most likely flow to other manufacturers.

The operators' plan is to bind users through packages in the early stage of 5G. Once the terminal and network conditions are mature, these users will naturally be converted into real 5G users.

But in fact, we will find that whether it is the price-performance war promoted by manufacturers for 5G mobile phones, or the competition for 5G package circle users promoted by operators, the focus does not seem to be on how to find and activate users' potential demand and scenario implementation for 5G fun gameplay. The starting point is more from the perspective of how to maximize market share and scale. This has also caused users to be in a passive state, passively led by mobile phone manufacturers, and passively choosing operators' 5G packages.

However, the 5G users won over through price wars and bundled package strategies do not actually have enough loyalty.

5G mobile phones, waiting for spring

At present, driven by mobile phone manufacturers and operators, the penetration rate of 5G mobile phones is increasing rapidly. However, judging from the attitude of the overall consumer market, it seems that the enthusiasm for 5G mobile phones is not as high as expected. The view that "there is WIFI everywhere indoors, and 4G is enough" has always occupied a certain market.

Some industry insiders said that with package fees breaking through the base price of 100 yuan and mobile phone equipment dropping to the "1,000 yuan range", 5G has become more people-friendly, but it seems that it is not convincing enough for the majority of users to throw away their 4G mobile phones.

So what is the problem?

From the perspective of mobile phone hardware and network, the hardware level can be said to be basically fully prepared at present. The overall performance of Huawei, Qualcomm and MediaTek's 5G chips can meet the application needs of 5G in the early stage. In addition, the current network construction is advancing rapidly. Data shows that basic telecommunications companies have built more than 250,000 5G base stations. The market expects that by the end of this year, my country will build more than 600,000 5G base stations, covering cities at the prefecture level and above across the country.

However, judging from the reactions of current users, 5G phones have not yet seen a truly disruptive experience improvement, and there has been no hit product that exceeds market expectations and can trigger a large enough word-of-mouth effect. The key problem behind this is that there are still no killer 5G applications. "5G phones are full of 4G applications, and 5G phones can only play things that were played in the 4G era."

Under 4G conditions, whether it is playing WeChat and Weibo, browsing Douyin and Kuaishou, playing King of Glory, searching on Baidu, or shopping on Taobao, Tmall, and Pinduoduo, there are basically no pain points or shortcomings. However, current users have bought 5G phones, and their time is still occupied by these mainstream applications. For many current 5G users, the current 5G experience is not much different from 4G.

The problem is that although 5G provides a surplus of high network speed, low latency, and multi-connection capabilities, current 5G mobile phones lack corresponding applications and scenarios that can unleash the advantages of these 5G capabilities.

This is also why many users have purchased 5G mobile phones, but the market response to 5G mobile phones is still lukewarm.

In the final analysis, the market needs a new killer application that can represent the 5G era to distinguish the 4G mobile phone era. As early as May 10, China Mobile launched the "5G Message" APP, but it was hastily launched and then hastily offline. 5G Message is obviously not that killer application. The so-called killer application should be that once users use it, they can feel the experience improvement it brings, and they can never go back to the old era, such as Weibo in the 2G era, WeChat in the 3G era, and Douyin in the 4G era.

In the 5G era, killer applications may emerge in three directions:

One is the live broadcast field. Because 5G communication can meet the high bandwidth requirements of 4K high-definition live broadcast for uplink transmission, mobile live broadcast will be free from the limitations of equipment and scenarios, making it possible to broadcast anytime and anywhere at low cost. The experience will far exceed the current live broadcast gameplay.

The second is cloud gaming. Today’s mobile games are still dominated by MOBA mobile games and casual chess and card games. Hardcore heavy mobile games are missing. The key is that mobile phone hardware devices cannot support them. In the past, many heavy hardcore games required hardware configurations of more than 10,000 yuan to run.

However, with the advantages of cloud computing, 5G large bandwidth and low latency, the network speed can reach gigabit, and the cloud and the end can work together perfectly. The cloud can complete the image processing work and stably support the smooth operation of heavy-loaded games in the cloud, reducing the dependence on hardware device performance. Cloud gaming may be one of the future directions of 5G killer applications.

Thirdly, 5G makes cross-terminal high-definition video calls, multi-tasking and multi-screen collaboration smoother, which essentially corresponds to the daily usage scenarios of online education and caters to the needs of the 5G ultra-high-definition and ultra-low-latency education market.

Therefore, the direction of 5G application scenarios and implementation is likely to be in the fields of cloud gaming, cloud education, 8K high-definition video live broadcast, mobile office, etc. However, from the current point of view, there are no corresponding signs and trends.

Xiaomi's Lu Weibing once said that the killer application of the 5G era will definitely appear within three years, but the prerequisite is the popularization of 5G terminals.

This is not wrong. After all, under the premise of the popularization of 5G networks and hardware terminals, application developers and mobile phone manufacturers have greater motivation to invest heavily in applications. But instead of waiting for the launch of 5G killer applications, it is better to lay out a position in advance. At present, many mobile phone manufacturers are focusing on the layout of 5G application scenarios such as high-definition VR video, cloud games, and mobile office. In the final analysis, the problems faced by 5G are similar to those of VR, lacking the growth promotion of application and content ecology.

VR was very popular in 2015-2016, but one of the reasons why VR products have not been able to gain popularity is that the application content ecosystem has not been established. Relevant data shows that in terms of content ecology, the number of global VR consumer applications was more than 60 at the end of 2015, and more than 900 applications at the end of 2016, and none of them were popular. However, the number of mobile phone applications, Android applications (3.5 million) and iOS applications (2.2 million) has exceeded 5.5 million. Buying a VR device but not having fun and high-quality VR applications to play is the same as buying a 5G phone but not having 5G application experience. The two face the same problem.

The favorable conditions of 5G have created certain possibilities for the birth of high-quality products. Whether there is explosive hardware combined with application scenarios to ignite the detonation point, and then drive the prosperity of the content and application ecology, is the key to the development of 5G mobile phones.

We know that 5G is closely related to the new infrastructure. Its potential is not limited to the mobile phone field. It also has great potential in the fields of drones, telemedicine, autonomous driving, AR/VR, the Internet of Things, etc. For mobile phone manufacturers, they need to think about how to use mobile phones as a 5G terminal to connect various industries that may explode due to 5G. This may also be the direction for mobile phone manufacturers to break through and explore killer applications.

Therefore, from the current perspective, the current thousand-yuan phone strategy and package bundling price reduction strategy can drive users' passive entry and forcibly drive a wave of user growth, but 5G mobile phones are still waiting for spring.