The "midfield battle" of the mobile phone industry in 2020

As early as the end of last year, the industry generally analyzed that the global mobile phone market in 2020 will face huge uncertainties: on the one hand, the gradual saturation of demand and serious homogeneity still face almost all manufacturers; on the other hand, the emergence of new technological variables such as 5G and folding screens will bring a broader game space to the global mobile phone market.

No one expected that the global consumer market would be shrouded in greater uncertainty.

As the first half of 2020 is coming to a hurried end, the influx of various industry data reports has allowed the outside world to witness the difficulties in the mobile phone market.

According to data recently released by Gartner, global smartphone shipments in the first quarter of 2020 were 299 million units, a year-on-year decrease of 20.2%. Among the top five mobile phone brands in the world, Huawei had the largest decline in sales, with sales of 40.92 million units in the first quarter, a year-on-year decrease of 27.3%. Samsung, Apple and OPPO also saw declines, with iPhone sales falling to 41 million units, a year-on-year decrease of 8.2%, and Xiaomi sales increasing slightly, a year-on-year increase of 1.4%.

Even with the most optimistic estimates, the impact of the epidemic will continue until the end of the year.

IDC recently predicted that global smartphone shipments will drop by nearly 11.9% year-on-year to 1.2 billion units in 2020. In the first half of this year, smartphone shipments will drop by 18.2%. The upcoming deployment of 5G networks will help smartphone shipments rebound next year, and global smartphone shipments are expected to resume growth in the first quarter of 2021.

In fact, as IDC analysts said: This decline in shipments began with a supply chain crisis and evolved into a global demand problem. The worldwide economic stagnation and vision problems reduced consumer information and caused people to re-prioritize spending on basic goods, which directly affected smartphone sales in the short term.

Specifically speaking, the competition in the Chinese market is particularly fierce. Almost at the same time, the China Academy of Information and Communications Technology recently released the domestic mobile phone market data for May: the shipment of smartphones in May was 32.661 million units, a year-on-year decrease of 10.4% and a month-on-month decrease of 19.9%; compared with the 17.2% year-on-year increase in April, the shipment of smartphones in May resumed negative growth again. From January to May this year, the cumulative shipment of smartphones was 121 million units, a year-on-year decrease of 16.0%.

In fact, it is well known in the industry that the global mobile phone market has entered a period of decline since 2017, with shipments hovering around 1.4 billion units for three consecutive years. Everyone knows that the industry dividends such as the replacement frequency, the explosion of mobile Internet and the upgrading of low-end consumption that once drove the growth of the mobile phone market have declined successively, and both the cost-effectiveness and marketing gimmicks have gradually faded.

The market can only rely on new demands for replacement of mobile phones.

The most realistic driving force behind this is naturally the 5G mobile phone - or to be more precise, the price-friendly 5G mobile phone.

The reality is also a surprise. According to the data from the China Academy of Information and Communications Technology, from January to May this year, the cumulative shipments of 5G mobile phones in the domestic market reached 46.084 million units. In particular, in May, the domestic shipments of 5G mobile phones reached 15.643 million units. Although it fell by 5% month-on-month, the shipments of 5G mobile phones accounted for 47.90% of the shipments of smartphones, setting a new record. In addition, 16 new 5G mobile phone models were launched, accounting for 50% of the number of new mobile phone models launched in the same period.

More importantly, according to my rough statistics, the lowest price of 5G mobile phones on the market has generally dropped to 1,500-2,000 yuan.

This means that young people may not even know what 5G is used for yet, but they have basically gained "5G freedom."

Moreover, as MediaTek and Qualcomm are likely to launch more mid- and low-end 5G chips, the prices of 5G mobile phones may continue to fall in the second half of the year, and the true 5G "thousand-yuan phone" seems to be not far away.

The China Securities Research Institute once predicted that when the price of 5G mobile phones is greater than 4,000 yuan, the market share will only reach 15%; if it drops to the 2,000 yuan stage, the market share will increase to about 41%; once it drops to around 1,000 yuan, the market share will rapidly expand to 79%, becoming the mainstream of the industry.

Furthermore, the expected arrival of the 5G replacement wave has once again confirmed that in the long run, on a larger scale, the most reliable market driving force is innovation premium.

To give an example that is easily overlooked, although Samsung mobile phones have completely become "other" in China (and there is no sign of recovery), what may make domestic manufacturers envious is that Strategic Analytics data shows that the average selling price (ASP) of Samsung's smartphones in the first quarter of this year hit a six-year high. The average selling price of smartphones in the period from January to March was US$292 (about RMB 2,067), an increase of 8.5% over the same period last year. The ASP in the first quarter also increased by 20.7% over the previous quarter.

It is not difficult to analyze that this high ASP is mainly driven by the sales of the foldable phone Galaxy Z Flip and the high-end Galaxy S20 series.

In the domestic market, as we all know, starting from the Xiaomi 10 series priced at 3,999 yuan, domestic manufacturers have generally raised prices tacitly. In addition to the increase in product costs, one of the reasons is of course the desire to expand the profit margin of single products.

But I don’t know how long the price increase of mobile phones will continue in a fully competitive and effective market, because market trends are always accompanied by periodic ups and downs of technology cycles, and the innovation cycle of smartphones is unlikely to be one wave after another. When the next vacuum period comes, perhaps we will see the familiar game pattern again.

After all, before the advent of new technologies, "individual differentiation" is often only born in areas with insufficient competition. But in any field where competition is extremely sufficient, convergence is almost inevitable.

This may mean that in the bloody sea of ​​the Chinese mobile phone market, "fighting to the end" is the only option. Now as the 618 event begins, the Chinese mobile phone market, which has lost the Spring Festival stall, can already smell the smell of gunpowder.

And this "midfield battle" is just a preview of the next battle.