Android market cannot wait for a hot small-screen phone

This new iPhone SE may become Apple's best-selling small-screen iPhone in the Chinese market. After its launch in April, it sold 930,000 units in just seven days.

The latest report data shows that thanks to the release of the new iPhone SE, iPhone sales in the Chinese market reached 3.9 million units in April, a 160% increase from 1.56 million units in March, of which the new iPhone SE accounted for nearly 25% of sales. Compared with the previous cold situation of the iPhone SE series in China, the new iPhone SE has finally made a comeback.

According to @it Technology Station, the cost of iPhone SE is 18% lower than that of iPhone 8, which is $217 (RMB 1,539). Judging from this price, the selling price of the new iPhone SE is nearly twice the cost of materials.

Earlier, other professional organizations estimated that the material cost of the iPhone 11 Pro Max (512GB version) was $490.5. In terms of price, the price of the iPhone 11 Pro Max (512GB version) when it was first launched reached 12,000, which is three times the material cost. Compared with the material cost, the iPhone SE is indeed a reasonable price. This means that Apple has made a big compromise in terms of profit.

The hot sales of the new iPhone SE, in a sense, prove that if Apple compromises on price, not only large-screen phones will sell well, but the demand for small-screen iPhones will also remain strong. But why has the domestic Android market not been able to wait for a hot-selling small-screen phone?

In the Android camp, the Xiaomi Mi 9se, Samsung S10e, and Meizu 16th can barely be considered small-screen phones in the past two years, but they have not made much noise or splash in the market in terms of popularity and sales. After all, while the iPhone SE is selling well, an overlooked fact is that the Android camp has always lacked mid-to-high-end small-screen phones that can compete with it.

According to Cook's recent remarks, the main customer base of iPhone SE comes from two aspects: one is the small-screen mobile phone enthusiasts who like uncompromising technology, and the other is those who switch from Android.

Why is there no high-end small-screen phone in the Android phone market?

There are many reasons for this.

The market demand for small-screen mobile phones does exist, but it has always been a niche market. The reason why a small niche market is not feasible is that the operation, marketing and production costs are too high, but the market demand is facing huge uncertainties. It is undoubtedly a gamble to hastily launch a new small-screen mobile phone. Therefore, domestic mobile phone manufacturers have not dared to bet on small-screen mobile phones in the past.

From the user's perspective, small-screen phones are cheaper in terms of material costs, so they should be sold at a lower price, not the other way around. Generally speaking, since small-screen phones have always been priced relatively low in the market, it is difficult for Android market consumers to accept small-screen phones being sold at high prices.

From the current Android small-screen phone market, whether in terms of configuration, CPU, memory, screen, etc., they are basically scaled-down versions of large-screen phones, which is an important factor affecting consumer purchases. Therefore, it may not be objective to put the blame on the screen size. The key to the current problem is that in terms of experience after the size is reduced, except for the convenience of one-handed operation, small-screen phones have almost no advantages.

Secondly, we need to see that the production difficulty of Android small-screen high-end mobile phones lies in the poor adaptation of the supply chain. From the industry's perspective, if the mobile phone supply chain is not fully controlled, what kind of mobile phone a mobile phone manufacturer wants to make depends on whether the upstream supply chain can be realized.

The reason why domestic mobile phone manufacturers do not make small-screen phones is not that they are unwilling to do so, but that it is more difficult to make small-screen phones, especially small-screen high-end phones, than large-screen high-end phones. Because large sizes have more space, they are easier to design than small-screen phones, and can also provide users with larger batteries or introduce new technologies, and batteries are one of the core pain points of current users.

Most consumers are unwilling to compromise on this pain point. Even with the new iPhone SE, many consumers still believe that battery life is a major weakness.

In addition, today when the supply chain and large-screen mobile phones have achieved complete integration and running-in, the difficulty in the supply chain link of making small-screen high-end mobile phones is that it is necessary to cram larger batteries, better camera sensors and other components into a smaller mobile phone space. It is also necessary to consider heat dissipation, processor power consumption, screen production line design and other issues. Small-screen high-end mobile phones may not keep up in the supply chain research and development link.

In the current era of large-screen phones, the production of small-screen phones involves the replacement and adjustment of parts and industrial production lines.

For example, from the perspective of the screen, supply chain manufacturers also arrange screen sizes according to market demand. Around 2017, screen sizes of around 5.5 inches were mainstream, and supply chain manufacturers basically focused on mobile phone screens of around 5.5 inches. In 2018, with the popularization of full-screen displays, 6 inches and above became the mainstream, and some screen suppliers began to design production lines based on 6-inch screens.

If a manufacturer suddenly wants to make a 4-inch small-screen phone today, the screen supplier will have to open a separate production line, which will increase additional manpower and material resources, quality control design, time and other costs. Whether the production line can be reused continuously is also a problem.

The reason why we emphasize small-screen high-end mobile phones is that for today's consumers, the pursuit level is different from the past. Today, when large-screen smooth experience has become standard, it is difficult for users to tolerate owning a low- or mid-end small-screen mobile phone with reduced configuration and experience.

Users expect a small screen, but the hardware and software configuration experience and appearance design are mid-to-high-end - first-class configuration and chip performance, first-class visual design texture and first-class hardware and software experience. To some extent, the new iPhone SE can meet this demand of users.

For Apple, its advantage lies in the fact that it has always treated the small-screen iPhone as a continuous niche market in the past, and has continued to manage supply chain resources, aggregation, production line quality control and mass production. The closed system can fully control every link of the industrial chain.

However, in the Android market, Samsung, which has a full industry chain layout, may be able to mass-produce small-screen mobile phones. However, to make small-screen mobile phones in the Android market, the R&D investment cost is high, and it also depends on whether the supply chain has sufficient shipments and profit drivers. From the current perspective, it may be difficult to find high-quality suppliers to lay out relevant design production lines and mass-produce small-screen mobile phones while ensuring good quality control.

An industry insider once pointed out: "The open industry chain and development environment determine that Android cannot control and optimize various mobile phone hardware. Therefore, the small space cannot be equipped with more powerful chips, which will also limit the size and battery capacity."

Apple's closed system of integrated hardware and software can relatively well handle the size, appearance, hardware configuration and software compatibility.

This also leads to the fact that in the small-screen mobile phone market, among mobile phones below 4 inches, the iPhone has the best industrial design and overall user experience. Compared with the iPhone, Android small-screen phones basically have no advantages.

On Zhihu, we see that there are still a large number of users expressing their demand for small-screen Android phones. Some Zhihu netizens said that even now when businesses are frantically promoting large screens, there are still a large number of users looking forward to small screens. If Huawei/Xiaomi can produce a small-screen phone that is not overly premium and has decent performance, the market prospects will be huge.

But as mentioned before, behind the huge prospects is the greater difficulty of making small-screen mobile phones. In the small-size market, Android lacks the top configuration and supply chain advantages to compete with the iPhone. However, Android manufacturers actually do not need to compete with Apple in the small-screen market today.

According to a data survey and analysis by AppOptix on the size of mobile phones people used in 2017, people who use phones smaller than 4.5 inches spend an average of only 184 minutes a day on their phones, while users of phones in the 5.0-5.5-inch range spend an average of 234 minutes more a day, and users of phones larger than 5.5 inches spend an average of 261 minutes a day on their phones.

From the perspective of mobile phone manufacturers' integrated hardware and software ecosystem, user time, and APP developer profitability, large-screen mobile phones also bring better user stickiness and ecological environment because they can occupy more user time.

iPhone SE cannot stop the decline of small-screen mobile phone market

Apple's iPhone SE has started a battle over price-performance ratio, and it is also a special arrangement for a special period. It may be based on several considerations: First, many users in Europe and the United States are accustomed to one-handed operation, and small-screen mobile phones match the needs of some users in Europe and the United States.

Secondly, the small-screen mobile phone market can be said to be Apple's stronghold and core business area. In this size area, Steve Jobs' words "3.5 inches is the most suitable mobile phone screen for humans" are still fresh in our minds. It is both a blank market in the market and an advantageous territory where Apple can better fill and meet user needs.

The second is to clear inventory. In the 5G era, Apple is also in urgent need of a cost-effective model to clear the inventory of 4G components and prepare for 5G with a light load. The new iPhone SE is also the seed player for Apple to clear inventory.

Economists point out that "specific historical circumstances determine which products are popular." In today's highly saturated smartphone market, mobile phone products are moving beyond the stage of conspicuous consumption. In other words, today, the mobile phone (iPhone) as a label of identity has gradually weakened, and the mobile phone is more of a necessity.

Therefore, the good sales of iPhone SE are largely inseparable from several points. First, it is the most cost-effective mobile phone in Apple's history. It is equipped with the same Apple A13 Bionic chip as the Apple iPhone 11 Pro. It has powerful performance and a very attractive price.

The second is that it retains the round Home button and upper and lower borders that Jobs advocated, which has a certain value of sentimental consumption; the second is that in the post-epidemic era, users' consumption habits are undergoing a new round of changes, becoming more rational, conservative and pragmatic.

According to the "Discovering New Driving Forces for Recovery: A Report on Consumption Trends among Young People in the Post-Pandemic Era" by Lexin Research Institute, there are more rational consumers after the epidemic, 80% of people have a debt ratio below 30%, and are more inclined to increase savings appropriately. 39.6% of people believe that "purchasing decisions are more cautious than before."

In general, the good sales of the new iPhone SE are due to certain special market conditions, but this will not be the trend in the future.

Bigger screens are the inevitable trend and direction of the tide. The limitation of small-screen mobile phones is that they are not suitable for the future 5G high-definition video era trend. 5G mobile phones have higher requirements and performance for signals and battery life. They need to install more antennas and larger batteries than 4G mobile phones to solve signal and power consumption problems. This may also lead to larger mobile phone screens. The 5G era will also be an era of explosive production and consumption of VR/AR games and video content.

Large-screen mobile phones can display more content on the screen, have a larger operating range, can achieve more precise operations, and have a better experience. From a domestic perspective, China is gradually becoming a short video power. According to the QuestMobile report, the number of short video users exceeded 820 million in 2019, and nearly 8 out of 10 Internet users are using short video apps. In the era of video consumption, larger screens can provide better visual experiences.

In addition, in the 5G era, along with the demand scenarios of the Internet of Everything, mobile phones will become a product that integrates entertainment centers, control centers, and productivity devices. Judging from the trend, it is also an all-in-one device that carries more and more functions. For such a device, the control experience advantages brought by one-handed operation, the visual experience and information display advantages brought by the large screen, and the battery life and performance power consumption advantages are compared. The latter is a greater rigid demand.

With the explosion of the wearable market in the future, the convenience of smart watches and AR glasses may be able to divert the scenarios and needs that must be completed with one hand.

Therefore, judging from the trend, small-screen mobile phones may always remain in the niche market of backup phones in the future. Even if the iPhone SE sells well, it cannot resist the trend and reality of the gradual decline of the small-screen mobile phone market.