Reviewing the historic rise of Chinese mobile phones: Strategic evolution from the edge to the future center

From a global perspective, China's smartphone industry has become a field with heroes and unlimited vitality. In this industry, we have seen the extinction of dinosaurs, the samurai won the shining armor and lost it again, and what is regarded as truth today may become the fuse of failure tomorrow. In such an extreme war of wisdom and creativity, some people are defending the strategic center position, and some are creating new marginal opportunities, but all players have only one goal, which is to become the new generation of overlords.

Common sense is: we all know that if you want to succeed, you must be highly focused; the paradox is that reality is often only "focus under limited resources". If you focus too much, it will directly lead to your inability to adjust yourself and thus be unable to keep up with the ever-changing world outside. In biological evolution, those animals with super-long characteristics in a certain aspect have become extinct due to changes in the surrounding environment; if companies focus too much, it will be difficult to quickly change their focus to adapt to new changes, and they will not be able to move from the center to the future center of the edge, and they will be eliminated when the times change.

Admittedly, this is a difficult situation, which is why we are so fascinated by the stories of rising stars and fallen heroes.

Looking back at the history of the mobile phone industry: The development of mobile phones as a smart consumer electronics industry started in 2007. That year, Apple's iPhone was launched, which set off a revolutionary revolution - turning mobile phones from instruments that can only answer calls into small computers that we can carry with us.

This is not a technological revolution, after all, these technologies already existed. Apple repackaged these existing technologies and changed people's understanding of mobile phones (in fact, Apple did not develop this new technology combination itself, but directly took the prototype called "snacks" from the computer department of Cambridge University).

For Apple, which has never been involved in the communications industry before, this is definitely a strategic innovation, a transformation from the edge to the center. As early as the 1990s, they tried to develop a PDA personal electronic assistant called Newton, but it was not successful.

Mobile phones have become tools that integrate functions such as "communication and entertainment", and this change has triggered a huge change in the industry. The most direct result: Nokia, the market leader, can make the best mobile phones and has won many design awards. However, it cannot keep up with the pace of the times and eventually faces the fate of being eliminated. It withdrew from the mobile phone industry in 2015 (and later made a comeback).

The Asian markets of China and South Korea have been growing continuously in the past and are full of experts. These mobile phone manufacturers are always keeping a close eye on these flexible smartphones that can be used for calls, video conferencing, games, photos and storage. They are always ready and capable of taking advantage of every opportunity hidden behind these small phones.

At the same time when Nokia was dethroned, we can confirm that after 2011, after a long period of development, the Chinese smartphone industry had an opportunity to reshuffle the market during the transition period between 3G and 4G. Previously, giants such as Nokia, TCL, Bird, HTC, Samsung and even Apple, which had long been at the center of the industry, were dethroned by this series of "marginal" people and events.

In this article, we strive to discuss the core issue together: the profound logic behind the historic rise of Chinese mobile phones such as Huawei, Honor, Xiaomi, OPPO and vivo lies in their industry-leading strategic capabilities. In this fierce competition among the world's top companies, Chinese mobile phone brands not only learn from their opponents, but also constantly seek opportunities from their own marginal perspectives.

History: Centralized arrogance led to the decline of international giants

Let’s start with a vivid story.

In the fall of 2013, Jacky, the head of OPPO Vietnam, slammed 2 million US dollars on the table and said to Tom (pseudonym), the boss of Mobile World, which controlled 40% of the mobile phone retail market in Vietnam: As long as you let OPPO enter your store, the 2 million US dollars will be a one-year profit deposit, and you will definitely make a profit.

This was vividly described by a dealer during a survey in Vietnam. What he wanted to express was how OPPO started a battle with Samsung in Vietnam by breaking through the gaps between the four major channel monopoly giants.

At that time, OPPO had just stabilized its position in China, but had already set its sights on Southeast Asian countries such as Vietnam and Indonesia, which have similar populations to the Chinese market. The partners that OPPO hired in the local market were incomprehensibly young. These 25- and 26-year-olds had an annual income of hundreds of thousands or even millions in 2016, which corresponds to an average monthly salary of about 1,500 yuan in Vietnam.

At that time, the average age of Samsung's middle and senior management, which dominated the Vietnamese market, was about 45 years old. They adopted the traditional multinational company operation matrix and took steady steps. As a challenger, OPPO took a different approach and formed a highly vertical, young-dominated competitive organization.

From the perspective of the mobile world, they felt that it was very risky for OPPO, which had zero market share and no retail presence, to start advertising. However, in the face of huge profits, they rationally accepted this challenger, which led to OPPO's rapid rise in Vietnam. In 2019, OPPO's market share in Vietnam exceeded 15%.

In line with OPPO's ambition, Huawei has made a historic strategic commitment to the mobile phone industry. Earlier, Huawei's internal meeting in Sanya in 2011 was a historic turning point for Huawei's terminals and even the group. Previously, Huawei's B2B business was almost "put to death and then reborn". A senior executive of an operator once publicly told the media: "If we use Huawei's equipment, our stock price will fall."

It is true that Huawei, as a private enterprise, does not naturally have the potential of national enterprises in the competition with ZTE. After experiencing the desperate situation in 2002 and the global challenge of the 2008 economic crisis, Huawei barely survived and clearly recognized the importance of sustainable growth. Stable cash flow is the way to survive for tens of thousands of people.

At this moment, mobile phones have become an option for the group's marginal business with the potential to "become a well-off society". An old Huawei employee who has worked at Huawei for more than 20 years complained privately: "Before, the brothers in the operator also looked down on Huawei phones and used Apple, thinking that the communication network was Huawei's technological commanding heights."

This may also be a knot that motivates Richard Yu, the core creator of the new terminal, and his fellow fighters. When he was transferred to the terminal in 2012, objectively speaking, it was a "marginal career". The advantage is that he can focus on a broader battlefield and can freely invent and create.

Let's review the growth trajectory of the leaders in the mobile phone industry. Although Chen Mingyong, as a minority of BBK, took the initiative to engage in MP3 as early as around 2001, OPPO did not break away from the company's long-term opportunistic "shoot and move to another place" in consumer electronics until 2008. There is reason to believe that Chen Mingyong is also a "marginal leader" who has stepped out from the edge of the old mother body step by step to find food.

Before the R7 flagship in 2015 crushed its competitors with 13 million units sold, the company was not domineering or even confident. The similarities between Chen Mingyong and Yu Chengdong are that they both started from a relatively marginal position to realize their ambitions, but it is clear that Yu has the genes and inertia of R&D, while Chen has the inertia of factory operations and pays great attention to the experience of young users.

These two current industry leaders are similar to Lei Jun, who was already at the center of the business world at that time but was eager for great success. Kingsoft Software, which carries Lei Jun's lofty ideals, has always been lukewarm in front of Microsoft Windows, but he is unwilling to be mediocre.

Vivo's head Shen Wei, like Duan Yongping, is originally from Jiangxi. Perhaps because of his long-term struggle in Shenzhen, he obviously has the pragmatism of a Cantonese and has inherited more of Duan's low-key and simple way of running a business. However, he was able to break away from the inertia of frequent product adjustments in the BBK era and continue to make heavy bets, which also shows his difference.

In his 2016 book “The People’s War between OPPO and Vivo”, author Zhou Zhanggui mentioned that the two companies OV have not yet put forward such a fancy expression as “Internet thinking” in the media, but they have a deep understanding of the characteristics of all social classes in China. OV’s simple Chinese local market strategy that directly targets consumers has been integrated into their bones. They are humble enough in front of consumers and do not have any so-called leader’s arrogance.

The success of OV is actually the inevitable result of "understanding the people" and "understanding the laws". We summarize this pragmatic approach with Chinese characteristics as the "people's war competition thought", including: demand comes from the people; marketing goes to the people; sales and the people cooperate; reputation is defined by the people; success is the victory of the people.

During the period of 2013-2014, strong demand for smartphones emerged in many rapidly developing regions of China, triggering a complex competition between new and old brands.

If we look back to the market in 2019, we will find that these unconventional adventurers have become the core brands of the industry. Huawei and Honor smartphones have led the transition from the old to the new. According to the market sales data for the second quarter of 2019 released by the data research company GFK, Huawei and Honor, which have long been based on research and development, have actually reached a market share of nearly 46%.

The factors of their success can be simply summarized as follows: Huawei discovered the "edge" opportunity of high-end phones with independent chip research and development, and Honor applied the edge strategy of young trendy products. Similarly, OPPO and vivo built channels and brands on the edge of the city, and Xiaomi created a new business model from the edge opportunities of IoT. Obviously, Apple and Samsung, which were once in the center, have never practiced the above strategies.

Looking back, we see the contingency and inevitability of edge breakthroughs. So, let us first clarify: What is the so-called "edge strategy"? We need to admit that it is difficult to find a balance between the center that requires high focus and the edge that requires high adaptability.

First of all, there are many possibilities at the edge, and not all of them may become the center of future competition. If we can know which edge opportunity may help us win the market in the future through simple analysis, then everyone can do it! Because of this, focusing on edge opportunities is actually risky. Behind every successful case, we can easily find 100 very bold and fierce attempters, but they all failed in the end.

We have already mentioned the example of Apple's failure in the 1990s. In addition, Siemens, Ericsson, and Microsoft (which bought Nokia's mobile phone business) also wanted to enter the mobile phone industry, but all ended in failure. These companies still had a lot of resources at the time.

Not to mention the giants in China that once dominated the market: HTC, Coolpad, LeTV, Meizu, Hammer, etc. They have all made many unique and bold attempts. As a company, it is not feasible to just throw money at any marginal opportunity. Companies must learn to choose. Adapting to all changes without any choice will only make the adaptation process extremely expensive, and then the edge will become your end point.

This is why it is very difficult for large companies: among the many choices in front of them, which potential opportunity is the right path to choose and drive the business forward? Should we invest in 100 opportunities in parallel? This actually represents another wrong attitude that is opposite to the overly risky attitude mentioned above - excessive conservatism and path dependence.

So, to put it simply: "Edge Strategy" is a centralized strategy relative to strong competitors at a specific point in time, looking for future opportunities in a differentiated way.

The rise of the edge of the Chinese market is the decline of the center. Apple has completely fallen from the altar. This company, which dominated the world with the strategic idea of ​​creating "ultimate user experience" with "ultimate products" and became a giant in the hearts of young Chinese people, is now trapped in the dilemma of lack of innovation. Cook has made Apple a company that is good at making money but not innovation. Samsung, a giant in communications and semiconductors, has basically disappeared from people's sight in China, and only Chinese manufacturers are chasing after its screens. Of course, this tragedy can also happen to any company. Today it is still a shining winner, and tomorrow it will become a dead dinosaur.

Those winners who once dominated the Chinese market stand at the center of the market and look at the challengers with disdain. They believe that the so-called innovations of these challengers are just small tricks on the edge that will not amount to anything big, let alone meet the needs of consumers. This is what we define as "centralized arrogance."

Tian Tao, a well-known management scientist, has an analysis of Motorola, an earlier communications giant, in his book "Will Huawei be the Next to Fall?" There is also a similar narrative: "Motorola's strategic investment in Iridium failed and it lost nearly $5 billion. This was the watershed for Motorola's decline. Motorola was not only 'slow to respond to customer needs', but also moved towards a self-enclosed 'ivory tower'." Tian Tao's summary of "ignoring customers, rejecting common sense, and putting technology first" is actually the fundamental reason for the decline of the previous generation of communications giants, and the reason behind it is also due to "centralized arrogance."

Generally speaking, it is difficult to change the inertia of judging things. Success in the center will shape and limit your aesthetic judgment standards for what is "correct and appropriate". We have mentioned the example of Nokia above. Their interface and product design are extremely outstanding, and even won them many design awards. But the leadership at the time looked at the prototype of the smartphone and decided-we hope to connect people (the marketing slogan at the time), we want to do interpersonal communication, not some distracting games and decorations. They misjudged the potential of the next generation of smartphones because they have been immersed in their love for the simple and plain design of their communication system.

Therefore, the success of China's mobile phone industry not only draws lessons from the experience of failed large companies in the past, but also from the failed experiences of many marginal attempts. This is also a constant reminder for today's core companies to remain humble, focus on strategy, and gain more insights.

From a deeper logical point of view, we find that Huawei, Honor, OPPO, vivo, and Xiaomi are all making big moves to break the long-term fixed centralized thinking mode in the face of such fierce market competition, and are trying to think about the future "edge" of the industry. As shown in the following figure:

From a strategic perspective, companies such as Huawei, Honor, OPPO, vivo, and Xiaomi are all trying to break the past reality center and find opportunities in the future center in the edge. These big logics are also reflected in the "edge strategy model": 1. The purpose of breaking the reality center is to find a new source of competitiveness; 2. Prioritize the practice of the edge center becoming the future center; 3. Do not rule out the exploration of the "no man's land center" in the farther edge. It can be seen that in this top business war of smartphones, the "edge strategy" perspective has been widely used in actual combat, removing the self-reflection of centralized arrogance, and each company is actually rediscovering itself.

It needs to be reiterated: this is indeed a very difficult balance to achieve. Because you cannot give up the current center, because you need to rely on the current center to earn resources to invest in the future. But how long can you hold on? If you give up now, you may have cash flow problems. If you keep relying on the current center, you will miss the window of opportunity.

To explore marginal opportunities, you need more than just in-depth analysis. You also need to practice and test these opportunities in the market. If you throw too much money at too many marginal opportunities at the same time, it is possible that nothing will come out of it. Whether you go left or right, you may fail.

As a result, large companies tend to be very cautious, hoping to directly take over those successful small companies. Small companies try a lot, so they naturally fail a lot. The excitement of the successful ones always makes people forget the regret of the failures.

From the perspective of "edge strategy", there are coexistence of danger and opportunity in competition. Objectively speaking, if Huawei survives Trump's blow, they will have to become more innovative and resilient. Because they must now start looking for new partners and rebuild their business model outside the Android ecosystem, such as Hongmeng operating system. If they do this, they will become stronger, and the Americans are likely to lose this war in many ways.

At the same time, Huawei needs to guard against the "centralized arrogance" of centralized thinking. Success has no value to Huawei. What is truly valuable are the opportunities and challenges at the edge.

Reality: “Looking for the edge” is “looking for the future”

In fact, from 2012 to 2014, "HuaRong, Xiaomi, OV" almost all achieved rapid growth from the edge of the industry through differentiated strategic logic; from 2015 to 2017, these giants were working hard to consolidate their edge strategic centers; starting from 2018, with the gradual reduction of product differentiation and saturated competition in channels, they were almost all looking for the next edge. Objectively speaking, in the mobile phone industry, Chinese brands have unprecedentedly shown strategic foresight that surpasses international giants, and the engine of sustained growth behind them all comes from "finding the edge."

Compared with the comprehensive advantages of traditional giants Apple and Samsung, the edge of Chinese brands starts with "Chinese characteristics":

First , we should focus on differentiated cities, establish a ladder-type channel network from rural areas to towns, small and medium-sized cities, and then to large and super-large cities, and build brands that are close to local young people. This is something that foreign brands find difficult to expand into.

Secondly, from brand communication centered on TV and advertising media to penetration communication mainly based on social media and TV variety shows, this is full of cultural barriers; thirdly, from the star effect of spokespersons to the technology leadership of mobile phone products, this has played the advantage of China's rapid industrial chain support; finally, from the main battlefield in China to the full competition in the global market. Almost every step is highly differentiated from the centralized giants. Today, it seems that these companies that have found their own edges have succeeded.

"Building capabilities, attacking the center, and finding the edge" has become a strategic consensus among Chinese mobile phone brands. After "finding the edge", a breakthrough requires a killer weapon: He Gang, president of Huawei's terminal product line, is actually constantly looking for new marginal technology growth points. From a dialectical point of view, the Nova he strongly promotes is also a marginal breakthrough after the Mate and P series formed the central potential. Zhu Ping, president of Huawei Terminal Greater China, is different from OV's advertising and positional warfare tactics, and promotes the "circle" vertical marketing strategy, which is a differentiated penetration of one level at a time.

The difference between Huawei and OV, which are both brand leaders targeting young people, is that Huawei pays more attention to the word-of-mouth effect of its high-end phones among political and business people at different levels. Therefore, in its marketing, it learns from OV's differentiated strategy of infiltrating young people and penetrates the circle's word-of-mouth.

While Honor President Zhao Ming insisted on "light assets and high efficiency", he found the widely ignored young geek "circle" to carry out a global youth movement and seek differentiation through "sharp technology".

At the same time, OPPO's leader Chen Mingyong borrowed from Huawei's investment of 10 billion yuan in technology research and development and reused young leaders like Shen Yiren. Vivo's Shen Wei spared no expense to hire consulting companies to build a global R&D organization and super concept store, while Xiaomi learned from Apple's flagship store model to establish a traffic center for consumer electronics and make up for its own shortcomings in management and control. These cases of mutual learning are also marginal breakthroughs to a certain extent.

In particular, the rise of Huawei actually borrowed from Xiaomi's IoT and OV's channel strategies, but it did not copy its competitors and instead explored a strategy that suits its own.

In our research on Huawei and Honor, we summarized the "marginal evolution" model of brand cognition, which to some extent made a breakthrough in OV's "people's war" strategy and also reflected the marginal logic behind high-level strategic competition, as shown in the figure:

The most difficult part of “finding the edge” is actually the edge breakthrough of brand building. Objectively speaking, the Chinese market is the most complex in the world. It is a country divided by industrialization and urbanization, showing a typical dual structure of towns and cities. Chinese cities are places where the population is concentrated and interpersonal relationships are divided, while rural areas are places where the population is dispersed and blood relations are aggregated (this dual market structure also exists in the UK. The developed and prosperous South and the poor and backward North have completely different perspectives. This can also be seen from the Brexit voting results. The North, which is afraid of the negative impact of globalization, is a firm Brexiteer, while the South, which enjoys the dividends of globalization, is a Remainer). The globalized market actually has the characteristics of both. Therefore, the multi-dimensional structure requires parallel analysis of subjective and objective dimensions, and attaches importance to the brand logic in the direction of “edge breakthrough”.

To put it simply: looking at China's dual structure, the bottom layer is closer to the two perspectives of "conformity" and "quality" in terms of consumer electronics demand, which requires consumer electronics manufacturers to develop low-risk, trustworthy, benchmarkable, reliable, durable and extreme test-proof products; while for the upper-level industrialized and urbanized population, it is closer to the two perspectives of "identity" and "advanced", requiring manufacturers to pay in-depth attention to the elements of showing off, personality, advancement, special effects and efficiency; from the global perspective of metropolises, the two main points are "thought leadership" and "lifestyle" guidance.

This difference between urban and rural populations is not unique to China. According to many cultural studies, the poorer the country, the more obvious the social hierarchy, and the more people follow this social order; while in wealthy countries, egalitarianism is often advocated, and people behave more individualistically. Why is this so? Because the poor rely more on each other to help them out of the difficulties they face. Because they rely on each other, they need a good mutually beneficial relationship to maintain their solidarity. Therefore, if a person starts to show off, it will cause others to be disgusted, and they will not help him next time. The show-off behavior of city people is actually related to their abundant resources. Because of their abundance, they are less dependent on others, and thus do not need others to "get used to" them, so they behave more casually.

Here, in view of the two studies on Hofstede's cultural dimensions theory by the famous scholar in the past thirty years (as shown above), we can see that some countries have become richer, and as people no longer rely on their families to survive, they have become more inclined to class concepts, individualism, power orientation, uncertainty anxiety, long-term goals first and self-pleasure tendencies. Because they show off their spending power when they are rich, not because of the family! The other extreme reflects the tendency towards egalitarianism, collectivism, gender orientation, adaptation to uncertainty, short-term goals first and self-restraint. The rural vs urban binary structure of Chinese society is actually very close to the trends of the above two poles.

So the inspiration for enterprises is: to find the edge of the brand breakthrough, you need to understand the cultural identity of your customer group. Even in the same country, there can be many differences between them, and the consumption psychology of different classes will produce completely opposite differences. Obviously, Chinese mobile phone companies have solved the problem of consumer cultural identity in multi-level society very well, which often allows brands to break through on the edge of the market where competitors have an advantage. This strategic initiative has a strong reference significance for global consumer companies.

To be more specific, in the exploration of mobile phone industry brands: in fact, the brand aesthetic orientation of rural and township people is closer to the two cultural characteristics of conformity and quality, while the people in big cities tend to be ideological leadership and lifestyle. The two are mutually marginal, representing the two directions of Hofstede's cultural dimension theory, while the vast second- and third-tier cities in China tend to be identity and advancement.

From this, we can conclude that perceiving consumers’ emotional benefits is the basic way of thinking for brands to find their edges. We can also apply similar methods of finding edges in other dimensions beyond brands.

Theory: Eastern philosophy meets Western science

Practical experience is destined to be richer than academic thinking, but academic exploration is often more philosophically interesting.

In 2019, in the current international environment, Huawei has become the most discussed technology brand in the world. Ren Zhengfei's thought leadership has been widely praised. At the same time, the rapid development of OV and Xiaomi in lifestyle brands has also attracted attention. The Chinese mobile phone industry has almost become the industry that integrates the Eastern and Western technological aesthetics most fully in China's manufacturing. Of course, it also permeates a strong Eastern philosophical thought.

Through the above strategic analysis and ideological dialogue, we can boldly infer the development trend in the next five years from the changes in the past 10 years. From the micro level of the industry, the smartphone industry will undergo profound evolution in four dimensions (as shown in the following figure: Pyramid Multi-dimensional Strategic Model):

Smartphone "Pyramid" Multi-dimensional Strategic Model

The first is the "product strategy dimension", which mainly includes four aspects, namely super accounts, UI application matrix, AI chips & OS, hardware technology supply chain & IoT hardware expansion. Here, we believe that the "super account" is a software system for software-defined hardware, and it is also a new edge center for future mobile phone products from hardware to software, and it also provides possibilities for Internet companies such as ByteDance to consider entering the mobile phone industry. In terms of AI chips & OS, facing the strong dominance of Google and Apple and the capabilities and potential of Chinese companies, Huawei's Hongmeng OS is emerging from the perspective of edge innovation connected by the Internet of Things, striving to form an ecological network that exceeds IOS & Android.

The second is the "brand strategy dimension". Chinese mobile phone companies have long been based on product strength in their brand strategy, which is the so-called "productism", and have cooperated with word-of-mouth brands and personal brands of leaders. However, from the trend point of view, the company's values ​​and lifestyle brands will gradually settle as the main direction of brand investment. In this dimension, the company's values ​​will have a long-term impact. If the corporate values ​​are limited to a small and radical group of people, the company's long-term brand may not settle and lose the brand competition.

The third is the "leadership strategy dimension". The strategic commanding height is technical leadership, and the strategic bottom line is the bottom-level R&D talent. From the perspective of the entire industry, surface application innovation technology is still the most important point of contention in the industry. In the future, this aspect may be combined with the super application of product strategy to vertically reflect application innovation.

The fourth is the "ecological strategy dimension", which includes cloud service ecology, IoT hardware ecology, user ecology and developer ecology. The main profit source of the entire smartphone industry has actually been subtly transferred to cloud services. The Internet revenue of "HuaRongMiOV" has actually ranked among the top ten Internet companies. In the future, the reverse pull effect of cloud services on the application and developer ecology may become more prominent. This competitive logic will reversely push the mobile phone industry from high-end brand competition to the competition for high-quality users in the mid-range price range of RMB 3,000-4,000, and then make profits through long-term cloud services.

Just like the cooperation between OPPO and vivo and game companies, and the cooperation between Huawei and video companies such as Youku and Tencent, it actually shows the trend of integration between smartphone companies and Internet companies. So, in the near future, it is very likely that independently operated videos and games will become the main profit contribution units of mobile phone companies.

It can be seen that the evolution of China's smartphone industry from a micro level is a multi-dimensional and complex logic. From the macro level of marginalization strategy practice reasoning, in the next five years: OV and Xiaomi's breakthrough direction will most likely be in the overseas market. The "factory girl phones" and "low-end brands" that people once thought of will not only remain in history forever, but also gain more market share in the United States and Europe. This marginal breakthrough may not be so confident for them themselves, but it is becoming clearer in the process of continuous exploration of the edge.

On the contrary, in the process of searching for the edge, Huawei brand, facing the political pressure from the United States, does not rule out building a new developer ecosystem around the Android operating system or its own Hongmeng operating system, spreading the capabilities of the chip to a wide range of hardware fields, and building an open platform architecture based on the capabilities of the Internet of Things. This looks very much like Apple's cross-era innovation of packaging software applications. Therefore, if Hongmeng OS forms a comprehensive breakthrough from the perspective of the Internet of Things, Huawei terminals will react to the communication network architecture dominated by operators and reconstruct the infrastructure of the industrial Internet through mobile. On top of this, terminal cloud services will generate more user touchpoints, and the technology platform will be fully open to authorized docking with talented smart developers. Honor may instead explore the "sharp technology" edge in a more differentiated way within Huawei terminals, such as breaking through to become an omni-channel brand for pan-Iot, home appliances, and mobile phones.

From a 10-year or even longer perspective, Huawei's consumer electronics genes are more pure and the rise of the Internet of Things and terminal cloud service businesses are the inevitable results of edge extension.

Huawei itself has made breakthroughs from the operator network to wireless business, to terminal business, to Internet of Things and cloud service business. There is reason to believe that this is also the real path of "entropy reduction" as mentioned by Ren Zhengfei. The edge is also the dissipation and reconstruction of the center.

In addition, three critical points of marginalization of mobile phone functions may appear soon: one is the transition from visual shooting competition to multimedia AI; the other is the consumption downgrade after the saturation of the consumer electronics market, which may allow flexible services to replace rigid equipment growth and become the new strategic edge; the third is that Huawei terminals become a cross-platform, cross-hardware software company.

For Huawei terminals, due to its long-term focus on hardware products, it has always been in a relatively marginal position in terms of brand, user operations, IoT hardware and cloud services. The final growth point of the Huawei system is likely to be here, especially cloud services. We should be able to see more radical leadership in edge innovation.

The logical deduction and transformation of this series of edge strategies can be widely seen in China's mobile phone industry. Perhaps intentionally or unintentionally, it reflects the Tai Chi Yin-Yang dialectical thinking in Chinese traditional culture (as shown in the figure above). The dialectical relationship between "center" and "edge" is: center and edge are two dialectical concepts. The meaning of their existence lies in their coexistence as a reflection of each other. A single "center" or "edge" does not exist.

In fact, this relationship can be perfectly displayed in the Tai Chi diagram: first, the center (fish eye) of a system is at the two edges of the opposing transformation; second, the boundaries between the center and the edge are relative; third, the entire system is in a state of constant motion; fourth, the system's movement dynamics can be driven from the center and edge dimensions respectively.

From this perspective, Ren Zhengfei's most important management ideas, "entropy reduction" and "dissipation", have related thought structures. "Entropy reduction" emphasizes reducing uncertainty and finding the edge future center, while "dissipation" is to convert the energy of the current center to the future center layout. Compared with Huawei's strategy, it can be said that Huawei and Honor are like the black and white of a Tai Chi system, and OV should be the same with each other. Even Huawei and OV Xiaomi can be placed in Tai Chi to feel their dynamic penetration and changing logic.

Behind the staged success of Chinese mobile phone companies, there are profound strategic and even philosophical foundations worth summarizing. The "edge strategy" thinking not only conforms to the Yin-Yang dialectic of Eastern philosophy, but is also based on the deconstructionism of Western scientific spirit:

First, the "edge strategy" recognizes that an organization should be multidimensional, and therefore its "strategic core" is vague - it may pursue high sales, or it may hope to make products that satisfy customers, or it may be a good reputation for the organization. The edge strategy emphasizes the dynamic ambiguity of the "center" of organizational activities.

The so-called center is where you invest the most manpower and material resources and where marketing is most focused. This "center" you think of may be at the center of a certain dimension and is driving your organization, but it is not the center in other dimensions. In other dimensions, it is powerless to drive the organization. As our perspective changes, the center is also changing. This just reflects the ambiguity and multifaceted nature of Chinese mobile phone brands.

Second, the "edge strategy" also recognizes that change is happening all the time. What we may consider as a strategic high ground today may become a burden tomorrow. In our current global, diversified and dynamic business environment, it is not a question of "whether the world will change", but a question of "when". Therefore, the "center" we are experiencing now may be, or may not be, or may no longer be within your value proposition positioning. For this reason, the edge strategy internalizes the essence of strategic change. It encourages you not to focus only on the present, but to think from a longer-term perspective about where the organization comes from and where it is going.

In summary, the profound logic of the historic rise of China's mobile phone industry lies in its industry-leading strategic capabilities. In this world-class top companies participated in the competition, Chinese mobile phone brands not only learn from their opponents, but also constantly seek opportunities from their own edge perspectives. The five major brands of "Huarong Mi OV" not only reflect the dialectical thoughts of Eastern philosophy, but also deeply learn from the modularization of Western management science to promote the coordinated transformation of strategy and organization. Now, Chinese mobile phone brands have almost become the brightest business card of China's manufacturing. From the more advanced strategic competitive and cooperative relationships, they reflect vitality in changes.

At the root of this, in the top business war, the "edge strategy" is not only a centralized preservative for "Huarong Mi OV", but also a core idea that will drive the future.

The marginal perspective not only allows major manufacturers to learn from their competitors humbly and strive for self-improvement, but also see the present from the future, be brave to make breakthroughs and firmly focus. This may be the profound logic of the historic rise of China's mobile phones.

At the same time, the idea of ​​"marginal strategy" also reminds smartphone companies that are already in "centralized success" to prevent themselves from being subverted and surpassed. They must quickly find a future center to continue their lives and continue their legends.