OV's performance has exploded with impressive growth, but there are hidden concerns amid the prosperity

Recently, the US research company IDC released the global mobile phone sales in 2016. The data showed that the total sales of smartphones in 2016 was 1.4706 billion units, an increase of only 2%. Although this figure is higher than IDC's previous forecast, it is far less than the 10.4% growth rate in 2015.

Samsung, which ranked first, saw its market share drop by 1.1 percentage points due to the explosion of Note 7, a year-on-year decrease of 3%.

Although Apple's fourth-quarter performance was good, its total sales in 2016 were 7% lower than in 2015, a larger decline than Samsung's.

Huawei ranked third in total sales, with a total of 139.3 million units in 2016, a year-on-year increase of 30.2%, and a market share increase of 2 percentage points to 9.5%.

The most impressive performance in 2016 came from OPPO and vivo, which ranked fourth and fifth. OPPO's sales increased by 132.9% in 2016, with a total sales volume of 99.4 million units and a market share of 6.8%. Vivo sold 77.3 million mobile phones in 2016, an increase of 103.2%, with a market share of 5.3%.

The glory of OV is an indisputable fact, but we should see that Xiaomi was also so glorious a few years ago, and Xiaomi has already belonged to Other in 2016. While OV is shining, it is not without hidden worries.

1. Why did OV rise explosively?

The author has written before that when smartphones, a consumer product, were first popularized, it was a process in which smartphones replaced feature phones. During this stage, low-priced brands were popular.

In China, it was roughly from 2012 to the end of 2014, which is the period when Xiaomi rose and became very popular. Huawei Honor and Coolpad Dazen, which followed suit during this period, also achieved success.

After 2015, it was the stage of replacing low-end phones with mid-to-high-end phones. Brands with low brand positioning were replaced at this stage, and OV and Huawei, which have higher positioning, became the beneficiaries.

Compared with Huawei, OV is stronger in publicity and channels. OV's predecessor has been engaged in electronic consumer products for more than ten years, and has accumulated a large number of sales channels and excellent profit distribution methods. OV can cover from first-tier cities to eighth-tier towns, and its advertising endorsements cover all high-rated programs. The product quality and workmanship have always been high-quality, and after-sales service is even more important.

To sum up, although OV's products are not highly configured, the experience is not inferior, and the comprehensive services are outstanding. They naturally emerge as a dark horse in the environment of hardware oversupply.

The rise of OV is the result of its long-term efforts, but it is mainly a historical process. The second round of phone replacement trend has given mid- to high-end brands opportunities, and OV has taken the biggest bite of the pie in this round of phone replacement trend.

2. OV's hidden worries

Since ancient times, it is more difficult to defend a kingdom than to conquer it. When you rise up and devour the market share of others, you are unstoppable. This is the case with OV today and Xiaomi a few years ago.

When your market share is large enough, it is up to you to maintain your share and prevent others from taking it away from you.

After the rise of OV, they ate the cake of the second round of phone replacement. In the third round of phone replacement, OV has no one to continue to devour. The top five are already Apple, Samsung, Huawei, and OV, and none of them is weak. In the third round of phone replacement, even if OV can maintain its advantage in the competition, it will not have a high growth rate of more than 100%.

The overall smartphone market has only grown by 2%, and it is unrealistic for a few brands to maintain growth of more than 100% for a long time.

OV also has its weaknesses. Compared with most Chinese manufacturers, OV is a strong player in mobile phone technology.

When the giants finally competed, Apple was not only a mobile phone manufacturer, but also a technology computer manufacturer with decades of accumulation; Samsung was not only a mobile phone manufacturer, but also involved in the entire consumer electronics industry chain, from processors to memory, flash memory, CMOS, lens modules, and display screens; Huawei was not only a mobile phone manufacturer, but also its communication technology was at the forefront of the world. Even Lenovo, which is now retreating step by step, has accumulated considerable patents thanks to Motorola.

When entering a market where giants compete and fighting a patent war, OV's ammunition reserves are insufficient.

The direction after the Chinese market is saturated is internationalization, and internationalization will face the threat of patent wars. Apple, Samsung, and Huawei are patent giants in themselves, and it is not enough for OV to rely on the patent accumulation in recent years and Qualcomm's patent anti-licensing protection. This is OV's hidden worry.

3. OV's future lies in internationalization

In fact, OV is also working hard to go international. In the markets of Thailand and Malaysia, OPPO has achieved good results, and in the Taiwan market, OPPO ranks among the top five.

In the battleground Indian market, vivo ranked second in the fourth quarter of last year with a market share of 10%, while OPPO also achieved 8%. OPPO's African strategy, which started in Egypt, has also taken off.

Compared with Europe and the United States, where patent barriers are strict and giants are deeply intertwined with the political circles, the Asian, African and Latin American markets are more conducive to the entry of OVs with weaker patents, and these markets can also receive immediate returns.

What OV needs to do is to maintain its advantages in the domestic market, step up its expansion into the third world market, and increase its market share and profits globally.

As for the European and American markets, when the time is ripe and the strength is strong enough, OV may be able to enter the European and American markets by acquiring companies, purchasing patents, and cooperating to set up factories, and it may not be impossible for it to catch up.

In the past two years, Chinese home appliance companies have developed well in Europe and have made good profits by relying on the European market amid the overall shrinkage of the TV market.

Televisions reached saturation in the country earlier than mobile phones, and the path taken by home appliance companies is worth learning from for Chinese mobile phone companies.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.