Lei Jun's anxiety: Xiaomi has passed its peak and is in decline

Xiaomi released a new mobile phone, and it was the first time that it didn’t cause a sensation.

People familiar with Xiaomi know that this is not normal. In the past, every time Lei Jun appeared, there would be all kinds of jokes being consumed by everyone, such as taking selfies, throwing iPhones, and making rice cookers. "Are you ok" once became a popular greeting.

You know, Lei Jun is going to release the largest screen phone in history, and he will personally broadcast it live. In addition to Xiaomi official website, QQ space, Toutiao and Bilibili are also involved. With such a big fuss, it is said that the number of independent visitors watching the Xiaomi Max launch conference live is close to 30 million. Everyone exclaimed that Lei Jun has the potential to be an Internet celebrity.

However, Xiaomi Max did not take the circle of friends by storm, and it can even be said to be "silent".

Compared to the 2014 when everyone was learning from Xiaomi, few people are talking about "Xiaomi's success" now. The outside world is curious about what Xiaomi is going through, but Lei Jun remains silent.

“Lei Jun’s Anxiety”

Some industry insiders say Lei Jun is a Zhuge Liang type of person, who is not like many company bosses who stay behind the scenes, but likes to do things himself. You know, he is a 47-year-old serial successful entrepreneur.

Before JD.com went public, Liu Qiangdong went to Columbia, the United States, for a period of time to delegate power. It is said that Lin Bin met a senior executive of JD.com at an event at that time and asked him directly, "Is it true that Liu Qiangdong went to the United States? Are you guys lying to me?"

Lin Bin admitted that at that time, neither he nor Lei Jun had weekends. Lei Jun was known as the "model worker of Zhongguancun" and worked more than 14 hours a day. "We couldn't imagine what would happen to the company if he was away for half a year."

At the end of last year , Li Wanqiang returned to the company, and the outside world generally believed that Lei Jun's move was to turn the tide. In addition, at the beginning of the year, Lei Jun recruited people everywhere. Within a few months, he personally talked to everyone he could get in touch with in the industry. Lei Jun's deep sense of crisis is already an open secret in the industry.

The most common comment about Lei Jun is that he is orthodox yet surprising. His greatest strengths are that he is good at survival and cooperation, but not good at robbing and conquering, and is too cautious.

He is also very alert to possible frictions and tries to reduce unnecessary misunderstandings. Lei Jun said, "We hope to have as many friends as possible and as few enemies as possible." He also stated, "We are not exclusive. We are open and do not take sides."

In fact, Xiaomi has no shortage of enemies. And judging from the situation last year, Lei Jun seems to be wavering and thinking about the path of Xiaomi.

The most obvious manifestation is that Xiaomi lost its rhythm last year and made many mistakes in channels, brands and products. At the beginning of the year, after the Xiaomi Note top-end version tried the water for 3000+ phones for the first time, it lowered its price back to 2999 before the phone was released. At a time when Internet brands such as Meizu and Honor have begun to move towards high-end, Xiaomi can only continue to establish its brand positioning of "high cost performance". This time, the high-end version of Xiaomi Max at 1999 yuan can also prove that Xiaomi will continue to attack the thousand-yuan phone in terms of products.

In November, Xiaomi released three products, including the Redmi Note 3, Xiaomi's first all-metal body. In the mobile phone circle where appearance is everything, Xiaomi has never launched a mobile phone with an all-metal body. Even the top-end version of Xiaomi Note has a glass body, which at least shows that Xiaomi has failed to gain a foothold in this regard.

It was also at that press conference that Lei Jun, for the first time, showed his emotions, telling about the difficulties of Xiaomi and himself when he first came to Beijing 24 years ago. He was so emotional that his voice choked up and he bowed to thank the Mi fans in the audience. I am willing to believe that Lei Jun was anxious and sad at the time. After all, he was a shining star a year ago, but ten months later he became a follower in the industry.

Compared with the problems with products, channels and brands, the decline in voice and momentum seems to better reflect Xiaomi's situation. As an Internet mobile phone company, the danger of not being mentioned is higher than being scolded. Being scolded means that it can still be used as a target by friendly competitors or companies in the industry, but not being mentioned means there is no comparability.

“Ranking falls out of the top five in the world”

Just last month, Xiaomi was exposed to have a decline in mobile phone sales in the first quarter of 2016. According to @Kevin Wang's Diary, who is certified as "IHS iSuppli China Research Director Wang Yang" on Sina Weibo , Xiaomi sold 14.8 million smartphones in the first quarter of 2016 (including overseas).

Although he also pointed out that Xiaomi's performance was good during the period of product restructuring when Redmi 3 and Redmi Note 3 were out of stock, if compared with Xiaomi's sales of 14.98 million units in the first quarter of 2015, this number is not bad.

However, in the horizontal coordinates of the industry, Xiaomi's situation is worrying. The latest data released by market research firm IDC shows that Xiaomi has slipped out of the top five in global smartphone sales.

Previously, Samsung and Apple were in the lead, with Huawei, Lenovo, and Xiaomi ranking third, fourth, and fifth respectively (although the combined sales of the three companies were not as high as Samsung's, they were still good performances). However, the latest rankings this year show that the top three companies have not changed, but Lenovo and Xiaomi have been squeezed out of the top five, replaced by OPPO and vivo.

For Xiaomi, its current advantages are slowly being lost, from the questioned hunger marketing model to the MIUI system that it is proud of, which is gradually revealing its shortcomings.

In contrast to the growing demand, Xiaomi has set a very small sales volume for each round. It is reported that on April 6, the "Mi Fan Festival", there were only 2,000 units of the black version of Xiaomi 5 in stock. Regarding this issue, Xiaomi's official explanation is that the "Snapdragon 820" processor is in short supply and Xiaomi 5 is still in a state of capacity climbing. However, it has been more than two months since the official launch, and there is still no stock, which has been questioned by the industry as playing "hunger marketing" again. But for the current consumer market, this kind of gameplay is also rapidly losing its own consumer groups to a certain extent.

In addition, at the conference, Xiaomi launched the MIUI8 system, "Xiao Milan Pavilion ", as a new font developed by Xiaomi, which was called by Xiaomi as surpassing Google 's Source Han Sans. However, some people pointed out that Google's Source Han Sans is a set of multiple fonts for PC operating systems and mobile terminals, and Google's Source Han Sans has 7 weights, suitable for different occasions, while Xiao Milan Pavilion has only two. The most important thing is that Google's Source Han Sans is completely open. Moreover, the NFC function of Xiaomi Max mentioned earlier has not been realized, and Lei Jun said that it will take 1-2 years.

Looking back at the situation in the mobile phone industry in the past six months, it is a fact that Xiaomi's popularity has faded. In 2015, Xiaomi set a total sales target of 80 million units, but only achieved sales of more than 70 million units, but won the first place in domestic sales. However, it still could not resist the momentum of Huawei's rise. You know, if you combine global shipments, this old company is the real boss of the Chinese mobile phone market.

Huawei's 2015 financial report shows that Huawei's consumer business had sales of more than 20 billion US dollars in 2015, with terminal shipments of 108 million units, a year-on-year increase of 44%, far exceeding the global average growth rate of the smartphone industry, making it the first smartphone brand in China to have annual shipments of over 100 million units.

By entering the mid-to-high-end market, Huawei has achieved an increase in global market share. According to the GfK report, Huawei's smartphone retail share in the Chinese market continues to lead, and it ranks third in the global market with a share of 9.9%. Among them, Europe, Latin America, the Middle East, Africa and other regions have achieved rapid growth and leading market share. In some developed countries in Western Europe, Huawei has also made major breakthroughs in the high-end smartphone market, ranking in the top three in market share.

According to the global smartphone sales rankings in the first quarter of 2016, Huawei's smartphone sales increased by 3% year-on-year, its market share jumped to 8.2%, and its shipments increased by 10 million units year-on-year.

“Reasons for Xiaomi’s decline”

The question is, has Xiaomi really “passed its peak”? Why has it fallen into decline?

The general market view is that, first of all, although Xiaomi's current online sales model has some innovations, the channels are relatively single. Compared with Huawei's efforts both online and offline, Xiaomi's mobile phones, which only do e-commerce, are more likely to hit the ceiling. Even online, there are many competitors. For example, Huawei Honor, LeTV, and Meizu, and these three companies have their own advantages in quality, cost-effectiveness, appearance, etc., which are enough to grab a part of Xiaomi's market share.

Secondly, Xiaomi's low price is no longer an advantage. When Xiaomi mobile phones were at the forefront, smartphones were becoming popular. At that time, Xiaomi mobile phones were smart and cheap, with high cost performance and were widely loved. But now smartphones are very common.

Data shows that by the end of 2014, the penetration rate of smartphones in first-tier cities had reached 94%. Users are more likely to replace their smartphones, and ordinary users tend to look for models with higher configurations. Therefore, Xiaomi's low-end phones no longer have an advantage. In addition, the current competition in the low-priced mobile phone market is fierce, and brands such as OPPO, vivo, Huawei, and Gionee are not weak in their ability to expand into lower-tier markets.

Another problem is the marketing method, which has hardly changed since Xiaomi started. It is still the same as the press conference first, followed by online sales. The cloud service is not used well and has been criticized as an advertising push service. The starvation marketing method has caused Mi fans to turn against it frequently.

Of course, Xiaomi's product positioning is also worth paying attention to. Xiaomi, Redmi, Redmi Note, and a series of products seem to focus on cost performance. Without differentiation, there will be no differentiated profits.

“What is the potential of Xiaomi’s ecosystem?”

Some people also reminded that mobile phones are only part of Xiaomi. Lei Jun's ambition is not mobile phones, but to build an ecosystem and occupy the entire digital end. Therefore, even if the mobile phone market is declining, the future of Xiaomi's ecosystem is still there.

Indeed, Xiaomi has also invested in a series of smart hardware companies. In addition to making mobile phones, it also sells TVs, mobile power banks, tablets, power strips, rice cookers, and wristbands. According to the report card disclosed by the "Xiaomi Ecosystem Plan": Xiaomi has invested in 55 companies, 7 of which have annual revenues of over 100 million, 2 have annual revenues of over 1 billion, and 4 have been valued at 1 billion US dollars and have become "unicorns."

Lei Jun also emphasized that Xiaomi is not an investment company, but is seeking to establish links with them and use investment to open up the territory of the smart hardware empire. More precisely, it is to establish strategic cooperation with these companies and integrate them into the Xiaomi ecological chain.

Hong Feng, the vice president of Xiaomi in charge of MIUI, said in an interview with China Entrepreneur Magazine in 2015 that in the future not only will Xiaomi's investment or cooperation hardware be included in the MIUI system, but Xiaomi will also establish a set of smart home standards and protocols. If enough hardware companies accept Xiaomi's standards and protocols, then products that do not adopt this set of standards will naturally be at a disadvantage in market competition.

In fact, Xiaomi has encountered many challenges in the process of building its ecological chain.

In December 2014, Ericsson filed a patent lawsuit against Xiaomi in India. Three days later, the Delhi High Court of India ruled that Xiaomi was prohibited from selling and importing mobile phones in India because it infringed Ericsson's patents. Although Xiaomi announced that the ban in India had been lifted eight days later, Xiaomi's patent issues began to be controversial. Facing accusations, Lei Jun repeatedly emphasized that the patent war was Xiaomi's rite of passage. Lin Bin, president of Xiaomi in charge of e-commerce, denied that Xiaomi would acquire patents through acquisitions and other means, "We have been on the path of independent research and development from the beginning."

Xiaomi once adopted a low-price strategy in the smart home sector, which was criticized by its peers. Some smart hardware manufacturers even worried that Xiaomi would bring bad influence to the industry. "Others sell switches for five yuan, but Xiaomi can only sell them for two yuan. I don't want to make our excellent products so cheap," said a smart home company executive.

In addition, the shipment volume of iHealth smart blood pressure monitors in the Xiaomi ecosystem has only reached tens of thousands so far. Lei Jun once emphasized that Xiaomi only makes three products: mobile phones (tablets), TVs (boxes) and routers, which are respectively the entrance to the mobile Internet, the entrance to home entertainment and the seesaw for smart homes. However, the smart router has also been slow to reach its ideal state. Since its launch in April 2014, the shipment volume is still far from the one million units planned by Lei Jun.

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.