Domestic manufacturers compete again in the 1,000 yuan smartphone market: domestic pressure, overseas pressure relief

After the conquest of 2014 and the release of flagship phones at the beginning of this year, domestic mobile phone manufacturers have recently shifted their product and marketing focus to thousand-yuan phones. After TCL launched the 799-yuan Momoda 4G new product, Hammer's thousand-yuan phone "Little Hammer" obtained 3C certification, and Xiaomi's Redmi series, Meizu's Meizu Blue series, Huawei's Honor series, etc. will also start a new round of competition in the entry-level market below 1,000 yuan. In addition, with the participation of LeTV, 360, etc., domestic mobile phone manufacturers are likely to return to the thousand-yuan phone market. This is in sharp contrast to the fact that domestic manufacturers have stated that they will reduce the release and competition of new thousand-yuan phones in order to pursue revenue and profits, and even run counter to it?

First of all, from the perspective of the domestic mobile phone market, in the first quarter of this year, the Chinese smartphone market, which had been growing rapidly, experienced its first quarterly decline, which undoubtedly made domestic mobile phones, which are still mainly based on the domestic market, feel the fierce competition and pressure. In particular, although Apple's iPhone 6 and iPhone 6 Plus were launched more than 8 months ago, in the first quarter of this year, their momentum in the Chinese mobile phone market still showed no obvious signs of weakening, ranking first in terms of shipments. At the same time, the performance of Samsung Galaxy S6 and Galaxy S6 Edge also exceeded that of its predecessor Galaxy S5. All these made it difficult for domestic mobile phone manufacturers to obtain a considerable or expected market share for their mid-to-high-end models to ensure the growth of revenue and profits. At this time, it is particularly important and realistic to maintain or promote the growth of market share with thousand-yuan phones.

You know, after the bloody storm in the domestic mobile phone market last year, the traditional "China Cool Alliance" that supported the Chinese mobile phone market has disintegrated. Lenovo and ZTE have fallen out of the top four in the Chinese mobile phone market in the first quarter of this year. ZTE was the first mobile phone manufacturer to propose to take the boutique and high-end route last year, but the actual results were not ideal, so-called lessons from the past. So when the competition situation becomes more severe this year, no one dares to take it lightly. Since it is difficult to make a substantial breakthrough in the high-end market, it is better to return to the thousand-yuan phone market to maintain market share first.

According to the latest statistics from Counterpoint, among the top 10 smartphones sold worldwide in April this year, only two smartphones from Chinese manufacturers made the list, namely the Redmi 2 ranked 5th and the Redmi Note ranked 9th, and both of these smartphones are priced below 1,000 yuan. Given that Xiaomi, to which these two models belong, sells almost all of its products in the domestic market, and ranked second in the Chinese smartphone market in the first quarter of this year with a market share of 13.1%, second only to Apple's 15.7%. In addition, nearly 60% of the sales of Huawei, which ranks third, are 1,000 yuan smartphones. It can be seen that 1,000 yuan smartphones (or low prices) are the only effective means (at least to maintain market share growth) for domestic manufacturers to deal with the pressure from Apple and Samsung in the high-end domestic market and the slowdown in the growth of the entire domestic mobile phone market. If Xiaomi and Huawei are like this, why don't other domestic manufacturers follow suit with 1,000 yuan smartphones?

Looking at the overseas market, it is precisely because of the pressure from the domestic market mentioned above that domestic manufacturers have taken overseas markets as a second battlefield to ease the pressure of domestic market growth. So what is the situation and characteristics of this second battlefield? Where is the breakthrough point or growth momentum for domestic manufacturers?

According to the same statistics from Counterpoint, last year in the global smartphone market consisting of Asia Pacific (including China), Europe, Latin America, Middle East/Africa, and North America, Samsung ranked first (in terms of sales volume) in three of the above five markets, namely Europe (market share of 35%), Latin America (30%), and Middle East/Africa (46%). The top spots in the other two markets were occupied by Apple, namely Asia Pacific (16%) and North America (37%). In comparison, among the above five markets, the ones with the highest market share included in the statistics are Xiaomi in the Asia Pacific market (market share of 9%, nearly 1/2 of Apple, which ranks first); ZTE in the European market (market share of 3%, only 1/10 of Samsung, which ranks first); ZTE in Latin America (market share of 5%, only 1/10 of Samsung, which ranks first); Huawei in the Middle East/Africa market (market share of 7%, only 1/6 of Samsung, which ranks first); and ZTE in the North American market (market share of 5%, only 1/7 of Apple, which ranks first).

It is worth noting that, from the aforementioned Counterpoint statistics of the top 10 smartphones sold worldwide in April this year, Apple's iPhone 6, iPhone 6 Plus and Samsung's Galaxy S6, Galaxy S6 Edge occupy the top 4 positions, and these are all high-end models. Even the models of Apple and Samsung ranked after Redmi 2 are all high-end models of the previous generation, such as Apple's iPhone 5S (ranked 7th), Samsung's Galaxy Note 4 (ranked 6th), Samsung's Galaxy S5 (ranked 8th), and the prices of these previous generation flagships are comparable to the prices of our current mainstream flagships (3,000-4,000 yuan) (even so, users would rather choose the previous generation flagships of Apple and Samsung than our mainstream flagships of the same price). It can be seen that even among the thousand-yuan phones, only Xiaomi, a domestic manufacturer, has entered the top 10 in terms of sales.

In addition, the brand awareness and influence of domestic mobile phone manufacturers in overseas markets are far less than in the domestic market, which means that domestic manufacturers face huge challenges in the competition for market share, not to mention revenue and profit, especially in the Latin American, Middle Eastern/African markets that our domestic manufacturers focus on. And judging from ZTE and Huawei, which have really made some gains in overseas markets (at least entered the market share statistics list), they are mostly thousand-yuan phones (including customized phones for operators). As more domestic manufacturers join the competition for overseas markets, there is no doubt that, just like the current domestic mobile phone market, thousand-yuan phones are the foundation for domestic manufacturers to gain a foothold in overseas markets, and the competition is equally fierce.

Based on the above analysis, we believe that the reason why domestic manufacturers have recently returned to the production of 1,000-yuan phones is that the domestic market is under pressure and the overseas market is relieved. It seems to be a proactive but helpless choice. What it reflects is that domestic mobile phone manufacturers still have a long way to go in terms of innovation in mobile phone value and shaping brand premium. Focusing on or focusing on 1,000-yuan phones in both the domestic and overseas markets is a severe test for domestic manufacturers' revenue and profits, especially profits.

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.