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LeEco Mobile Phones "Compete on Costs" to Clear the Mist and Move Towards Free Hardware
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In 2015, LeTV once again emerged as a dark horse in the domestic smartphone industry. What is the biggest selling point of LeEco phones? Borderless ID? Dual flagship processors? Full metal body?It was not until the launch conference on April 14, when LeTV Chairman Jia Yueting talked about the product pricing strategy, that we realized that all these elements about the product itself before the release of LeTV mobile phone were more like a foreshadowing before the launch of new products. This time, LeTV's real killer feature is to differentiate itself through the ecological model, and to firmly lock in users with mass production cost pricing and ecological services. BOM information becomes the industry's "magic mirror" At the launch of LeTV Superphone, Jia Yueting announced that "LeTV will break the boundaries between cost and price", and the key word of "breaking the boundaries" is BOM. BOM stands for Bill of Material, which means the bill of materials in the manufacturing process of a product. If the manufacturer is willing to disclose the details, it is actually a comparison table of production costs. For example, in the BOM information of Le 1 Pro released by LeTV, in addition to being able to fully present the parts information of each part of the phone, the pricing of each component is also clearly displayed. From this we can see that the cost of the Qualcomm MSM-8994 processor chip, which occupies a core position in the mobile phone, combined with the RF and memory modules, has exceeded RMB 1,000. In contrast, the cost of integrating functional modules including HIFI, MHL, and 4in1sensor is less than RMB 60. The significance of publishing BOM information is undoubtedly to provide the most direct and comprehensive reference for the pricing of mobile phone products. Although the current smartphone market has many domestically produced mobile phone products at representative price points of 699 yuan, 999 yuan and 1999 yuan, to be fair, most ordinary consumers and even digital enthusiasts do not know why these mobile phone manufacturers set the prices this way. Why do Meizu and Xiaomi, whose corporate values and product hardware and software designs are completely different, have similar prices? How much profit margin does Xiaomi 4 have after a 300 yuan price cut six months after its launch? And is it really reasonable that Apple's iPhone has always been so expensive? Through the BOM information of material-related costs, it is easy to see whether the manufacturer's attitude towards the market and users is conscientious. What does it mean to have one million people participating? There is no doubt that LeTV is not a brand that has been involved in the smartphone industry for a long time. From a market perspective, the popularity of LeTV phones cannot match or surpass existing competitors such as Xiaomi and Meizu. However, this time, the "national pricing" campaign initiated by LeTV, which prices products based on BOM information and mass production costs, has received responses from over one million users and won the support of everyone. Why do users support LeEco? Because users do not know enough about the mobile phone products that accompany them every moment, especially in terms of price. Just like LeEco's slogan of "exposing the shady profits of the so-called 'best value for money mobile phone'", for domestic consumers, manufacturers setting an attractive price is indeed the most effective means to impress consumers' purchasing psychology. But on the other hand, it also becomes a fancy tool to hide the mystery behind the product. Take the Apple iPhone, which is most familiar to people, for example. Whenever a new iPhone is released, it is inevitable that experts from all walks of life will disassemble the iPhone and guess the actual product cost spent by Apple. Relevant data shows that after disassembling and analyzing Apple's latest iPhone 6 and iPhone 6 Plus, it was concluded that the cost of iPhone 6 is approximately US$200 to US$247, and the cost of iPhone 6 Plus is between US$216 and US$263. This estimate already includes the assembly fee of between US$4 and US$4.5 for parts and labor costs for each device. But judging from the actual selling prices of iPhone 6 and iPhone 6 Plus, there is a huge difference compared to their actual costs. The entry-level iPhone 6 Plus is priced at $749. Even when comparing the same models, the cost of the 128GB version is theoretically only $47 more than the 16GB version, but the actual price difference is as high as $200. What is even more unacceptable is that creating huge profit margins on mobile phone products seems to have become a habit for most mobile phone brands, even for brands like Apple that can generate tens of millions of sales in just three days. If the 55% profit share of the first generation of iPhone is already surprising enough, then starting with this generation of iPhone, Apple's profit margin has been directly aimed at 70%. Either relying on the word-of-mouth of product usage accumulated over the years, or relying on the brand's own popularity, these achievements should have been an incentive for manufacturers to make continuous progress. However, now, they have gradually become excuses for mobile phone brands to impose a "reasonable premium" on their products. Consumers are already spending a lot of money to pay for the logo on the back cover of their phones, and at this time, LeTV announced the mass production cost of mobile phones for the first time in the industry. Even the Le 1 series products were priced according to the mass production cost, which was much lower than the initial BOM cost of the entire machine. Obviously, this is what consumers are happy to see. Why are domestic competitors slow to follow suit? There are many domestic mobile phone brands. LeTV, a newcomer, made a bold attempt to "compete on cost" and also "invited competitors to compete and let users set prices". However, contrary to expectations, although LeTV has mentioned competing products such as Xiaomi Note and Huawei Mate 7 many times, a week after the release of LeTV mobile phone on April 14, these domestic competitors have still chosen to remain silent. Why does LeEco dare to do what Xiaomi and Huawei don’t? We can perhaps see the reason from two aspects. First, the pricing of products such as Xiaomi Note and Huawei Mate7 may not have been reasonable from the very beginning. As the most expensive Xiaomi phone, Xiaomi Note has broken through the 1,999 yuan price threshold of domestic flagship phones established by Xiaomi itself. The top-end version of Xiaomi Note has even exceeded the 3,000 yuan mark. The positioning range of Huawei Mate7 is even higher than that of Xiaomi Note top-end version. If manufacturers now announce the costs, the cost data obtained based on BOM information will be far from the actual selling price of the products. This will obviously make these mobile phone brands embarrassed and they will have no way to explain to consumers who have already purchased these products. Secondly, brands such as Xiaomi and Huawei, which have been in the mobile phone industry for many years, may not be able to or dare to compete with LeTV in the "cost competition" arena. From the perspective of product model, Huawei is an old hardware manufacturer, and although Xiaomi has MIUI, which has a unique and differentiated route at the software and system level, it is Xiaomi phones that consumers value and are willing to spend manpower and material resources to "buy" them. After all, Xiaomi is still manufacturing and selling hardware. Unlike the above brands, LeTV has been emphasizing the concept of ecology since it initially planned to manufacture mobile phones. Although in the eyes of most people this seems a bit mysterious, it is undeniable that this has given LeTV an opportunity and made it possible for LeTV mobile phones to start with product prices. LeTV's powerful content resources, including video services, can form a strong internal support for the ecosystem. In the past, the hardware + service pricing mechanism allowed LeTV Super TV to rewrite the pricing model of smart TVs. At the LeTV mobile phone launch conference, Jia Yueting made it clear that by purchasing LeTV services, you can even buy a mobile phone for free. We are all paying attention to and looking forward to the arrival of the era of free hardware, but it needs to be clear that it is absolutely impossible for a pure hardware manufacturer to make hardware zero-cost or even low-cost. In terms of product prices, to reduce the proportion of hardware to zero or even to zero, it is necessary to leverage external resources such as services and ecosystems. This is also what LeTV has but other mobile phone brands do not have. Domestic mobile phone manufacturers are divided among themselves, and LeTV's efforts at this late point in time still bring new directions and opportunities to the saturated and homogeneous domestic mobile phone market. The cost issue has always been a topic that major mobile phone manufacturers are extremely reluctant to discuss. LeTV seems to have taught its predecessors in the industry a lesson on how to face up to the cost of mobile phone hardware to satisfy users and whether hardware can be free on smartphones in the future. 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. |
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