Xiaomi surpassed Huawei to become the world's third-largest smartphone brand in terms of shipments.

It sounds like something that is unbelievable. After all, Huawei has become the largest player in the Chinese smartphone market in the past year or two, and it has also performed well in the international market. However, in addition, Xiaomi is constantly looking for opportunities to become a market leader again.

Changes in the market position of the two will indeed trigger a series of discussions. However, the facts that occur are not as simple as it described, and almost all manufacturers are "victims."

All mobile phone manufacturers are affected as the epidemic spread 

In the global smartphone market report released by the research organization Strategy Analytics on March 16 (later referred to as "unofficial release" by its official Weibo), the shipment of TOP 6 mobile phone manufacturers in the first two months of 2020 has changed compared with the previous months: the shipments of all manufacturers have declined, and in February Huawei's shipments were overtaken by Xiaomi.

During January, mobile phone manufacturers other than Huawei experienced a slight decline in shipments but maintained roughly the same level as the three months in Q4 2019. By February, only Samsung's shipments still reached 18.2 million, Apple's shipments dropped to 10.2 million, Xiaomi's shipments were 6 million, Huawei's shipments were 5.5 million, OPPO's reached 4 million, and Vivo's were 3.6 million.

Xiaomi's smartphone shipments surpassed Huawei's, but this is not worth anyone's excitement. Due to a series of reasons such as the epidemic, the entire mobile phone market has seen a significant decline, and the change in ranking is only part of it. I believe that the result of this abnormal environment competition is not what Xiaomi expects to "return to No.1 in China in the first ten quarters."

The impact of the epidemic on the global smartphone market is significant, which directly leads to the reduction of the shipment scale of top 6 from the average of nearly 100 million units per month of Q4 in 2019 to less than 50 million units in February this year. The epidemic is not an opportunity for any manufacturer, but a disaster for all manufacturers in the mobile phone industry.

The 2020 China Mobile Market Analysis Report released by the China Information and Communication Technology Academy in February also illustrates this from the other side. The total Chinese shipments in January were 20.813 million, which fell directly to 6.384 million in February. In the same period last year, the number of shipments in January reached 34.048 million and the number of shipments in February reached 14.511 million. Changes in the Chinese market accounted for an important factor in the global market trend.

So as we can see, the whole smartphone market is down, both in China and globally. Every manufacturer is implicated and can't stay out of the business. Compared with that, it doesn't make much sense to ship more goods in a short time. For all of us, it is more important to survive in this disaster than to defeat their opponents.

The mobile phone market suffered a double blow

The epidemic is the first factor affecting smartphone sales in the past two months. The traditional Chinese New Year holiday has reduced the speed of mobile phone production. The supply chain supply slowdown and delays in factory resumption due to isolation and other measures have even magnified the negative impact on production.

Due to the need to use the budget in hand to purchase living and anti-epidemic materials, the transfer of funds has led to a decline in consumer demand for mobile phones. At the same time, the offline channels, which originally accounted for a significant proportion of mobile phone shipments, also failed to operate and open because of epidemic prevention work. During the outbreak, the entire chain of the mobile phone market from production, shipment to sales slowed down.

Moreover, the mobile phone market itself is facing a trend of shrinking the overall scale. After the demographic dividend in the Chinese market has been exhausted and turned into a stock market, other global markets have not seen significant growth. What's more, the engine for the next market surge cannot be found in a short time. The 5G boom originally favored by operators and mobile phone manufacturers in various countries has also occurred some unexpected episodes.

Although it has been proposed more than a year, no country has completed large-scale high-quality 5G network coverage so far. The discussion of Sub-6G and millimeter wave routes and the investment in network construction have made the speed of global 5G networks coverage come slowlier than expected. Even Chinese operators who plan to invest hundreds of billions of dollars to build 5G networks have not reached the point where there are 5G signals everywhere.

Consumers have a very clear thought: since there is no 5G network that can compete with 4G network at the moment, upgrading 5G mobile phones will not be a good option, not to mention the fact that it is difficult to go shopping and get available funds. The 5G market scale that originally made mobile phone manufacturers full of expectations is still a gold mine buried underground, which needs to be further explored.

What's even worse for the sale of 5G mobile phones is that the price of mobile phones has obviously increased. The middle-end 5G mobile phones have reached 2,000 yuan, and that of high-end products have gone up to 3,000 yuan, which is 1,000 yuan more expensive than previous years' 4G products. It is inseparable from the rising cost. It is said that the shipping price of the 5G flagship platform has doubled, and the arms race of mobile phone specifications such as imaging is also a major factor.

The decline of market consumption capacity and the rise of flagship mobile phone price have occurred at the same time, which even affected Samsung. The Samsung Galaxy S20 is sold from 6,999 yuan, and the top flagship S20 Ultra is sold from 9999 yuan. According to industry sources cited by the Korean media the elec, the Galaxy S20 series has not sold as well as last year's S10 series, and Samsung will reduce parts orders.

Xiaomi is relatively lucky. Compared with the previous year's Xiaomi Mi 9, Xiaomi Mi 10 has increased its pricing by more than 1,000 yuan, but it is the first product to adopt Snapdragon 865. And it will continue to supply in February. The product's own functions, such as photography, charging, and design, also meets the performance of the new price segment.Therefore, consumers are willing to actively purchase this new product released in the epidemic.

Offline sales across the industry also have been affected. There are no exceptions for Xiaomi's self-operated stores and its authorized stores, which have been closed for a short time or shortened their business hours. Xiaomi's mature online sales channel has provided support for it. In the data given by JD.com, Xiaomi Mi 10 has also become one of the best-selling 5G models of the month. Xiaomi's 6 million shipments in February may be the result.

Huawei just ran into a gap period. Except for the top product Mate Xs, which had fewer shipments, Huawei did not launch other new products in China during this period, lacking an effective stimulus to the market. Many manufacturers' means of obtaining growth through overseas markets has also slowed down due to a series of effects of US sanctions. Therefore, during this period, Huawei showed a sharp decline in shipments.

Will this change affect the status of the two manufacturers in the long run? I don't think we can draw conclusions now. Xiaomi has indeed achieved an advantage, but it still needs to make efforts to consolidate the results in many ways. The release of Huawei's new phones is coming soon, and it has also found a way to restore its overseas market.

The real competition will wait until the second half of the year after the outbreak or even next year.

5G is still an opportunity for manufacturers such as Huawei and Xiaomi

In 2020, which encounters the Black Swan event, what opportunities may the mobile phone market have?

The biggest opportunity is 5G. According to the data, the total shipments in January reached 20.813 million in 2020. The number of 4G mobile phones shipments was 15.03 million and the number of 5G mobile phones shipments was 5.465 million. In February, of the total shipments of 6.384 million, there were 3.96 million 4G mobile phones and 2.38 million 5G mobile phones. 5G phones don't seem to be popular in China.

From another perspective, it can be seen that 5G mobile phones are gradually becoming mainstream. In September 2019, the number of 4G mobile phones shipments reached 34.286 million, and the number of 5G mobile phones shipments was 497,000, a ratio of about 69: 1. In November of the same year, the number of 4G mobile phones shipments reached 28.299 million, and the number of 5G mobile phones shipments reached 5.074 million, a ratio of approximately 5.5: 1. In the first two months of this year, the ratio has changed to 2.7: 1 and 1.6: 1.

There is no doubt that 5G mobile phones are becoming mainstream products in the market, which is inseparable from the proportion of 5G mobile phones in the new phones. Of the 34 new phones listed in January, there are 18 4G phones and 8 5G phones, and in February there are 11 5G phones and 4 4G phones among 16 new phones. It is clear that price and network coverage are not the key factors affecting consumer preferences.

No one will deliberately reject high-quality new technology. Consumers already regard 5G as an important reason to buy, but there still need some opportunities to promote sales, such as more objective conditions to purchase, better network coverage, more adequate supply or more appropriate price.

The 5G mobile phones that have already been listed are mainly high-end flagship products. These products have higher prices and profits. They have also been recognized by consumers for the high specifications that come with them. However, the sales may not bring absolute market share advantages to manufacturers.

At the end of last year, many manufacturers said that they would provide 5G mobile phones to the low-end and mid-end product lines, and that may be the node of the 5G mobile phone market's explosion. Both Xiaomi and Huawei have made corresponding adjustments and preparations for the upcoming market opportunities.

Xiaomi Mi 10 set the tone for this manufacturer to steadily go to the high-end market. It has received quite good positive feedback in the market, and it has not completely lost the positive market image of Xiaomi's affordable pricing. The independent Redmi brand has such products as K30 5G which have refreshed the lowest price of 5G mobile phones, taking into account Chinese users' needs in different positioning.

Xiaomi has increased its product investment in overseas markets, launched special models for Indian and international markets such as the Redmi Note 9 Pro, and created corresponding products based on local needs. At the same time as Xiaomi 10 went overseas as a high-end product line, it also independently transformed the POCO product line into a brand, showing an attitude of deeply cultivating overseas market segments.

Huawei has a comprehensive product line covering the high-, middle- and low-end market in China: Mate and P series are both flagship products and have a large volume of shipments. The sub-brand Glory has gained a lot in Internet sales. Nova, which has been focused on in the past two years, also seizes an opportunity from OPPO and Vivo. Starting from P40, Huawei's 2020 new products will be released one after another.

In overseas markets that have a huge impact on Huawei's total shipments, Huawei's GMS alternative HMS has made preliminary preparations. And the mobile service ecosystem including maps, payments, and personal services has been supplemented. In addition to the user base that has a strong dependence on Google's ecology, the relatively complete overseas alternatives of HMS have the opportunity to regain rapid growth.

In conclusion, the report we just saw represents the market performance in a particular period of time. It cannot be simply and rudely estimated as the overall trend of the mobile phone market, nor can it be directly regarded as a milestone for a manufacturer to become a market leader.

The mobile phone market is experiencing double changes in the overall size and objective environment. The impact on each manufacturer is real, but the hidden opportunities have not disappeared. Perhaps after the epidemic is over, what will be waiting for us is to regain fierce competition and a growing market atmosphere.

This is an article from ifeng.com, translated by Chris Yuan.