The US chip restrictions since May of this year have plunged Huawei’s mobile phone business into an unprecedented predicament. Although Huawei ranked first in the domestic smartphone market with a shipment of 142 million units and a market share of 38.5% in 2019, Its subsequent development still draws a question mark.
In June 2014, the termination of operator subsidies marked the end of the “China Cool Alliance (ZTE, Huawei, Coolpad, Lenovo)” era. Only Huawei survived, while the mobile phone businesses of ZTE, Lenovo and Coolpad have gradually been marginalized. . But since May last year, Huawei’s high-end chips have been robbed, while ZTE, Lenovo, and Coolpad are “not idle” at all.
In November 2019, Lenovo “resurrected” the Razr V3 15 years ago. With a “blade” folding screen mobile phone, it subverted the traditional public’s perception of the shape of the folding screen. In early September this year, ZTE was ahead of Xiaomi and OV. The mobile phone with an under-screen camera was first released, leading the battle of the mobile phone screen to a new stage; Coolpad did not move on the phone, but directly released its first lightweight all-in-one AR glasses in July.
▲Cool Xview AR glasses
In the past ten years of Chinese mobile phone arena, these old guns are still there, just “changing the world.” The ten-year cycle of China Kulian is a huge change in China’s mobile phone industry, and it is also a microcosm of the changes in China’s communication technology industry and the smartphone market.
No one can be strong forever, just as no one can remain silent forever. The “declining nobles” of ZTE, Lenovo, and Coolpad are still playing vigorously. Huawei, the giant of today’s robotics circle, seems to have been poked in the “Achilles’ Heel.”
In the past ten years since 2011, how has China Coollink’s mobile phone business been developing? Is it a new path or is it hard to survive? In the context of the era of 5G, AIoT, big data, and cloud services, ZTE has added 5G chips, new infrastructure, and Lenovo’s entry into the data center. Cool is interested in smart cities and is developing B-end business. What they sell in the gourd What medicine?
The benefits of this article: From the battle of hundreds of machines to the stronger, who is the leader in the 5G mobile phone era? Recommend the in-depth report “Learning from History: Looking at the Future Battle of 5G Mobile Phones from the Evolution of China’s Mobile Phone Industry Pattern”, the official account dialog box replied to[mobile]to download.
From four companies occupying 40% of the market, to three companies accounting for less than 3%
Although it is said that “the hero does not mention being brave in the past,” the China Cool League was indeed brave back then.
The domestic mobile phone market in 2011 can be said to be dominated by ZTE, Huawei, and Coolpad. In 2012, Lenovo entered the market through an omni-channel and multi-product line layout, and its market share has skyrocketed by 536%. Since then, the pattern of “China Cool Alliance” has formally formed.
At that time, domestic operators vigorously promoted the popularization of 3G and 4G networks, so China Kulian could get a lot of subsidies from operators. The sales model of charging mobile phones to send mobile phones became the mainstream. Under the operator’s subsidies for burning money, China’s smart The mobile phone market has ushered in a trend, and a large number of users have chosen domestic smart phones when they change their phones.
In the Chinese smartphone market in the fourth quarter of 2012, the total shipment market share of the four Chinese Kulian companies exceeded 40%. Among the four companies in China Coollink, Coolpad has the strongest momentum. According to the survey data of Sinopec, in April 2012, Coolpad’s shipments ranked second, second only to Samsung.
At that time, who could have imagined that in just a few years, ZTE and Coolpad’s market share was less than 1%. It would be difficult to find their annual sales from the statistical reports of data agencies, and Lenovo’s market share was only At 2.6%, Huawei has already eaten nearly 40% of the market.
▲China’s smartphone market shipments in 2019
Today, ZTE’s mobile phone business only accounts for 15% of total revenue. In addition, ZTE’s strategy for the mobile phone business is also very simple, focusing on profit rather than volume. This can be seen from ZTE’s high-end strategy. At present, ZTE’s Tianji Axon series are generally flagship smartphones, and the price is usually between 2000 yuan and 3000 yuan, and some models can even reach 4000 yuan or higher.
▲ Revenue distribution of ZTE’s financial reporting business in the first half of 2020
Since the business focus is not on running volume, ZTE mobile phones have the opportunity to try to take the lead in launching new technologies, such as 5G, under-screen camera and other technologies, to grab the first launch and create the only remaining volume for themselves. Regardless of the sales, we are the “starter” anyway, which to some extent proves ZTE’s R&D strength, and also reflects that the supply chain relationship that ZTE has accumulated over the years is still solid.
Now for ZTE, the mobile phone business is more like a “face-saving project”. It must be beautiful, and it must be able to make money. It doesn’t matter if the size is small, don’t lose money.
▲ZTE A20 screen camera smartphone
Lenovo’s smartphone shipments in 2019 are close to 40 million units, which is still a “good” number relative to ZTE and Coolpad, and its market share remains at around 2.6%.
In the second quarter of this year, Lenovo’s mobile phone business revenue was 7.65 billion yuan, accounting for only 8% of total revenue, down 27% year-on-year, and it also lost 350 million yuan. Lenovo’s mobile phone business seems to be “neither volume nor profit.” .
However, with the release of Lenovo’s savior gaming phone, Lenovo’s voice in the smartphone circle has responded. Lenovo is the top two giant in the global PC market by shipments. In recent years, the gaming market has been booming. Both notebooks and PC desktops have launched gaming series products aimed at gamers.
In order to give full play to its advantages in the PC field, Lenovo directly created the brand savior, focusing on gaming e-sports products. The rise of gaming phones also attracted the attention of Lenovo, and the savior gaming phone was born. For Lenovo’s hardware manufacturers, the “extreme cost-effectiveness” required by gaming phones is Lenovo’s strengths.
▲Lenovo savior gaming phone
However, the global shipment of gaming phones in 2019 will be no more than one million units. This is still an extremely segmented and niche market. The broader market for ordinary smart phones is currently closed for Lenovo. As a result, Lenovo’s mobile phone business has been difficult to break through.
Coolpad’s situation is the most “critical” compared to the other three. ZTE and Lenovo still have their own “main businesses”, such as ZTE’s communications equipment business and Lenovo’s PC business. Mobile phones are just a “sideline business” for them, but Coolpad’s current revenue comes from its mobile phone and tablet business.
So why do we basically not see Coolpad phones? This is mainly because more than 92% of Coolpad’s mobile phone and tablet business are placed in overseas markets, especially the entire American market. The mobile phone business revenue of the Chinese mainland market in the first half of the year was only 26.35 million yuan.
▲Coolpad revenue distribution in the first half of 2020
However, due to the black swan event of the epidemic, Coolpad’s overall mobile phone business lost more than 50 million in the first half of this year, revenue fell 41% year-on-year, and its loss expanded nearly 1.5 times. Coolpad’s life is really harder.
However, in August of this year, Coolpad released the Coolpad X10. The most interesting thing is that this is an operator-customized machine that Coolpad cooperates with Tianyi Telecom, giving people a feeling of “like a world away.” Coolpad also said that they will return to the domestic mobile phone market through this product.
For ZTE, Coolpad, and Lenovo’s glorious mobile phone business, their three ideas are also very clear: avoid large forces, or focus on overseas markets, or focus on market segments. ZTE and Lenovo have marginalized the mobile phone business, and Coolpad is also working hard to find new opportunities.
Compared with these three companies, although Huawei is still huge in size, the pressure is no less than them. For Huawei, the mobile phone business is one of their core businesses, accounting for more than 54% of revenue. The current US chip restriction has drawn a question mark on how Huawei can obtain high-end mobile phone SoCs in the future.
Although Huawei recently chartered a flight overnight to transport the advanced technology chips produced by TSMC back to its own warehouse, this can only “quench one’s thirst” and cannot “open source”. Once the high-end chip inventory is exhausted, Huawei’s flagship P series and Mate series will be difficult to move. You must know that Huawei’s more prominent imaging capabilities and system scheduling optimization capabilities are all based on self-developed SoC.
Under the operator’s “Sword of Damocles”, who can be spared?
It is not a day’s work to develop from the four dominance in the era of China Coollink to today’s Huawei’s dominance. The other three have been marginalized. It is by no means a day’s work. What are the key turning points in the middle that have influenced these Chinese smartphone manufacturers. fate?
If one of the core influencing factors is taken out, it must be that operator subsidies were cut in 2014. This knife greatly hurt ZTE, Lenovo and Coolpad.
▲China’s smartphone market shipments from 2014 to 2015
In June 2014, the operator’s contract machine policy changed, and the subsidy for mobile phone terminals decreased. In the past, China Kulian, which sold mobile phones in conjunction with the operator, had no advantage at once. Failure to sell mobile phones will lead to a backlog of inventory, and there is also the issue of pricing confusion.
At that time, nearly 80% of Lenovo’s profits came from operators’ customized machines, ZTE was also firmly locked by operators, and 90% of Coolpad’s shipments came from operators’ customized machines. Although they have been struggling to change, their mobile phone business has almost stagnated after 2014, making it very difficult to move forward.
Lenovo is considered a “big business” among these companies. In terms of smartphones, it has made many strategic adjustments, acquired Motorola, and created its own brands such as Le Meng and ZUK. But the problem is that none of these sub-brands survived.
In the second half of 2014, the person in charge of the operator business will naturally come out to “back the pot.” Therefore, Feng Xing, who is mainly engaged in the operator business, left his job and took away a group of Lenovo subordinates, and he became the head of LeTV’s mobile business. people.
▲ Feng Xing
In June 2015, Liu Jun, who was the head of the mobile phone business at the time, was transferred from his post. Chen Xudong, CEO of Magic Factory, took over the mobile phone business and served as the CEO of the ZUK brand. From 2014 to 2018, Lenovo’s mobile phone business changed four head coaches. Among them, Qiao Jian also recruited executives from outside to cut off the Lenovo mobile phone brand directly in an attempt to focus on Motorola’s marketing.
In the end, these adjustments did not work, but brought huge losses, and the dug-out executives also left and scattered. After this tossing, Lenovo’s mobile phone brand’s vitality was greatly injured, and for a long time it was unable to breathe.
Some of Lenovo’s mobile phone business coaches want to be high-end, some want to be cost-effective, and some want to capture young people, but Yang Yuanqing obviously only leaves everyone a short period of time to “try and make mistakes”. . In fact, this also makes it difficult for Lenovo to establish its own characteristics and make it difficult to impress consumers.
Although the ZUK brand attracted widespread attention due to the personal public opinion of the “Magne Magnet” when it was first born, it finally disappeared due to poor actual sales.
Operator subsidies were cut, and it was also a “disaster” for ZTE, because ZTE was actually the largest manufacturer that relied on operator customized machines in 2014. After leaving the operator, ZTE has also launched its own sub-brand, hoping to reshape its brand image, but the response has been mediocre.
▲ZTE launched the Grand S series in 2013
Even as a state-owned enterprise, ZTE is more difficult to respond to changes. In 2012, “Southern Weekend” described ZTE at the time and said, “ZTE’s management has actually formed an internal and hidden benefit distribution system, and the bottom employees are basically excluded from the established benefit structure.” Such a structure forms a shackle and limits breakthroughs and innovations in product design.
In 2014, Zeng Xuezhong, who was referred to internally by ZTE as “Zeng Yiyi” and “Eight King Kong”, began to focus on the mobile phone business, making drastic reforms, abandoning the tactics of the sea, focusing on core technology, and doing precision. Since I don’t know how to go, ZTE will learn from others, and ZTE will lean in that direction if Huawei does it.
But the market is very cold. After two years of continuous losses, Yin Yimin took office. Less than half a year later, Cheng Lixin took over. Zeng Xuezhong has also officially left ZTE, where he worked for more than 20 years.
Today, ZTE’s Axon series conference is often hosted by a product manager with a strange face. Instead, Ni Fei, the head of the sub-brand Nubia, has become the most concerned executive of ZTE, and Nubia has also become A sharp sword of ZTE on the game mobile track.
For Coolpad, after the operator subsidy storm in 2014, the fate of the mobile phone industry veteran is obviously a bit tricky.
Coolpad first broke out in the cooperation with 360, replaced by Jia Yueting’s 2.1 billion investment in Coolpad, accounting for 18% of the shares, becoming the second largest shareholder. However, with the outbreak of the LeTV crisis, Jia Yueting’s withdrawal made Coolpad’s “not wealthy family even worse.”
Since 2014, Coolpad executives have frequently exchanged blood, but they still continue to lose money. Coolpad has become more and more dependent on capital blood transfusions, which also caused hidden dangers to their management to a certain extent. In 2016, founder Guo Deying officially left Coolpad, and Liu Jiangfeng, the former president of Huawei Honor, became the CEO of Coolpad. At this time, Coolpad is no longer the Coolpad that year.
▲Guo Deying, founder of Coolpad
In 2016, Coolpad shipped 15 million mobile phones and continued to lose 3.5 billion yuan. Cool1, Coolpad S1 and Cool M7 failed to press the pause button for Coolpad’s cliff-like fall.
In the era of operators’ customized machines, manufacturers basically don’t have to spend too much time thinking about user needs when producing products. They only need to complete the operators’ requirements. The mobile phone manufacturers who have left the operators have not improved their product design concepts and quality control, but users have significantly improved their requirements for smart phone products.
At this time, if you are not out, who is out?
Compared with the decline of ZTE, Lenovo, and Coolpad, after the subsidy ceased in June 2014, Huawei seemed to go more calmly, because for Huawei, everything seemed to be expected.
As early as December 3, 2010, Huawei held a high-level symposium. Ren Zhengfei upgraded the mobile phone business to one of the company’s three major business sectors. Most importantly, he decided that Huawei would switch from being a contract machine to consumption. It is a high-end independent brand centered on the developer.
After that, Huawei established the Consumer Division. Ren Zhengfei said that the new department will at least not be less in R&D and investment than its peers. In 2010, with the rise of China’s smart phones, the demand for upstream communication equipment skyrocketed, and Huawei’s net profit also reached 23.8 billion yuan. Therefore, Ren Zhengfei said this is really full of confidence.
In 2011, with the establishment of Huawei’s Consumer Business Unit, Yu Chengdong became a general who carried the flag, taking over as CEO of Consumer Business and Chairman of Huawei Terminal Company. Since he took office, Huawei has directly cut off the white-label operator’s customized machine business with annual sales of 30 million, focusing on smartphones.
Of course, the transition will be painful. At that time, 14 of the 15 operators in Europe terminated their cooperation with Huawei. In 2012, Huawei’s annual sales volume was only 120 million units, while in 2011 there were 150 million units. It should be known that it was the time when the sales of smartphones broke out.
In addition, it is the creation of Huawei’s own high-end brand. After Yu Chengdong took charge of the consumer business, Huawei formulated the four major product lines of the Ascend series, including the D, P, G, and Y series. Among them, P series and D series are mainly high-end flagships.
From the annual sales of 500,000 Ascend P1 in January 2012, to the first Ascend D1 using Huawei’s self-developed chip K3V2, the Ascend D1 frequently crashed due to heat, and the sales of Ascend P6 released in June 2013 exceeded 4 million. Huawei actually completed its own transformation as early as 2014 before the operator’s transformation.
▲Huawei HiSilicon’s self-developed chip K3V2
Before the operator subsidies this sword of Damocles fell, Huawei broke its arm three years in advance, gritted its teeth, and just started building its own high-end brand early.
Huawei has gradually found its position in the consumer market through trial and error step by step and adjusting product design ideas. In September 2014, Huawei Mate 7 was equipped with Kirin 925 self-developed processor, and its sales exceeded 7 million units. The P6 series and Mate 7 series helped Huawei formally gain a foothold in the high-end market.
From 2014 to 2015, Huawei’s shipments and market share have grown rapidly, with shipments increasing by 53% year-on-year, and its market share of shipments is second only to Xiaomi, ranking second. On the way to hit the high-end market, Huawei’s P9 Plus was released for 8 months in 2016, and global shipments exceeded 10 million units. This is also Huawei’s first high-end flagship smartphone with a shipment of over 10 million.
In the second quarter of 2016, according to Gartner data, Samsung and Apple were far ahead in sales, and Huawei ranked first among domestic manufacturers with 30 million sales. During this period, the domestic mobile phone market ushered in the era of a new “Huami OV” four-power competition, and this situation has continued to this day.
▲China’s smartphone market shipments in the second quarter of 2016
Today, where does the reincarnation of China Cool Alliance turn?
Each industry has its own different stages of development, just as the smart phone industry has a hundred schools of thought, contends, and a three-pronged stand, or even a dominant one. The former China Cool Alliance has disappeared in the long river of history, but ZTE, Huawei, Coolpad and Lenovo are still racing on their own tracks and never give up.
Judging from the current developments of ZTE, Lenovo and Coolpad and their respective statements, each of them has relatively optimistic expectations about their own development prospects. They all set their sights on 5G, IoT, AI, big data, and cloud. Serve on these popular tracks.
ZTE’s housekeeping skills are of course not mobile phones, but communications. ZTE’s carrier network business now accounts for as much as 74%. They have received 46 5G orders worldwide. As Huawei is restricted, they are in overseas markets. The resistance will be reduced.
Communication technology is the root of ZTE, and their prosperous business has grown on it. Communication chip design and development, communication technology patents and the huge market volume of optical transmission network equipment are all clearly proposed by ZTE, and the follow-up will focus on the core of development. Globally, ZTE has more than 5,000 patents in the 5G field.
When it comes to domestic chips, everyone’s eyes are focused on Huawei, but in fact, ZTE has always been the top three chip design manufacturer in terms of overall revenue and profit in China. ZTE alone has more than 4,100 chip patents. And ZTE is currently one of the few domestic companies that invests more than 10 billion yuan in R&D each year. It can rank among the top four in the world in the field of communications alone.
Just yesterday, Li Hui, vice president of ZTE, revealed at the 3rd Digital China Summit that ZTE has realized the commercial use of self-developed 7 nm chips on the main control chips of 5G wireless base stations, switches and other equipment. The chip is still in the experimental stage.
On the basis of communication technology, ZTE’s government and corporate affairs have also become the focus of his development, such as big data, cloud computing, and the Internet of Things. In the first half of this year, ZTE’s government and corporate affairs accounted for 10% of total revenue, including enterprise-oriented cloud computing solutions and Golden DB distributed databases.
At the 2019 BDIC conference held in early June, ZTE’s Golden DB database obtained full scores in all 50 tests. It was the only manufacturer participating in the test to get full scores at the time, and it beat technology giants such as Baidu, Alibaba, and Tencent.
Although the background of ZTE’s state-owned enterprise has hindered its transformation, it has also become its innate advantage in the development of government and corporate affairs. Domestic business accounts for two-thirds of ZTE’s revenue. Now that the digital transformation of China’s economic development is still advancing, ZTE has a great opportunity.
Lenovo has many opportunities for development at the moment. Its business is actually very global. Central, Asia, the United States, Europe and Africa basically divide its business revenue into four equal parts. Of course, according to the business classification, the PC business is absolutely dominant. The second quarter revenue is 74.2 billion yuan, accounting for Total revenue is 80%, an increase of 10% year-on-year. Lenovo is currently the top two PC manufacturer in the world.
The data center is the infrastructure for digital and information construction, and the hardware equipment of the data center is actually an extension of the PC.
Lenovo’s deep industrial chain layout for decades can provide itself with cost advantages in products. Therefore, Lenovo has gradually entered the data center field. At present, the second quarter revenue of this business has reached 11.3 billion yuan, accounting for 12% of total revenue. A year-on-year increase of 18.9%, however, this business is still losing money.
Lenovo has a savior brand that focuses on the e-sports field in the PC field, and the savior team also began to enter e-sports mobile phones this year. Generally speaking, Lenovo’s e-sports mobile phones are only a small branch of its e-sports brand, and they have basically bid farewell. The mainstream flagship smartphone market.
On Coolpad’s side, it is unrealistic to only expect the recovery of the mobile phone business. They are now also expanding their business to the industrial Internet of Things, AR/VR smart devices and smart cities. In May of this year, Coolpad released its first 5G industrial routing module, which can be used in drones, robotic arms, VR terminals, cameras, and robots. The ambitions of this cannot be underestimated.
At the same time, Coolpad is also interested in an emerging market such as smart cities. In July this year, they signed a smart city cooperation project with Shenzhen Jingyue Technology Co., Ltd.
In fact, Coolpad has certain technical reserves. In the first half of 2020, Coolpad’s domestic main body Yulong Communications ranked 35th in China with 224 patents. Coolpad’s advantage lies in its small and sophisticated R&D team, which focuses on the Internet of Things, XR and other subdivisions.
More interestingly, in August, Coolpad released a thousand-yuan 5G mobile phone and returned to the domestic market. It seems that no one is willing to miss the market dividend of 5G replacement. After all, for Coolpad in the current financial situation, it is good to get a share of the 5G thousand yuan phone market.
Compared with ZTE, Lenovo, and Coolpad, Huawei’s destiny is full of variables. Huawei, like them, has a global business, but Huawei has one difference. It is a global leader in a certain high-tech field. Ahead of the current global technology hegemon, the United States, this is 5G communication technology.
Huawei’s destiny is not determined by him, but is affected by whether the developed countries in Europe and the United States, led by the United States, are ready to live in harmony with the rising China. The chip’s neck is just an appearance. Behind this is the complex game of multiple forces such as politics, economy, technology, and military among major powers.
But one thing is clear: China must strengthen self-research of core technologies in the high-tech field. Huawei’s “core structure” requires the joint efforts of companies in the entire Chinese semiconductor industry chain. Huawei’s dilemma is something that ZTE, Lenovo, Coolpad, and every other Chinese technology company must consider and even face in the process of rising.
Summary: China Cool Alliance is still there, and the market has changed.
“China Cool Alliance” once led an era of the rise of China’s smart phone industry, and today, despite the many twists and turns, their story continues.
For the mobile phone business, ZTE and Lenovo have adopted the strategy of giving up sales to ensure profit. 5G mobile phones are gradually landing and continue to implement. Coolpad’s focus is still in the overseas market, but this wave of dividends in the domestic 5G market is also aimed at the thousand yuan machine gear. Huawei sits firmly on the throne of the domestic market, but the market is frequently blocked.
From the overall financial situation, Huawei, ZTE, and Lenovo are in a slightly better situation. Revenue and profit are all positive growth trends year-on-year, but Coolpad has fallen by more than 40% year-on-year, and its business losses are serious. It is the smallest of the three, and its future is still uncertain. .
But there is one thing that they have a tacit understanding. Today’s China Cool Alliance takes 5G and 5G-related big data, Internet of Things, and AI-related businesses as the focus. Everyone hopes to grasp the pulse of the times.
ZTE is working hard on new 5G infrastructure, Lenovo is also slowly entering the data center, Coolpad is adding to the smart city business, and Huawei is fully working on 5G, AI and cloud, from hardware to software. No one wants to miss out on the 5G+AIoT express train.
Now we stand at the node of 2020 and look back at the rise and fall of “China Cool Alliance”. If we turn around, what will “Huami OV” look like ten years later?