Starting from Xiaomi 1 in 2011, Xiaomi Mobile has sold its mobile phone market in China with its product hardware + low price and high cost performance as its selling point, plus online sales and hunger marketing.
Text | Liu Yanling
Source | Diamond Business Review (ID: libusiness)
ChinaVenture
NEWS
How long can Xiaomi be in the scenery?
The answer seems to be clear now. From 0 to 45 billion dollars in valuation peak, Xiaomi spent 4 years; from the peak down, Xiaomi only took a year.
Starting from Xiaomi 1 in 2011, Xiaomi Mobile has sold its mobile phone market in China with its product hardware + low price and high cost performance as its selling point, plus online sales and hunger marketing. In 2015, Xiaomi's annual mobile phone sales exceeded 70 million units, ranking first in the country.
But just a year later, Xiaomi suddenly lost the glory of the past in the field of smart phones. According to IDC data, the annual shipment of Xiaomi mobile phone in 2016 decreased by 36% year-on-year, and the market share also fell from 15.1% in 2015 to 8.9%. It is even more rumored that the valuation of Xiaomi has shrunk significantly, less than one tenth of the peak period.
What have you experienced in the past few years from the "leader" of the mobile phone industry to the "chaser"? Can Xiaomi, who is going downhill, regain the vents and turn around? The Rockstone Business Review can get some inspiration from the development path of Xiaomi in the past 7 years.
Lei Junqiren
When he founded Xiaomi, Lei Jun was just 40 years old. "Ten is not confused," Lei Jun himself said that Xiaomi was his last venture, and after a 20 years of business experience, he was a new attempt to "get his job."
Lei Jun became famous at the age of 18 and was admitted to the Computer Department of Wuhan University at the age of 18. After graduating from college, Lei Jun went to Beijing alone. At the end of 1991, he met with Qiujun, the founder of Jinshan Software in Zhongguancun, and then joined Jinshan Software to become the sixth employee of Jinshan. In 1998, the 29-year-old Lei Jun was promoted to the general manager of Jinshan Company.
Lei Jun stayed in this position for ten years. During the period, Jinshan went through several transitions from office software to word power, drug tyrants, and to games and networks. Lei Jun led Jinshan five times to impact the IPO, and ultimately relied on the performance of online games, successfully listed in Hong Kong in October 2007. However, the valuation of Jinshan's listing was far less than that of Alibaba, which was listed in Hong Kong in one year, and not even in the US, such as Shanda and Baidu, which were listed in the US in the early years.
The situation is changing. Many years later, Lei Jun recalled this paragraph and said quite a bit of emotion. "It is not enough to succeed by relying on hard work. To find the most fat market, take advantage of the trend."
Jinshan missed the first wave of the Internet, but one thing is crucial in the future. In 2000, Lei Jun led a Jinshan internal entrepreneurial project, Joyo. After more than four years, it was sold to Amazon for $75 million. This sale allowed Lei Jun to achieve financial freedom and also laid the capital for his subsequent angel investment.
At the end of 2007, two months after Jinshan successfully listed, Lei Jun resigned as president and CEO for health reasons and left Jinshan. It was proved afterwards that it was this departure that made Lei Jun's reborn.
Lei Jun, who left Jinshan, turned into an angel investor and began to look at the Internet from a broader perspective. In 2008, he wrote in his personal blog: Mobile Internet is the next big opportunity for entrepreneurship. At the same time, Lei Jun has repeatedly invested in a number of well-known cases in the mobile Internet, e-commerce, social and other fields - La Cala, UCWeb, Vanke Eslite, YY, Le Tao, more play, more to watch. Among them, where the customer Eslite is popular, YY has been listed in the US, and the current market value is more than 4 billion US dollars.
Doing investment has enabled Lei Jun to gain a deeper understanding of the Internet and has also received exceptionally rich returns. But the companies he invested in are hard to say that Lei Jun’s own business.
Deep down, Lei Jun still wants to be a career that truly belongs to him, and to establish his own status as a river and lake with a large and even great company.
Soon, Lei Jun found his own "potential" - the explosion of smartphones and mobile Internet. In April 2010, Xiaomi Company was incorporated, and the first product, the mobile operating system MIUI, was launched in August of that year. At the end of 2010, Xiaomi completed the A round of financing, amounting to 41 million US dollars, the investors are Morningside Ventures, Qiming and IDG, the company's valuation of 250 million US dollars.
In 2011, one year after the start of the business, Lei Jun held a small media communication meeting and announced two things. One was that MIUI was done by Lei Jun, and the other was that Xiaomi launched the mobile phone next month. The reason why the smartphone business is chosen, Lei Jun believes that "great companies are always born in great trends. Smartphones should be the biggest opportunity of this era."
Millet phenomenon
On August 16, 2011, Xiaomi Mobile 1 was officially released. 1999 yuan, parameter running points, Internet sales and fan economy, several highly concentrated keywords summarize the operation of Xiaomi. Xiaomi has sprung up everywhere, and the rise has even exceeded the expectations of Lei Jun.
Unlike other smart phones that take offline push, Xiaomi is the first online sales company in China. Before the launch of each mobile phone, Xiaomi will launch a strong promotion campaign, attracting fans' attention with hunger marketing, and Xiaomi mobile phone sales only in Xiaomi.com, which will force fans to buy orders, and the product iteration is rapid, it is easy to produce " The unexpected effect of being born for a fever.
According to public information, when Xiaomi is on sale, 300,000 units will be robbed within 5 minutes, and this kind of snapping scene will be repeated almost every time the new product is released, and it will be refreshed.
In a questioning voice, Xiaomi sold 7.19 million mobile phones in 2012 and sold 18.7 million mobile phones in 2013, which greatly suppressed the Lenovo, TCL, Cool, Meizu, etc. at that time and rushed to the forefront. In the process, Xiaomi completed four rounds of financing, and the valuation quickly broke through 10 billion US dollars, becoming a phenomena-level brand in the mobile phone industry.
The millet mode is hot for a while. Xiaomi relies heavily on the most important business weight of Internet thinking. In the original statement of Lei Jun, Xiaomi mode is not to build factories, not to do offline, not to advertise, and then "focus, extreme, reputation, fast", mobile phones should be combined with software and services. When pricing mobile phones, try to be close to the cost, without intermediate channels, e-commerce, and use prices to "kill" competitors. It can be said that Xiaomi has drawn a wonderful successful "reverse attack" route through Internet thinking.
The valuation of Xiaomi in the capital market has also risen rapidly. By the end of 2014, its valuation has reached 45 billion US dollars, an increase of nearly 180 times in four years, surpassing any unlisted technology startups in the world.
In the same year, Xiaomi's mobile phone market share also surpassed Huawei and Lenovo, becoming the largest smartphone manufacturer in China, and once ranked third in the world with Samsung and Apple. Lei Jun’s smiling face kept appearing on the cover of magazines such as Time Magazine and Fortune.
Some people applaud Xiaomi and praised it as a domestic smartphone with less than 2,000 yuan. It can always be as "powerful" as Samsung and Apple. At the same time, some people accuse Xiaomi of being an "industry destroyer" in price wars. It is likened to a "crawling excavator", "one by one to push down the industry and then reshuffle."
These doubts did not affect the follow-up of it. Imitators of the millet model continue to flood into the mobile phone industry, vying to compare products with Xiaomi phones.
Encounter growing troubles
In 2013 and 2014, people enthusiastically pursued Xiaomi and the Internet model and Internet thinking he represented, and called Lei Jun "Rebs." In 2015, Xiaomi, who triumphed all the way, suffered growing troubles in the fifth year. In the next two years, the Chinese smartphone market has become the world of Huawei, OPPO and vivo.
The fourth quarter of 2014 was a turning point, and Xiaomi’s mobile phone sales showed a quarter-on-quarter decline for the first time. The quarter-on-quarter sales decline is a nightmare for all high-growth companies, which means that the decline in corporate performance has occurred, business imagination is not in place, and the valuation of enterprises in the capital market will be hit hard.
At the same time, according to the monitoring, Xiaomi has been declining since the second quarter of 2015. The sales volume of mobile phones in the four quarters was 14 million units, 20 million units, 18.5 million units and 16.9 million units respectively. The decline in 2016 was particularly noticeable. In the first quarter, Xiaomi's mobile phone shipments were 12.8 million units, a decrease of 1.2 million units, down 8.6%.
Xiaomi’s main competitors were fruitful in 2015. Meizu became the biggest dark horse in the mobile phone industry in 2015, and its triumphant triumph; Huawei took the first place in the market with Huawei and glory; and LeTV also got the tickets for the Chinese smartphone industry with its ecological advantages and high cost performance. Stabilize the heel.
In the first quarter of 2016, Xiaomi was ranked the top five for the first time. IDC report shows that in the first quarter of 2016, Samsung, Apple and Huawei occupied the top three in the global smartphone market, while OPPO and vivo replaced Lenovo and Xiaomi respectively, becoming the world's fourth and fifth largest smartphone manufacturers.
There are even media assertions that Xiaomi is in a turning point: the most frightening thing is not that the growth rate is slowing down, but that it is prosperous and weak, and Xiaomi begins to decline after hitting the top.
Millet dilemma
It is undeniable that after five years of smooth sailing, Xiaomi is in a new stage facing new challenges – how to take a new step.
In the past few years, Xiaomi has tried to diversify and make Xiaomi Mall into a department store, trying to use other products to make up for the problem of mobile phones. Xiaomi is doing TV, making flat panels, making wiring boards, and doing mobile power... Open hundreds of products in Xiaomi Mall.
However, Xiaomi did not find a product that could replace the sales of smartphones. Xiaomi mobile phone has won the price-performance ratio for a long time, and lost the brand's premium ability. It has become difficult in the era of changing the machine.
In addition to the unsatisfactory performance, Xiaomi began to experience the flow of executive talents, from financial related vice president Zhang Jinling, to content Chen Hao, to international business vice president Hugo.
When joining Xiaomi, Hugo once said that Xiaomi wants to "conquer the world". In 2014, Hugo led Xiaomi into the Indian market. A year later, Xiaomi sold 3 million mobile phones in India, and then went online in India. website. By 2016, Xiaomi’s sales in India have grown to 6.5 million units, making it the third largest smartphone manufacturer in India. Hugo also led Xiaomi into the Brazilian, Indonesian and African markets. With his departure, the breakthrough of the international market has become a problem in front of Xiaomi.
In the overseas market, there is a patent issue in front of Xiaomi. In 2013, Xiaomi was accused of plagiarism by domestic manufacturing companies; in December 2014, after the advent of the 899 yuan Xiaomi air purifier, it was also “questionedâ€, and it was considered that both the shape, the internal structure, and even the propaganda copy were in Japan. A certain brand of products is similar.
Then, the Delhi High Court of India ruled that Xiaomi infringed on Ericsson's patent, and Xiaomi paid a high amount of compensation for this. The lawsuit has also caused people to re-examine the domestic mobile phones: the shape is beautiful again, the price is lower, and if there is no huge mobile technology patent, it will not be able to go abroad.
In China, "millet powder" said that Lei Jun is "Rebs" and Xiaomi is "Chinese apple." However, opponents pointed out that Apple's patent license is 48 times that of Xiaomi, and Xiaomi's searchable patents are only half of Apple's. In May 2015, Xiaomi Online Store officially landed in the mainstream market in Europe and America, but only sold headphones, mobile power and bracelets, and no mobile phones. At the Hannover Communication and Information Technology Expo in Germany in March, the Xiaomi booth did not see mobile phones.
In the face of the decline in mobile phone sales, executive departures and the expansion of overseas market expansion, Lei Jun seems to be swaying and thinking about Xiaomi's path. It is obvious that Xiaomi is suffering from seven-year itch and transformation.
This kind of difficulty lies in the fact that Xiaomi has grown up with the help of the Internet, and the wind has passed. Xiaomi's research and development capabilities are still weak. The supply chain problem in the transformation has to face. When the international market is lost, there is no basis for further growth.
start again
Although the mobile phone business has encountered challenges, it is undeniable that Xiaomi is still a very competitive company.
OPPO and vivo have a large number of offline traditional stores, allowing Lei Jun to re-examine the "offline channels." Lei Jun also acknowledged this: “Traditional retail and traditional channels are still 80% of the market today. This is the biggest problem that Xiaomi has encountered, that is, how to break through the barriers of business model.â€
We have seen that in the past year, Xiaomi is seeking to change. The biggest change is from the Internet to the offline, using Xiaomi House to provide exports for mobile chain, TV and all the eco-chain products related to the Mijia brand. Lei Jun said publicly, "The millet home has opened 54 so far, including Shanghai Joy City Store, Beijing Colorful City Store, Zhengzhou David City Store with annual sales of 100 million yuan. This year plans to open 200 stores, plans to open in the next three years. 1000."
In addition to the offline channel represented by Xiaomi Home, the official recently launched a mode similar to the direct supply of joining, allowing individuals and companies to directly participate in related plans to get goods. In addition to the channel, Xiaomi has also done a particularly successful thing for brand promotion, creating a “full screen†Xiaomi MIX, which has won many praises from home and abroad.
On the last day of February this year, Xiaomi’s self-developed chip “澎湃S1†was released. At the meeting, Lei Jun revisited Xiaomi’s initial problems. In the idea of ​​mass solidification, “high cost performance†was the initial heart of Xiaomi’s founding, and forgot. In 2010, Xiaomi was "born for a fever." The appearance of 澎湃S1 has to be said to be a highlight of the history of millet development, which has far-reaching strategic significance for Xiaomi.
Previously, the pain of the first launch of the supply chain problem led to a sharp drop in sales. Xiaomi knew that holding the core technology in his own hands was the mastery of his own destiny.澎湃S1 and the previously released Xiaomi MIX, is the transformation plan given by Xiaomi in the development of the trough: taking the technology to life.
"Return to the beginning of the heart, re-start." Lei Jun also said in an interview that "Xiaomi is still in a downturn, but it has begun to rebound."
According to IDC data, in the first quarter of 2017, Xiaomi's mobile phone market share was 9.0%, ranking fifth, second only to the fourth Apple's 9.2%, compared with 7.4% in the fourth quarter of last year, a 21.6% increase from the previous month. %. Insiders commented that Xiaomi's bottoming rebound has seen very obvious effects, and the unicorn is gradually regaining more market share.
Conclusion
At the beginning of Lei Jun’s entrepreneurial goal, it was only three years to achieve the goal of making Xiaomi’s valuation of 10 billion US dollars. The success of the millet model has made it a dark horse in the global smartphone industry. He has taken a different path from the competition with traditional mobile phone manufacturers such as Apple, Samsung and Huawei.
As the Xiaomi model encountered difficulties, Lei Jun began to re-examine the practice of Xiaomi. From light assets to personal management of the supply chain, from advertising to hiring spokespersons, from the elimination of channels to the expansion of Xiaomi home, the current Xiaomi mobile phone and traditional mobile phone manufacturers have the same routine. Behind this is a torture of a pure online business model that relies on the Internet.
Although the Internet model that Xiaomi initially insisted on is not consistent, the impact on industry and users is still huge and far-reaching. For the Chinese mobile phone industry, a destructive squid has made Huawei Lenovo ZTE OPPO rapidly progress in fear; for Chinese Internet users, the Xiaomi model will clean up the domestic cottage, allowing people to experience efficient and convenient Mobile Internet services have accelerated the popularity of Chinese smartphones.
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