Analysis of why smart phone market is difficult to profit

At the end of October 2012, many telecom companies reported the financial statements for the third quarter of 2012 in succession. Surprisingly, smart phone manufacturers have been particularly hard on the days when smart phone sales have grown steadily and popularity has increased. Nokia lost 1.27 billion U.S. dollars, Motorola Mobile lost 527 million U.S. dollars, and HTC’s net profit dropped 79% year-on-year.... Market performance has been gloomy. Even domestic mobile phone manufacturers, which have always been known for their high growth rate, are equally unoptimistic. ZTE’s net profit has been 15 years. The first loss was 1.7 billion yuan. TCL and Huawei also experienced a decline in profits. Even some second- and third-tier domestic mobile phone manufacturers have shouted that it is difficult to make money in the smart phone market. What is wrong with this?

First, the more you sell, the more you may lose. "The homogeneity of products is the biggest problem in the current smartphone market, especially the Android smartphone market." For the dismal performance of smart phone manufacturers in the third quarter, Izun Consulting analyst Liu Zhengyun said that Android The characteristics of the free and open platform and the increasingly modularity of the upstream chip platform are among the “culprits” for the sharp reduction in the profit space of the company. "Perhaps this argument is not fair, because both the opening of Android and the simplification of the upstream chip platform are all aimed at helping manufacturers reduce costs, but this has virtually reduced the entry barrier for the mobile phone industry."

The person in charge of a domestic mobile phone in Shenzhen revealed to reporters that because MediaTek and Qualcomm and other vendors have launched a large number of low-end chip platform solutions, and provide a public version of the design, as long as the funds, basically any vendor can enter the smart phone industry, Makes the average price of smart phones lower and lower. "At the end of last year, single-core entry products could be sold for around 1,000 yuan. This year's dual-core has dropped below 1,500 yuan. Since the fourth quarter, even quad-cores have been killed below 2,000 yuan."

"In the era of functional machines, handsets don't compete with performance parameters, and splicing featured appearance or feature makers can also carry out differentiated marketing sales. However, the appearance of Android smart phones is basically the same. Manufacturers can only fight hardware and fight prices. The former will Increase the cost, the latter will reduce profits, opponents more, how can domestic manufacturers do not have enough brand support to make money?” Liu Zhengyao said that in addition to the homogenization of the product itself, the operator customization model in the mobile channel The rise has also formed a certain impact on manufacturers' independent pricing power, and even caused some mobile phone manufacturers to sell more and more ridiculous phenomenon.

"In the second half of last year, we won the bid for a thousand yuan worth of smart machines, each of which could make a profit of a hundred dollars. However, in the third quarter of this year, there was only a few tens of yuan in profits, and some may even lose money, and now operators The billing period is getting longer and longer, and the financial pressure on us is not small.” The person in charge of another domestic mobile phone complained to reporters, but he also said that operators are currently the main platform for the promotion of smart phones, even if Losing money, it is hard for manufacturers to give up. "Operators have at least a size to customize. Without this platform, it's harder to make money."

Second, the transformation of electricity suppliers, overseas exchanges have been buoyed in the torturous environment of this kind of internal and external attack, some domestic mobile phone manufacturers have been unable to sit still, diversified channel expansion has become their first choice. The domestic mobile phone manufacturer Jin Li recently moved to the e-commerce platform and joined forces with Taobao to launch customized products. In this regard, Jin Li, executive vice president Lu Wei Bing said that in the current fierce competitive environment, the traditional mobile phone manufacturers in the e-commerce platform and mobile Internet market for further development has become a real demand.

Compared with the gradual testing of traditional mobile phone manufacturers, newcomers have placed all their hopes on the e-commerce platform. In the past six months, many new brands have emerged in the domestic mobile phone market. Innos, Coca-Cola, Ume, Mushrooms and other bizarre names have emerged one after another. Product marketing has also relied on Weibo, forums and other platforms. “This is mainly influenced by the success of Xiaomi’s mobile phone. Through Weibo marketing and sales through e-commerce channels, these companies can achieve light asset operations, save a lot of channel costs and intermediate links, thereby increasing profitability. Although I’m not sure These companies can all succeed, but this approach should be sought after by more and more manufacturers in the era of meager profits." Liu Zheng said.

Of course, not all vendors are not e-commerce platforms. Last year, Lenovo Mobile, which had emerged with the help of smartphones, has succeeded in acquiring a second-largest position in the domestic mobile phone market, and has begun a new round of deployment. However, its vision is on overseas markets. Coincidentally, another old-fashioned smart phone manufacturer, Cool, has successfully entered the US market in the third quarter of this year. In addition, the already-exploited Hong Kong and Taiwan markets have accelerated their progress in entering the overseas mainstream market. "To enter the overseas market with its own brand is difficult, but if it is successful, it will be even more secure in terms of brand improvement and profitability," said Li Xuqing, the Cool Market Marketing Commissioner, in an interview with the reporter.