Top of the big era

The wave of smartphones has already begun, and China will be the most brutal and fierce place in the field of smartphone competition. In the past few years, Asda has been doing very well in China and is the largest Android mobile phone brand. It is expected that sales this year may exceed 10 billion US dollars!

However, that is only the overseas market.

Even Zhou Buqi doesn't have that much confidence in what Asda can develop in China.

Competition in the domestic mobile phone manufacturing industry is too fierce.

There are many reasons.

From a technical perspective, there are mainly two reasons.

First, the technical content of mobile phone manufacturing is not high, and the entry threshold is very low. For mobile phone manufacturers, there is no need to research chips, sensors, panels, and cameras. They can just buy them directly from the supply chain and then process and assemble them.

The second is the field of operating systems.

Foreign Android mobile operating systems are basically the same. There is actually not that big a difference between buying Samsung or LG, Motorola or Sony.

Especially after the hardware products are highly homogenized, the gap between mobile phones of different brands is getting smaller and smaller.

It’s different in China. Since Google withdrew from the mainland market last year, it means that domestic Android phone users cannot enjoy Google’s series of services like abroad.

Therefore, optimizing the interface performance of the Android system has become an important matter.

The application market on top of the operating system can flourish; combining system optimization and application services can also become a business... In other words, domestic mobile phones can have more profit channels than foreign mobile phones, and can be used more Make money from the software level.

You can make money from software services, and hardware becomes a tool... You can constantly lower your prices to compete with others. The entire industry is collectively lowering prices, and competition will be unprecedentedly fierce.

Obviously, Lei Jun is the leader in this field.

His innovative mobile phone strategy is the fundamental reason why Xiaomi, as a little-known small company, defeated a large number of large manufacturers such as "China Cool Alliance" and quickly emerged.

Lei Jun comes from the Internet and software industries. He makes Internet phones, not hardware phones. He positions Xiaomi as an Internet company, not a mobile phone company.

If Xiaomi wants to make money, it does not want to make money through Xiaomi mobile phone products itself, but to "dump" Xiaomi mobile phones into the market at ultra-low prices and gain a large number of users.

Then generate sustained profits by providing subsequent software services to these users.

This is the core element of Xiaomi's success, not hunger marketing.

At this point, LeTV has gone even more extreme.

LeTV TVs and LeTV mobile phones have high configurations, but the prices are very low. The purpose is not to make money from consumers on hardware products, but to create revenue for LeTV through subsequent use after consumers buy the products.

For example, for Internet TV, the annual revenue brought to manufacturers by a startup advertisement alone can far exceed the price concessions brought to users when the product is sold.

This is so imaginative!

You must know that TVs are not fast-moving consumer goods. Consumers will only buy new TVs under very few and very specific circumstances.

If the purchasing frequency is too low, it means too few TV sets are shipped.

This means that TV manufacturers make very little profit.

After all, selling hardware products is just a one-time service. After selling the product, it loses its subsequent sustainable ability to make money.

Providing "software services" is different. After consumers buy the TV set, it becomes a long-term and effective platform channel for pushing advertisements to consumers!

This is a sustainable money-making ability, and you can get a steady stream of income.

Internet mobile phones have defeated traditional mobile phone manufacturers, and Internet TV has defeated traditional TV manufacturers. They are basically similar strategies. TVs can be sold to consumers at a price lower than the cost price, and the manufacturer will make a small loss first, it doesn’t matter!

First, rely on extremely low prices to attract consumers!

After consumers take the TV home, manufacturers will find ways to earn back the profits from the hardware products in the subsequent process of providing software services to consumers.

This "give first, take later" Internet strategy has directly wiped out traditional industries.

LeTV didn’t do it.

Because Jobs's ambitions were too great, he only had so little money in hand, and he had too many businesses to plan. From mobile phones to televisions to cars, there were too many "subsidies" that needed to be "given" in advance. The later "withdrawal" has not yet been recovered. The company's cash flow has been cut off, and it will die if it cannot survive.

If LeTV has tens of billions of cash flows on its books, it might be able to put this entire model into operation.

After all, Jobs was a lucky man, and his business skills were still lacking.

Lei Jun is different. He is truly down-to-earth and relies on his own strength. He is a real entrepreneur. His level is much higher. He is very mature in Xiaomi.

Take it one step at a time and take your time.

Before the mobile phone business grew, Xiaomi focused all its energy on mobile phones.

In fact, Apple is the originator of this innovation in Internet software and hardware models.

Apple makes money by making a lot of money at the hardware level, and then after selling mobile phones to users, it continues to make continuous money from consumers through the software level.

Hardware in the left hand and software in the right hand. Both hands must be grasped and both hands must be strong.

So Apple’s ability to make money is super strong.

Lei Jun is very self-aware. If Xiaomi wants to compete with Apple, it is really overestimating its capabilities. Xiaomi can't even compete with domestic Chinese companies such as China Cool Alliance, Jinli, and Meizu.

There is no other way, then you can’t grab it with both hands.

Take the initiative to give up one!

They no longer pursue making money on the hardware products of the mobile phone itself like traditional mobile phone manufacturers and actively give up profits at the hardware level, but pursue longer-term profits from software services.

Giving up profits at the hardware level gives Xiaomi mobile phones a lot of room to reduce prices!

For mobile phones with the same configuration, the market price of "China Cool Alliance" mobile phones is 3,500-4,000 yuan, and the price of Xiaomi 1 is 1,999 yuan... directly discounted by half!

Such a price advantage will bring extremely strong competitiveness.

This is very uncomfortable. Xiaomi has become a troublemaker in the industry and is deeply hated by its peers. The public relations copywriting of major companies seems to have been negotiated, and they are constantly criticizing Xiaomi.

From a businessman's point of view, Zhou Buqi also disliked Lei Jun's tactics.

This is so deceiving!

Smartphones are such a new gadget and how profitable they are? !

When the entire mobile phone industry was immersed in it and making a lot of money, a guy who didn't play by the rules suddenly came out and completely subverted the industry.

You don't make money yourself, and you want everyone to accompany you to make money together. It's so unethical!

The "Chinese Cool Alliance" collapsed directly.

After Huawei experienced a short trough period, it quickly adjusted its strategy and rose again, becoming a mobile phone giant in the new era; Lenovo directly lost its domestic market, but fortunately its sales in overseas markets were okay; ZTE was unsatisfactory and has lost its market share. It is recognized by consumers at home and abroad, but with the promotion of the state, you can sell your mobile phones to some besieged countries and live well before being fined a huge sum of money.

Coolpad is no longer good and is completely dead.

Zhou Buqi met Lei Jun in the capital with Zhou Shaoning. He wanted to ask Boss Zhou for help and provide some support to Xiaomi at the supply chain level.

This is related to the business logic of some electronic product industries.

Whether it is making computers or mobile phones, or making refrigerators or TVs, the cooperation between manufacturers and the supply chain is not a one-hand payment and one-hand delivery model.

Get the goods first and pay later.

For example, Xiaomi wants to make mobile phones. In fact, they don’t need to have much money in their accounts. They just need to convince the supply chain and then obtain the goods in the form of "liability" first.

After getting the goods, spend a little money to assemble them at the foundry and sell them to the market.

After making money, Xiaomi will use the money to pay back the money owed to the supply chain.

The entire business process is complete.

It seems that the supply chain is at a disadvantage here, but there is nothing we can do about it because the information is not equal in this process. Mobile phone manufacturers do not know whether each batch of goods provided by the supplier can meet the standards.

So you have to be "in debt".

This is a binding and constraint on the supply chain. There must be no fraud and accessories that meet the standards must be provided. Once you commit fraud...I'm sorry, the order will be cancelled, and the liability will be cancelled.

Suppliers will suffer huge losses.

For example, a domestic supply chain manufacturer for Apple was discovered by Apple to be supplying goods with fraud. This supply chain manufacturer with a market value of tens of billions immediately faced bankruptcy.

So this model is very unfriendly to small companies.

When Asda first made mobile phones, it was endorsed by Ziweixing, so the supply chain believed in Asda and was willing to provide Asda with a large "liability limit" to supply Asda.

Not so with Xiaomi.

This is a small company. Although Lei Jun has taken office as the chairman of Kingsoft Group, there is no relationship between Kingsoft and Xiaomi. We can’t let Kingsoft endorse Xiaomi, right?

This results in Xiaomi’s credibility not being high enough.

The supply chain is afraid to supply goods.

What if a product is lent to Xiaomi, but Xiaomi's mobile phone cannot be sold and all the money is lost... At that time, Xiaomi goes bankrupt and cannot pay for the supply chain, and the supply chain will bear huge losses.

However, when communicating in person, Lei Jun was still a little wary and had reservations about the Xiaomi model.

Xiaomi’s press conference will be held in the middle of this month.

At that time, Xiaomi Mi 1 will be released at a price that is extremely impactful and can be said to be a devastating blow to the industry. Asda is now considered a mobile phone giant and has been planning the domestic market since last year.

The Xiaomi model will not only impact traditional mobile phone manufacturers such as "China Cool Alliance", but Asda will also be affected.

So Lei Jun was very cautious.

I plan to fool around first.

Anyway, Boss Zhou has to pay attention to his face. As long as he agrees, even if he doesn't sign the contract, it's hard for him to regret it directly in his current status.

As everyone knows, Zhou Buqi already knows the Xiaomi model well.

Counting "knowledge" as "unknown" will give you a great advantage in the negotiation process. Xiaomi is a company founded by Lei Jun, who considers himself a "knowledgeable" party.

As everyone knows, in front of the foresight Zhou Buqi, he is the "unknown" party.

Zhou Buqi and Zhou Shaoning stayed calm and listened patiently to Lei Jun's introduction to Xiaomi and his demonstration of his credibility and product competitiveness.

In fact, it is deceiving.

Then, Zhou Buqi was really "fooled" and said proudly: "Okay, how many years have we known each other? When I started my business as Ziweixing, I also received the care of Jinshan. This will always be with me. I won’t forget it either.”

Listening to his tone, Lei Jun felt that there was something interesting and was very happy, "Of course, we have cooperated a lot over the years, and every time is a pleasure, whether it is UC or YY."

Zhou Buqi smiled and said, "Just tell me, what do you want to think about?"

"Supply!"

Lei Jun is blunt.

Zhou Buqi said in embarrassment: "Among the spare parts for smartphones, the most important ones are the processor and panel, right? This... the domestic supply chain system cannot solve it yet."

"I found Sharp for the panel, so you don't need to worry too much about it. The processor needs to be connected with Qualcomm, which is not too difficult. These are all foreign companies. The real difficulty is domestic."

Lei Jun was somewhat embarrassed.

Zhou Shaoning simply explained, "Foreign companies have priority in the repayment of supply chain payments, so the risks are smaller and it is easier to reach cooperation. The difficulty is for domestic supply chain manufacturers."

This is actually the inevitable situation of the current development of the domestic economy.

We must pay attention to international influence and build social trust in order to continuously attract foreign investment and establish cooperation with foreign businessmen.

In other words, if you fail to join Xiaomi, you have to sell your assets to pay back the money.

First, the money must be returned to foreign suppliers such as Sharp and Qualcomm. If there is any remaining money, the money will be distributed to domestic suppliers. This is not only a contractual requirement, but also the general environment of the current economic development situation.

For example, a real estate company has a debt of 2 trillion yuan. It cannot afford to pay for the demolition of the east wall to pay for the west wall... The first thing to repay is the overseas debt, followed by the government debt, then the debt prefixed with the word "国", then the debt of private enterprises, and finally It is the debt of the common people.

This is actually pretty good.

It is much better than back then when foreigners were called foreign guests in the country and enjoyed many preferential and super-national treatment. The Friendship Store only allowed foreigners to enter but not Chinese people.

Zhou Buqi waved his hand, showing his trust in Lei Jun, "I support your entrepreneurship. This is not only because of my trust in you, but also a big judgment on the current global economic situation."

Lei Jun was a little amused, knowing that this guy liked Shangzhang Shangxian, "So big?"

Zhou Buqi smiled and said: "Yes, the Internet is now a big killer, and it will cause a devastating blow to many traditional industries that are clinging to the old days. In my opinion, the mobile phone industry is also a traditional industry. Japanese companies such as Sony, Panasonic, and Sharp None of them work anymore, including Nokia, Motorola, Siemens, and Philips."

Lei Jun nodded, "Well, Internet mobile phones are now the biggest outlet in the mobile phone business... I heard that Baidu and Alibaba are also entering the market."

"Um?"

Zhou Buqi was slightly startled.

Zhou Shaoning added, "Baidu and Alibaba Cloud seem to be launching Internet mobile phones. Now the situation in the industry has become vigorous. Even companies like Meizu that used to make MP3 players have begun to transform into smartphones. There are even many mobile phone manufacturers making copycat phones. I’m also going to make a smartphone.”

Lei Jun sighed, "Yes, compared with those companies, Xiaomi is just a small studio, and its competitiveness is indeed much worse."