Although the market value has reached a record high, the controversy surrounding Xiaomi is far from over.
On the eve of Xiaomi's release of the third quarterly report in 2020, the company's share price hit a record high since its listing. 165438+1On the day of the release of the financial report on October 24, the stock price once climbed to an all-time high of more than HK$ 28. With the landing of "boots", Xiaomi's share price has been adjusted back one after another, but overall, it still recorded a positive income of more than 140% during the year.
Xiaomi with multiple identities was once regarded as "the first share owned by young people", but it was dubbed as "the first share held by young people" shortly after its listing. Around the performance and valuation of Xiaomi, there is always a dispute between long and short institutions. Nowadays, the market performance of Xiaomi seems to have given those "bears" a heavy blow. Even so, with Huawei restarting its 4G mobile phone and stripping off its glory, Xiaomi's future performance and market share will once again cause controversy.
Mobile phone market share surpassed Apple, ranking third.
Xiaomi's continuous efforts in the field of high-end machines are full of challenges.
The third quarterly report shows that Xiaomi's single-quarter revenue and profit reached a record high. At the same time, mobile phone revenue and mobile phone shipments in a single quarter also hit a new high. According to IDC statistics, Xiaomi surpassed Apple in the mobile phone market share in the third quarter of 2020, ranking third in the world. According to data from Konas, the company's smartphone shipments in the mainland increased by 18.9% year-on-year in the third quarter, making it the only company among the top five manufacturers to achieve positive growth.
Before 2020 10 months, Xiaomi's flagship high-end mobile phone sales exceeded 8 million. Meanwhile, the average selling price (ASP) of its smartphones in Chinese mainland increased by 65,438+04.7% year-on-year. Xiaomi said in the financial report that this benefited from the increase in sales of mid-to high-end mobile phones. At the beginning of this year, Xiaomi released the first annual 5G true flagship Xiaomi 10 series mobile phone, and released the Xiaomi 10 speed commemorative edition in the third quarter, and Xiaomi's high-end product strategy was successfully implemented.
There is a certain reason for Xiaomi's success in high-end strategy. Zhang Kexing believes that "the mid-to high-end models of Xiaomi are in line with the company's strategy. In the past, Xiaomi seized the market with cost performance, because the company's R&D investment was not enough. With the change of consumers' concept, mobile phones are becoming more and more important to everyone, and consumers are willing to spend more money to buy better models. In addition, Xiaomi has a very good factor, that is, compared with friends, its inventory of 4G mobile phones is relatively low, so there is no burden in the transformation process of 5G mobile phones. "
Regarding whether Xiaomi can occupy a place in the highly competitive high-end machine market, Wei Yuan believes that "the brand image of Xiaomi's cost performance is too deeply rooted in people's hearts. This brand image does not match the psychological core demands of high-end users in the high-end market, but it is very difficult to reverse this kind of user's mind in the high-end market."
Zhang Kexing said that from the currently known data, Xiaomi has been recognized by many "rice noodles". In this regard, its market share in high-end models has been relatively certain. But in the long run, Xiaomi's strategy of developing high-end models in the medium and long term still faces very strong competitors, such as Apple and Huawei. In the face of strong competitors, Xiaomi may not be able to maintain a growing market share in the high-end market.
Smartphones are still the core of the core.
In the short term, it is difficult to shift the focus of overseas to Europe.
IDC's China Smart Home Equipment Market Quarterly Tracking Report shows that the shipment of smart home equipment market in China is expected to be close to 220 million units in 2020, and will grow to nearly 500 million units in 2024, with a compound annual growth rate of 23%.
Wei Yuan also believes that Xiaomi's core competitiveness still lies in its mobile phone. "This is the basic disk of Xiaomi's business, which determines the market competitiveness and brand image of Xiaomi's entire series of products. If the mobile phone business is not good, it is hard to imagine that its services such as IOT and smart home can flourish. On the other hand, however, IOT is a key factor in Xiaomi's ecological construction. There are the blessing of Xiaomi brand, the requirements for design, the control of quality, and the scale effect and network effect. I am still optimistic about the future development prospects of Xiaomi IOT business. "
According to the statistics of Konas, in the third quarter of 2020, the overseas market revenue of Xiaomi smartphones reached 39.8 billion yuan, a year-on-year increase of 52. 1%. In this quarter, overseas market revenue and its contribution to total revenue both reached record highs. Among them, the shipments of Western Europe were particularly eye-catching, with a year-on-year increase of 107.3%, and its market share increased to 13.3%, ranking third.
In fact, in overseas markets, India and Southeast Asia have always been the key areas of Xiaomi smartphones. With the company's vigorous development and remarkable achievements in the European market, it has also triggered a discussion on whether to shift its focus in overseas markets.
"The European market is a high-end market, where consumers have higher purchasing power; However, the European market is seriously divided, there are many languages and cultures, and laws and regulations such as patents, data protection and consumer privacy protection are complex and strict. Therefore, the cost of market development is relatively high, and it is difficult to do it overnight, which requires long-term investment. Therefore, in the foreseeable future, I believe that India and Southeast Asia will remain the main battlefields of Xiaomi's overseas, and it is worth further cultivation. Although it will actively explore and expand in the European market, it will take time, and the focus of overseas markets cannot and does not need to be transferred to Europe soon. " Yuan Yu said.
"Triathlon" Business Model
The biggest challenge is the user experience.
Xiaomi's business model is "triathlon" (hardware+Internet service+e-commerce and new retail). The purpose of Xiaomi's hardware products is to meet the needs of high quality and exquisite design while pursuing the ultimate cost performance. Lei Jun promised that the comprehensive net profit rate of the company's overall hardware business (including smart phones, IOT and consumer products) will not exceed 5%, otherwise the excess will be returned to users. According to Chen Hang, an analyst at Founder Securities, the ultimate cost performance is the starting point of Xiaomi moat. He believes that "low gross profit+high efficiency" is the essence of Xiaomi's business model and the moat of Xiaomi.
In Zhang Kexing's view, we can understand the business model of Xiaomi's "triathlon" in this way. "Xiaomi uses the mobile phone business to drive the popularity and reputation of the whole brand, and at the same time uses intelligent hardware to expand the boundaries of product lines and businesses. We can compare it with Costco, a foreign supermarket chain with very high cost performance.
As for how to evaluate the effect of this business model, Wei Yuan thinks that the biggest difficulty for Xiaomi to realize the spiral drive from hardware to Internet is to make MIUI comparable to iOS in user experience under the condition of being restricted by the underlying Android system.
Zhang Kexing added, "Now many companies are transitioning from hardware to software as a business model, but few companies are doing well. The only thing that has been very successful is Apple, which forms a closed loop of the iOS system through mobile phones, computers and tablets, and buys and pays for products. To achieve such results, Xiaomi is very difficult and can only take one step at a time. At present, the main income source of Xiaomi's Internet service is advertising. To truly realize the drive from hardware to the Internet, it is necessary to re-engineer the business model. "
(This article has been published in1Red Weekly on October 28th, 165438. The stocks mentioned in this article are only examples and do not make any investment suggestions. )