Continued from the previous article "The IPO valuation is going to exceed 100 billion, but the net profit does not exceed 5%, and the history of Xiaomi's vents that are always pumping "wind" (Part 1: Qifeng)"
According to reliable sources, the listing case of Chinese mobile phone maker Xiaomi is in the process of being accelerated, and Xiaomi will apply for listing this week. The company may raise $10 billion in the listing, and the company is looking for a valuation of $100 billion.
In addition, recently, Xiaomi founder Lei Jun promised that the comprehensive net profit margin of Xiaomi's hardware businesses such as mobile phones, Internet of Things and various ecological chain products will not exceed 5% this year. This makes foreign media believe that the small profit strategy has disappointed some investors.
The ultra-large valuation and financing plan have formed Xiaomi, which has been adhering to the slogan theory, and has the most beautiful convulsion this year.
And why does it dare to do so? Is it really worth the price? Xiaomi, whose external evaluation and internal experience are always lingering in a world of ice and fire, is going to play with the wind again?
"The entire Xiaomi brand has gone through a lot of hardships, and it has come step by step until no one makes our fakes and can stand up again. I think the brand is the lifeline for Xiaomi, and it is the trust of all users in us. ” On November 7, 2017, at the Xiaomi Investment Annual Conference, Lei Jun, the founder, chairman and CEO of Xiaomi, said in a speech.
This time, Lei Jun stood in front of the stage of the speech very seriously, and used PPT to preach the bitterness of the past two years: "In the global market rankings in the first quarter of this year, Samsung is the first, Apple is the second, and Apple is the third. It is Huawei, the fourth is OPPO, and the fifth is vivo, but I can’t find Xiaomi, Xiaomi and other companies have a common name called others.”
Who could have imagined that just three years ago, Lei Jun told Forbes reporters in high spirits: The only mistake in the past four years was to underestimate Xiaomi by a zero.
This time, Lei Jun wants to make this zero more round in the IPO.
Starting a business is not easy, and Lei Jun and the Xiaomi company founded in April 2010 have once again returned to their own outlets.
Xiaomi, which is always exhausted, can currently be summarized as the three stages of "wind - cold - wind". It is possible that after the IPO, the historical cycle will be regular again. Let's start with the wind:
The IPO valuation needs to break through 100 billion, but the net profit does not exceed 5%. The history of Xiaomi's outlet is always drawing "wind" (middle: cold)
Fives
A cold, a pattern of hard times
Standing on the tuyere for a long time will inevitably cause a cold.
Lei Jun said at a CEO seminar on "Internet + and China Manufacturing Upgrade" in August 2017: At the beginning of 2014, co-founder Liu De led a dozen people to establish an ecological chain department, and successively made various products. Now the bracelet is the first in the world, and the air purifier was the first in China last year, and it is actually the first in the world. The balance car is the world's first, the power bank is the world's first, and the sweeping robot is the world's first.
Many firsts, starting from 2014, the valuation of 45 billion US dollars was also called out from that year, which also made it the most valuable unlisted company at that time.
But from the end of that year, Xiaomi, who was proud of the spring breeze, entered an eventful autumn. In 2015, Xiaomi did not complete the expected sales volume; in 2016, Xiaomi's mobile phone sales fell by 36%, falling out of the top five in the world.
"We have focused on e-commerce in the past few years, but there is a huge flaw. E-commerce only accounts for 10% of the total retail sales of goods. Up to now, 90% of people buy things online. 100% of the top is yours, and you only have 10% of the market." On many occasions in 2017, Lei Jun repeatedly used such words to interpret the previous decline of Xiaomi, and blamed the first difficulty on the online market. Vicious competition: "When we came out with a valuation of 45 billion US dollars, everyone thought he could do it, as long as he burned money. So in the past two years, some peers have lost astronomical amounts of money in the mobile phone market."
But it is impossible for the e-commerce outlet to have no opponents to enter. Xiaomi, a high-flying pig, fell when Lei Jun's "wind outlet theory" was the hottest, not only because of peer competition.
According to Lei Jun's self-proclaimed concept of "new domestic products" that he proposed when Xiaomi was founded, what went wrong?
six
No more hunger, Xiaomi is still "plagiarizing"?
On December 16, 2014, Lei Jun's 45th birthday, he received two "grand gifts" from his opponents, one was 360's investment alliance with Coolpad, and the other was Huawei's release of a new mobile phone, the Honor 6 plus. The reporter who came to interview said, "The competition in this industry is horrible."
Lei Jun's "horror" can be traced back to two months ago. On the eve of Apple's announcement of new products such as the iPad Air 2 and iPad mini 3, when its design director Jonathan Ivey attended the "Vanity Fair Summit", an audience asked in the question-and-answer session. On the topic of "China's Apple" Xiaomi, he said very directly: "I don't think this is flattery, with all due respect. When you start something, you don't know if it will be successful, you spend seven It took eight years. But after that, it was copied. It was too direct, it was theft, it was laziness. I don’t think this is inappropriate.” He also said that this is not against Xiaomi, a manufacturer, but against plagiarism. The phenomenon of design creativity.
It is worth mentioning that this October is also a festival for "Mi Fans" (collectively referred to as Xiaomi fans). On October 16, Lei Jun, chairman and CEO of Xiaomi, announced on Weibo that most of Xiaomi's products have been guaranteed to be supplied, and Xiaomi.com is always in stock.
This is regarded by the industry as a signal for Xiaomi to bid farewell to the "starvation marketing" model. Before and after October, Xiaomi has repeatedly sold many star products to fans on the Xiaomi sales day on Tuesday, including the Xiaomi Mi 4. In the early days, to buy these star products, most of them needed to have the so-called "F code" or queue up to buy. This kind of panic buying mode of limited purchase is regarded by the industry as Xiaomi's unique hunger marketing. The reason for this situation has always been explained as the contradiction between the purchase enthusiasm of Mi Fans and the insufficient production capacity of Xiaomi.
Lei Jun revealed in his previous Weibo that by the end of September 2014, the production capacity of Xiaomi Mi 4 will reach 1 million units per month, and it is expected that 1.5 million units will be shipped in a single month in October. The flagship model has the highest level of climbing speed”. According to industry analysts, the stable supply of production capacity has become a key capability for Xiaomi to become the leader in the domestic mobile phone market.
Xiaomi's repeated peaks in production and sales may, to a certain extent, gradually make it the center of heated discussions, just as Apple and Samsung have always endured.
In August, Xiaomi was also caught in a war of words. On August 4, after Nokia announced layoffs, an employee of Xiaomi tweeted mockery. Wang Sicong, director of Wanda Group, directly attacked while retweeting the Weibo, saying that Xiaomi "does nothing but copy and fry"?
But this war of words, which did not provide much evidence, quickly subsided.
The plagiarism debate in October was different. Shortly after Jonathan Ivey complained, Yang Jun, who was certified by Sina Weibo as the senior director of Lenovo's mobile phone product planning, posted a Weibo on the 13th, putting forward his own views on the plagiarism problem of Xiaomi.
On this Weibo, Yang Jun wrote with the theme of "Which is better for plagiarism": "When I first saw the Mi 4, I thought it was someone who brought the wrong product to release, and I couldn't help but think of the phrase 'one piece' The artistic journey of steel plates'. Not to mention the similarity in appearance, even the systems are similar, I really can't agree. What's the point of copying other people's products of the previous generation, if you want to copy, just copy the iPhone6, and it will be released at the same time! Do you have any confidence?! Only Personally, I pay tribute to Apple, and I don't like plagiarists." At the same time, I compared the appearance of the iPhone 5S and the Mi 4 in the way of group pictures.
This move makes people think that Lenovo, which has always been low-key, also intends to join the war of words.
seven
Is Xiaomi mode really not afraid of being "plagiarized"?
Lin Binde, president of Xiaomi Corporation, responded with a sense of marketing: "Xiaomi is a very open company and will not force everyone to use only Xiaomi. We also use many products other than Xiaomi. Any individual organization can only use Xiaomi products seriously. I am qualified to say whether it is plagiarism from others. I am very willing to give him a Xiaomi mobile phone, so that he can really use it before expressing his opinion.”
Interestingly, Lin Bin was asked in an interview with the Nikkei that "many Chinese companies are copying Xiaomi's business model, what is your response to this", he said: "Our business model covers hardware. , software, network services and online marketing four elements, so it is not so easy to be copied."
What is Xiaomi's business model that is not easily copied? The argument in an article titled "Xiaomi, Not Apple, Will Change the Smartphone Industry" on the Harvard Business Review website on October 14, 2014, may be instructive:
Xiaomi's business model is extremely disruptive. Unlike Apple, Xiaomi is not targeting high-end users. Xiaomi phones sell for at least 60 percent less than Apple's, so their customers are mostly teenagers. Xiaomi phones are only priced a little more than all the parts combined, and they don't charge as high a price as other phone makers and offer cutting-edge devices. In two years, the cost of original parts has dropped by more than 90%, so Xiaomi has kept the price low while taking the difference in the bag. Essentially, Xiaomi's profit formula is the exact opposite of Apple's. In order to maintain high profit margins, Apple needs to constantly introduce new models to make the highest profits through new models.
But the truth is not as unbreakable as Lin Bin expected.
Meizu launched the 1799 yuan Meizu MX4 earlier, which is also cost-effective, imitating Xiaomi, attacking the reverse Apple model, and in-depth cooperation with Alibaba. And the domestic mobile phone army, known as the "China Cool Lianmi" army, has become more and more realistic in the possibility of entering a more violent price war later.
Can Xiaomi's business model still be invincible? The answer is of course no. Xiaomi's choice at the time was to avoid competition.
"Xiaomi's business model is more likely to succeed in countries that meet the following conditions: a huge population, e-commerce is just emerging and operators are not strong enough. At present, Xiaomi has entered the Indonesian and Indian markets, and it may enter Brazil and Russia next." Lin In the above interview, Bin gave the confidence to not be afraid of plagiarism.
This layout did bring major benefits when Xiaomi reversed its decline later.
According to the IDC report, Chinese manufacturers continue to dominate the Indian smartphone market. In the first quarter of 2017, Xiaomi's mobile phone shipments in India increased by 39.8% quarter-on-quarter. Among them, Redmi Note 4 has become the largest smartphone model shipped in the Indian market.
"When we entered the Indian market, Samsung had 30% of the market, and it only took us one or two years to reach the level of rivalry with Samsung." Lei Jun said in a speech in 2017: So I am very Proudly said that "there is no mobile phone company in the world that can successfully reverse the decline in sales." After this sentence, four words were added: "Except Xiaomi."
Eight
Insufficient innovation, "dormant" for 2 years!
Insufficient innovation is Xiaomi's hidden pain.
The Xiaomi press conference is indeed completely Apple-like, with product presentation PPT, the classic "One More Thing", and even Xiaomi CEO Lei Jun's dress is imitating Jobs in a black top and blue jeans.
Walking into Xiaomi's offline experience store, if you don't look at the product logo, you don't even know whether you are entering an Apple retail store or Xiaomi's offline experience store.
Xiaomi's various products, mobile phones, tablets, routers and TVs, look exactly like Apple?
Such Mi-hei-style remarks have become a joke and talk to mock Xiaomi on the Internet, and Xiaomi seems to have not brought much imagination to users in terms of innovation.
But innovation is not just a problem for Xiaomi, including Samsung, Xiaomi's biggest rival in the Android smartphone field, is also distressed.
In essence, Samsung's core technology in the mobile business is different from that of Apple. Because it "stays" under the banner of Android, its biggest advantage lies not in software and hardware, but in innovative design. It can be said that in the era of smartphones, Playing a world is precisely by taking the lead on the big screen like Galaxy. This first-mover advantage and innovation that sets industry standards inevitably slowly fades over time and collective “copycats.”
And Xiaomi, before 2015, has never led the fashion in design, and it is obviously easier to be criticized.
Lei Jun and many high-level executives of Xiaomi also realized this and turned it into action during the two years when it fell into the air.
"In fact, everyone knows that the innovation of core technology is the most important thing for a company to succeed." Lei Jun revealed in summarizing Xiaomi's experience that in 2016, Xiaomi applied for 7,071 invention patents worldwide: "In the past, we were faced with Lots of challenges, but the truth has never been as bad as the outside world says. We've returned to healthy growth. We'll be back to fast growth in the next two years."
In more than 2 years of dormancy, Xiaomi is most proud of its Xiaomi MIX launched in October 2016.
This mobile phone adopts an all-ceramic body, and the screen ratio of the mobile phone reaches 91.3%. Its novel design form is named full screen by Xiaomi. "Everyone has followed this design, and the entire industry has accepted the definition of a full-screen mobile phone. We have stood at the top of the world and led the trend of the entire technology." Lei Jun is very proud of this, and he also uses this mobile phone. , to wash away Xiaomi's plagiarism name.
This idea came from a discussion with a group of engineers at the beginning of 2014. They felt that the mobile phone industry became more and more boring, and everyone's mobile phones became more and more the same.
When Lei Jun recalled the advent of "full screen", he did not forget to take Apple: Why is it the same? It's because the iPhone was defined like this ten years ago. So at the beginning of 2014, I made the final call and said, let's make a concept phone, there is no timetable, no budget, we just want to give it a try.
Not only is the appearance innovating, but Xiaomi has also carried out in-depth research and development at the "content" level of hardware.
In February 2017, Xiaomi released its self-developed mid-to-high-end mobile phone processing chips, becoming the fourth mobile phone company with self-developed chips outside of Apple, Samsung and Huawei.
The innovation effect is obvious.
According to IDC data, in the first quarter of 2017, Xiaomi's domestic market share of mobile phones was 9.0%, a quarter-on-quarter increase of 21.6%. Xiaomi started to recover in 2017 after several consecutive quarters of declines.
(To be continued)
The theme of the next issue - A brief history of Xiaomi outlet (Part 2): wind creation
Zhang Shule People's Network, People's Posts and Telecommunications columnist, Internet and game industry observers