The market winter is still lingering in 2023, how can the smartphone industry continue to thrive? in English

How can the smartphone industry thrive despite the prolonged market winter in 2023?

【PhoneAuto】On May 5th Beijing time, the World Health Organization announced that COVID-19 is no longer an international public health emergency, marking the end of the COVID-19 pandemic that has caused global panic in the past three years. In the first few months of 2023, the consumer market responded very positively, especially the tourism market led by Zibo, which has basically returned to the level of 2019, and there is no longer any concern about a spur-of-the-moment trip.

Although the seemingly booming tourism market is seen by many as a concentrated release of demand that has been suppressed for three years, not all markets can recover so quickly. For the smartphone market, after three years of “beating,” it has become scarred all over and sales have continued to decline. Even in 2023, the bottom that we once predicted did not appear immediately. According to the performance report of the global smartphone market in the first quarter of 2023 by market analysis agency Counterpoint, the overall market is still in decline, with global smartphone shipments down 14% year-on-year and 7% quarter-on-quarter to 280.2 million units. According to Canalys data, global smartphone shipments in the first quarter of 2023 fell by 13% to 270 million units.

According to Counterpoint data, in the first quarter, Samsung’s shipments fell by 19% year-on-year, Apple’s fell by 2%, Xiaomi’s fell by 22%, OPPO’s fell by 10%, and vivo’s fell by 18%, and even others fell by 16%, with an overall decline of 14%. The decline in shipments naturally also affects revenue, but it does not have much impact on Samsung and Apple. On the one hand, Samsung’s S23 series has increased its average selling price to $340, while Apple has the lowest year-on-year decline. Against the backdrop of the overall decline, Samsung and Apple’s strong performance has allowed them to occupy 96% of the global smartphone operating profit, while other manufacturers can only get a small share.

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The “never-ending” decline in the smartphone market is hard not to make people think. How can the mobile phone industry roll up in order to recover to its previous level? After all, in the past three years, manufacturers have been rolling up tirelessly, but the results have been unsatisfactory. The constantly shrinking shipments and market share further force manufacturers to think about how to roll up more effectively and find a glimmer of hope in the process. From the report, it is not difficult to see that attacking the high-end market is an effective method that can to some extent avoid risks, but the process is extremely long and painful, especially when facing giants like Samsung and Apple. The road to high-end for domestic manufacturers is not smooth.

How can the mobile phone industry roll up in order to fight for a way out? Perhaps manufacturers have already started and are doing it, but the road ahead is long and winding, and it is bound to be a difficult and arduous journey.

Standing at the crossroads of the transformation from feature phones to smartphones, perhaps no one had thought that foldable screen phones would emerge in the future. But with the continuous evolution of technology, foldable screens have indeed become a possibility and are gradually moving from a niche to the mainstream. One foldable screen, two ways of life, this is the story that manufacturers want to tell consumers, and it is also the advantage of foldable screen products.

In this regard, domestic manufacturers have indeed done a good job in recent years. Huawei has covered internal folding, external folding, and vertical folding forms with their seven generations of Mate Xs from Mate X to Mate X3 in four years. With the accumulation of technology, they have solved many industry problems such as the lightweight and reliability of foldable screens, making foldable screens become the mainstream machines that are more user-friendly. Moreover, as Huawei’s product update rhythm gradually returns to normal from last year, consumers’ expectations for Huawei’s foldable screens have further increased.

In addition, OPPO’s efforts in the field of foldable screens have also been highly recognized by the market. The brand-new Find N2 and Find N2 Flip have become business cards for OPPO’s foldable screens, and have also boosted OPPO’s smartphone sales. Recently, the market analysis agency Canalys released data for the first quarter of 2023. The shipments of smartphones in the Chinese mainland market in the first quarter of 2023 decreased by 11% year-on-year, with a total shipment of 67 million units. This is the lowest first quarter since 2013. Among many manufacturers, Apple continued its popularity with the iPhone 14 series, ranking first in the Chinese mainland market in the first quarter of 2023 with a market share of 20% and shipments of 13.3 million units. OPPO followed closely with a market share of 19% and shipments of 12.6 million units, of which foldable screens played a big role.

OPPO’s foldable screens have quickly become popular in the market due to their unique folding size, design, functions, and attractive price. It has to be said that OPPO has a deep insight into user needs, and the Find N series products have allowed OPPO to make a beautiful overtaking in the field of foldable screens.

Vivo has also made great efforts in foldable screens. With the brand-new Vivo X Fold2 and Vivo X Flip, it has accumulated profound technological capabilities. Both hardware and software can provide consumers with excellent user experience. Moreover, with the launch of the Huaxia Red color, Vivo’s large foldable screen is more closely associated with politics and business, while X Flip is focused on fashion and has become a “magic box” for many female users. In terms of foldable screens, the aesthetic sense of the blue-green factory is really worth learning from.

Honor has been focusing on foldable screens since its independence. With the release of Honor Magic V and Honor Magic Vs, the company has caused quite a stir in the market. This year, the upcoming Honor Magic V2 is expected to further overcome the challenge of being thin and light, and continue to push forward with a comprehensive strategy. Of course, there are also rumors that Honor will launch a small foldable screen product this year, which will undoubtedly enhance the company’s competitiveness in the foldable screen market and fill the gap in small foldable products, playing an important role in Honor’s high-end branding.

With the entry of domestic manufacturers and the maturity of foldable screen technology, the price of foldable screens on the market has gradually decreased. Previously, prices of tens of thousands of yuan made people hesitate, but now you can buy a decent foldable screen experience for a few thousand yuan. When such niche products become mainstream, manufacturers will get the answer they want. Of course, on another level, if manufacturers make foldable screens good enough, consumers can also accept higher prices, which is also the only way to create high-quality foldable screen products.

Currently, smartphones are the most frequently used and necessary intelligent mobile terminals, and therefore are the best medium for information flow. Therefore, smartphone manufacturers have a unique advantage in building ecosystems. Moreover, for smartphone manufacturers, ecosystems are like a “barrier” that they must cross. Once they cross it, they can ride the wind and waves, but if they can’t cross it, it will be a difficult barrier to overcome. From this perspective, Apple has demonstrated it very well. The iOS ecosystem has built Apple’s competitiveness on a global scale, and the huge iOS system has strong regenerative ability. When combined with Apple’s first-class hardware, it creates the best-selling iPhone products worldwide.

In recent years, domestic manufacturers have also recognized the importance of ecology and have been continuously making efforts in this regard. For example, Huawei’s HarmonyOS is the best demonstration. From the continuous bottom-up innovation based on Android’s EMUI to the creation of a completely independent and controllable HarmonyOS, Huawei deeply understands the importance of software ecology. Even if hardware is free from control, if software cannot be independent, the fate is still in the hands of others. On the HarmonyOS 3.1 installed on the Huawei P60 series, we can feel the smoothness, interconnectivity, and security it brings, which is an important step for HarmonyOS to move towards version 4.0.

Another significant change is that various systems based on Android are gradually digging deeper, trying to create differentiated competitiveness and higher controllability over the system. For example, the transition from Honor MagicUI to MagicOS has built a set of interconnection capabilities belonging to Honor itself through the MagicRing trust environment, which can better connect laptops, tablets, mobile phones, and other devices together. The premise of doing this is that they also have to make their own laptops, tablets, watches and other products. Currently, we can also see that manufacturers are consistent in this regard, and relevant products are being made. Of course, device interconnection is a major direction, not only for Honor, but also for manufacturers such as OPPO, Vivo, Xiaomi, etc. This is an important step for domestic manufacturers to build their own ecology.

In addition, this ecology not only includes our regular understanding of mobile phones, laptops, tablets, and systems, but also includes a very large category of “cars”. In the trend of intelligence, smart cars are a delicious piece that everyone is eyeing. For example, Huawei has deeply empowered the AITO Qianjie car. With the technical accumulation of Huawei in the consumer field, Qianjie’s car machine can be said to be a sky-high ceiling. Xiaomi personally entered the field of car manufacturing. Although it is not yet in mass production, it has been actively advancing after planning. It should officially meet everyone in the next two years and become an important part of Xiaomi’s ecology. Another example is Meizu. The return of the Meizu 20 series has also brought FlymeAuto into the public’s view. This is not only a dreamy cross-border, but also Meizu’s desire and plan to create its own ecology.

As these ecosystems gradually grow, you may find that after buying one product, you may need to buy other products from the same brand, not only because they have related products, but more importantly because this can bring a better interconnected experience. In this intelligent age, who doesn’t want to embrace efficiency and convenience? If laptops, tablets, phones, and watches are products from different manufacturers, then the barriers between different terminals seem to be difficult to eliminate forever, and cross-terminal seamless experience is a luxury in this situation.

For most people, having all hardware configurations full on a phone is naturally the best, but they haven’t thought about what experience this will bring after being full. This is like some professional teams in League of Legends, who clearly have the strongest five players, but the final result of the competition is unsatisfactory. When smartphone manufacturers make smartphones, they also need to consider this aspect and learn to give and take.

Take the imaging currently being discussed in the high-end market as an example. Pursuing a large sensor seems to be a truth that everyone understands, but this also tests the manufacturer’s industrial design capabilities. The final product is thick and heavy, making it difficult to have a good feel. Although the recognition in the market is very high, the consumer experience may not be the best. Therefore, manufacturers have been trying to balance hardware configurations and lightness, fast charging and battery capacity, etc. The fast charging power of flagship phones may not be the highest, but it still cannot hide the fact that it is a flagship phone.

For the high-end market, manufacturers find it difficult to widen the gap in hardware when they are similar, and what really widens the gap is investment in algorithms. Why are people crazily investing in imaging this year and why are they starting to focus on the direction of low-light shooting? In fact, it is to hope to build a barrier with their own technology and form consumer memory. Let everyone think of which phone takes the best photo when taking low-light and long-focus photos. Of course, from the consumer level, this direction is indeed very popular, whether it is low-light shooting or long-focus macro shooting, both are favorites of mobile photography enthusiasts.

In the mid-range market, there is a very obvious trend this year, which is to bundle memory. Configurations with 16GB+1TB are sold for around 3000 yuan, which was unimaginable in the past. Even most computers did not have this memory configuration. But now we can buy a decent product. On the one hand, it is because memory prices have indeed come down, and on the other hand, large memory is a major need for users in this price range. Bundling memory directly solves the pain points of users to a certain extent, which is fast, accurate and ruthless, and is more direct in marketing.

Just like the internal competition in the automotive industry, the smartphone market will still be highly competitive in 2023, and smartphone manufacturers must accept the fact that even if there is competition, their market share will continue to decline. This is the reality of 2023, which was once optimistic for many people. For smartphone manufacturers, internal competition is a way to seek breakthroughs. Behind this competition is the positive signal released. It’s like rowing against the current, if you don’t advance, you will retreat. Manufacturers must maintain and improve their market share through internal competition to make the future better. Of course, this kind of competition is definitely good for users. When manufacturers compete fiercely, users can have more choices. Why not take advantage of it?

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