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Can Xiaomi turn around?

Editor’s note: This article is from WeChat public account “Hai Ke Finance” ( ID: haikecaijing) , author Qi Jielun.

“Me, I used Jinshan words to check what is called” broken “.” broken “is actually very simple and professional.

If you are not a senior “Mi Fen” and you happen to walk away from the screen during the Xiaomi 10 live broadcast conference the other day, then the founder and Xiaomi of Hubei Xiantao version of Mandarin When Chairman Lei Jun threw out this sentence, you were ninety-nine-years old-what is broken?

The netizens at station B seem to be very happy. When the whole event is over 60 minutes, the rolling barrage ushered in a small climax. Most of them are no strangers to Lei Jun, and they are especially familiar with Lei ’s ingenious spoken English. After all, a sentence “Are you ok” and related audio and video materials at the Xiaomi Mi 4i conference in New Delhi, India in April 2015, is already the Station-level creative material in the town of Ghost Animal District. And this “break” was not the first time Lei Jun said, although the netizens laughed as always.

“Bro” means “pro”. “Xiaomi Mi 10” is also “Xiaomi Mi 10 Pro”. Because I have a better understanding of Lei Jun, even before the beginning of this session, that is, Lei Jun was standing in the center of the stage and introduced the parameters of Xiaomi Mi 10 in conjunction with the PPT. , And a netizen immediately issued a barrage preview: “Let me guess, is it ‘broken’!”

As the first person to carry forward the “Internet thinking” in mainland China, Lei Jun, a serial entrepreneur who enjoys the reputation of “Rebs” after Steve Jobs, is undoubtedly a joke, or else Some old-fashioned and stubborn entrepreneurs, let alone make his speech into a video of ghosts and animals, and make a variety of magical interpretations with the photo of him and Zhou Hongzhang, that is, you are a little unconventional extension, and even praise is not enough. He will always feel unhappy at his will. If the boss is upset, The public relations deletion does not say, or you have to report your operating platform smoothly.

Lei Jun, a popular young netizen, obviously knows how to deal with rice noodles and potential rice noodles.

November 2014, Wuzhen, Zhejiang, during the first World Internet Conference, Lei Jun, together with Cao Guowei and Liu Qiangdong, visited the CCTV “Dialogue” program, saying that his philosophy of life is “to make more friends, to make the enemy “Small”, “can cooperate as much as possible”; and in May 2018, he further sublimated this point and focused on the user level, and wrote it into the Xiaomi prospectus in the form of “Chairman’s Open Letter”, among which One paragraph: “Excellent companies make profits, excellent companies make people’s hearts. What makes us proud is that we are a rare high-tech company with a ‘fan culture’.”

From the core hardware product, that is, the mobile phone “born for fever” since April 2010, after that, its categories have continued to expand, gradually increasing to TVs, laptops, smart speakers, bracelets, mobile power, and balance cars. And air purifiers, etc. Over the past 10 years, the Xiaomi brand led by Lei Jun has taken the “extreme price / performance ratio” as a weapon to attack the city and gain ground.

When listed on the Hong Kong Stock Exchange on July 9, 2018, Lei Jun stated that Xiaomi is no longer a pure hardware company, but an innovation-driven Internet company. Although the hardware is still an important user portal for Xiaomi, but Xiaomi does not expect hardware to be the main source of company profits. He said that Xiaomi’s business model is the original “triathlon” of “hardware + new retail + Internet services”.

But so far, it is clear that hardware, especially the mobile phone business, still firmly holds the absolute majority of Xiaomi Group’s revenue. Taking the latest financial report, the 2019 Q3 financial report released on November 27, 2019 as an example, during the reporting period, Xiaomi Group’s total revenue was 53.7 billion yuan, of which smartphone revenue was 32.3 billion yuan, accounting for more than 60%.

In other words, the overall market performance of the two mobile phone brands, Xiaomi and Redmi, determines whether Lei Jun can save the endless stock price-since it fell below the Hong Kong dollar issue price on the first day of listing, it has been moving all the way Next, as of the close of March 15, 2020, each share has fallen to HK $ 10.98, and the market value has shrunk 37% to US $ 33.95 billion from Lei Jun’s earlier pride in a letter to all members.

Lei Jun ’s statement on the night of listing on July 9, 2018, “The short-term fluctuations in stock prices are not important,” “The investor who buys Xiaomi ’s stock on the first day of listing will double”, and so on, but “earn “Xiesheng” has now become “cut in half.” Whether it’s Lei Jun’s friends, ordinary investors or Xiaomi’s employees, at least the current feeling will probably not be very pleasant. The pressure on Lei Jun can be imagined.

Lei Jun needs a huge victory, but it’s not easy.

On the one hand are domestic smartphonesThe market is gradually saturated and the breakthrough is weak; on the other hand, competition from strong friends such as Huawei, OPPO, and Vivo is becoming more and more brutal; and Lei Jun continues to add weight and has high hopes for the prospect of “5G + AIoT”. In the next few percent of the market, it’s not good, and more importantly, far water can’t hydrolyze near thirst.

What’s worse is the outbreak of new crown pneumonia before the 2020 Spring Festival, which has made it difficult to carry out many offline actions, including marketing, sales, and supply chain response, such as the Mi 10 press conference originally planned for 4,000 people offline, Can only be changed to live broadcast, so including Xiaomi, mobile phone industry shipments have fallen to freezing point.

01, Domestic foundation is already unstable

The Chinese mainland market is undoubtedly an extremely important territory for mobile phone manufacturers around the world.

In January 2020, the international research institute Canalys released a report on the fourth quarter and full year of the Chinese mainland smartphone market in 2019.

According to the report, in the fourth quarter of 2019, the top five smartphone shipments in mainland China were Huawei, OPPO, Vivo, Apple, and Xiaomi, of which Huawei shipped 33.3 million units, accounting for 39% of the market share. OPPO is on par with Vivo, with 16.4% and 15.4% shares in shipments of 14 million and 13.1 million units, respectively. Xiaomi came in last with shipments of 8.1 million and market share of 9.5%.

Look at the whole year again. Canalys report shows that the top five smartphone shipments in Mainland China in 2019 are Huawei, OPPO, Vivo, Xiaomi, and Apple, with shipments of 14 million, 65.7 million, 62.7 million, and 38.8 million. And 27.5 million units, with market shares of 38.5%, 17.8%, 17.0%, 10.5%, and 7.5%, respectively. Xiaomi has taken a small step and ranked fourth.

Smartphone shipments in Mainland China in 2019. Source: Canalys

However, at least in 2014 and 2015, according to data from IDC, Strategy Analytics, and Canalys as above—although the statistical caliber of the three is slightly different and Huawei has been closely following, the intelligence of mainland China The undisputed leader of the mobile phone market at that time was Xiaomi.

Xiaomi’s advantage is losingGo and it’s fast. After 2016, it was not only overtaken by Huawei, OPPO, and Vivo, but it has not entered the top three in the country since then, and the gap between it and Huawei is getting wider-rest assured, we have confiscated Huawei’s money.

On February 7, 2018, at the Beijing University of Technology Gymnasium, Lei Jun said happily at Xiaomi’s 2018 annual meeting that as of October 2017, Xiaomi had achieved the goal of over 100 billion in revenue set at the beginning of the year. He believes that 2017 is a year in the future. To this end, he decided to pursue the victory and set a new goal for the mobile phone business: within 10 quarters, the domestic market will return to the first place.

In the words of Lei Jun, the Chinese market is the foundation of Xiaomi, the world ’s largest consumer electronics market, and a high ground for global industry competition. Only local wins can continue to support the steady development of international business. Only by winning in China can we Win the world.

“In this decisive battle, we must firmly move the battlefield forward, with the headquarters on the front line. We must use the province as the unit, the city as the unit, each county, township, and even the community grid as the unit on the battlefield. We are always brave and agile everywhere, fighting for every inch of land and fighting to the end, “he said.

10 quarters, that is, two and a half years. If you count from the day Lei Jun spoke as the starting point, then August 7, 2020 is the deadline, and there is not much time left for Xiaomi and Lei Jun.

Since Lei Jun has mentioned high-profile “Xiaomi’s journey is the sea of ​​stars” many times, after the team conquered a “small goal”, he shouted a big goal to boost morale. This is certainly understandable, but objective reality It’s cold-if you really want to achieve it, now, the probability is almost zero.

Good news comes at the same time as bad news.

In December 2019, IDC made a prediction on the mobile phone market in mainland China in 2020, which involved 10 aspects. The first one mentioned that with the 5G concept accelerating into the public view and the rapid coverage of 5G mobile phones The domestic smartphone market may bottom out and rebound, and shipments are expected to return to positive growth, a year-on-year increase may reach 0.7%.

Sudden outbreaks quickly made this prediction invalid. Moreover, in view of the current situation, it is not only far from an increase, and it will take at least several months to return to the normalization level of previous years.

Data is explaining the problem.

Domestic mobile phone market shipments. Source: China Academy of Information and Communication Technology

According to the “China Mobile Market Analysis in February 2020,” released by China Information and Communication Technology Research Institute, a research institute directly under the Ministry of Industry and Information Technology, on March 9,According to the report, in February 2020, the total domestic mobile phone market shipments were 6.384 million units, a year-on-year decrease of 56.0%, including 43,000 2G mobile phones, 3.960 million 4G mobile phones, and 2.38 million 5G mobile phones. From January to February 2020, The total domestic mobile phone market shipment was 27.197 million units, a year-on-year decrease of 44.0%, of which 389,000 were 2G mobile phones, 18.964 million 4G mobile phones, and 7.845 million 5G mobile phones.

02, How long does it take to make double?

As the first share of the “same shares but different rights” of the Hong Kong Stock Exchange, coupled with the popularity of Lei Jun and the failure of the Hong Kong Stock Exchange to Ali 4 years ago, Xiaomi’s listing has received considerable attention from all parties. Eyes and volume are said to cover the US group that was listed at the same place after 2 months.

It is embarrassing that Xiaomi’s stock price trend does not deserve the joy of Lei Jun and the founding team.

Lei Jun said on the eve of listing that as of July 8, 2018, Xiaomi had a total of more than 7,000 employees holding stocks or options. “After the IPO, everyone will get a blessing from the capital market.”

During the overall downward trend of Xiaomi’s stock price, the roles of He Xiaopeng and Lin Bin must be mentioned.

It should be said that besides the endorsement subscription of industry leaders such as Li Ka-shing, Ma Yun, Ma Huateng before and after Xiaomi’s listing, the most dazzling is the platform of Xiaopeng Motors founder He Xiaopeng.

After Xiaomi submitted the prospectus on May 3, 2018, Lei Jun changed the title of “Chairman’s Open Letter” in the prospectus to “Who is Xiaomi and why does Xiaomi struggle?” On May 4th, He Xiaopeng followed suit and sent an open letter: “Who is Xiaopeng Automobile and Why is Xiaopeng Automobile Fighting”. In addition to talking about Lei Jun’s help to him and Xiaopeng Automobile, the full text expresses thanks and blessings.

This is just a prelude.

Xiaomi’s listing was at 12:21 on the next day of July 10. He Xiaopeng sent a circle of friends saying that he had bought more than 100 million US dollars in the secondary market on July 9 and July 10, respectively. Xiaomi stocks, “I am optimistic about Lei and Xiaomi.”

“For a good company, the best time is when the market is scared. I was fortunate to have taken Ali’s stock in 13 and 14 years and has been till now. I also bought Tencent from 14 years. Unfortunately, not enough Many. I strongly feel that Xiaomi’s future is as outstanding as Ali and Tencent, and maybe both are great. “He said.

The industry knows that Lei Jun has a great influence on He Xiaopeng. He is an angel investor in two startup projects, namely UC Youshi and Xiaopeng Automobile, and He Xiaopeng hesitates to publicize Lei Jun as his “mentor and nobleman”.

Of course, this is a Li-style interaction, and the interaction does not end there-November 13, 2019Xiaopeng Automobile announced that it had received $ 400 million in Series C financing, and Xiaomi was one of the investors.

Then the question arises: Can ordinary investors as many as 100,000, like He Xiaopeng, have firm confidence in Xiaomi and Lei Jun, and can “learn to endure and hold on”? What’s more important is that the result of “holding hold” is really “making double”, how long is this cycle?

It can be seen that in order to stop the stock price rising and encourage investor confidence, Xiaomi Group and Lei Jun have so far offered multiple tools including stock repurchases.

One of the nodes that deserves special attention is January 9, 2019. On the day when the listing was lifted for half a year, a large number of shareholders cashed out. Apoletto Managers Ltd, a fund owned by Yuri Milner, a well-known Russian investor and founder of DST, reduced its holdings of 594 million shares and cashed in nearly 6 billion Hong Kong dollars. Affected by this, Xiaomi’s stock price fell 6.58% on the day.

Apart from the announcement that the executives of the board of directors and CEO Lei Jun and CFO Zhou Capital have promised to continue to lock in Xiaomi stocks in the next 365 days, the Xiaomi Group will be held on January 17, January 18, and January respectively On the 22nd, there were many large-scale repurchases in a row, and the stock price rose slightly in the short term. Since then, such repo actions have frequently occurred.

Xin Mi co-founder and president Lin Bin is not on the above stock lock list.

HKEx’s “Easy Disclosure” website (hkexnews.hk) shows that since August 21, 2019, Lin Bin has reduced his holdings of Xiaomi stocks by 41,313,400 shares for 3 consecutive days, realizing HK $ 370 million.

During the period when Xiaomi’s stock price continued to slump, core executives reduced their cash to cash out. The negative effect is self-evident: your president is cashing out a lot, and there is a possibility of switching to other investments. However, investors who are deeply in dilemma, how to deal with it?

The news spread quickly and fermented, causing a big storm, and the doubts and disappointments of Xiaomi by all parties have deepened.

On August 27 of the same year, Lin Bin issued a notice through Xiaomi Group that he would no longer reduce his holdings in the next 365 days. At the same time, Lin Bin personally tweeted that Xiaomi is still the whole of his career, “I love Xiaomi, I am full of confidence in Xiaomi’s future, and I believe that the Xiaomi model will be successful.”

The cash-out action is not fictitious. At this time, only verbal explanation is undoubtedly weak. Management promotes innovation at the source, raises the share price to the root cause, turns the peak of the stock market, and allows investors with erratic mentality to see hope. That is the truth. But looking at Xiaomi’s product strategy, this problem has no solution in the short term.

03, Who’s AIoT ?

“AIoT” is still a term that is industry-oriented and technology-oriented. It is not as widely known as “5G”. It is a collective name for “AI” and “IoT”.

Literally, AI, or Artificial Intelligence, refers to artificial intelligence; IoT, the Internet of Things, refers to the Internet of Things; together, AIoT means artificial intelligence + the Internet of Things platform. AIoT is exactly the direction Xiaomi is focusing on in addition to mobile phones.

On January 2, 2020, Lei Jun sent a letter to all members in the New Year. The letter mentioned one general direction and two good news.

According to Lei Jun, the former refers to Xiaomi’s clear strategic direction of “5G + AI + IoT next-generation super Internet”, and 2020 is the year of attack for Xiaomi’s 5G business and also Xiaomi’s promotion of “mobile phone + AIoT” A key year for dual engines; two good news, one is that Xiaomi’s TV shipments exceeded 10 million units in 2019, setting a record for Chinese TV brands, and the other is Chang Cheng, former vice president of Lenovo Group and head of mobile phone business , Joined Xiaomi, served as vice president of Xiaomi Group, responsible for mobile phone product planning.

The focus is “5G + AIoT”.

At the beginning of 2019, Xiaomi disclosed a “All in AIoT, 10 billion investment in 5 years” plan, and in March 2019, Lei Jun issued a document to establish an AIoT Strategy Committee under the Xiaomi Group Technology Committee. Responsible for promoting synergy between AIoT-related business and technical departments and promoting the implementation of strategies.