Rebirth 08: Rise from copycat phones

Chapter 165 Zhiyun Dependence

However, the strength of Samsung's Galaxy series of mobile phones is only limited to the Korean market. In other markets, they are basically beaten by Zhiyun and Fruit, and can only sell a few units.

In the current situation of the high-end market, the sales volume of S9 mobile phones is still quite considerable, and hundreds of thousands of units can be sold every month.

This thing is a high-end machine, and a few hundred thousand old models is already very good.

The so-called flagship phones newly released by other mobile phone manufacturers are cheaper, but their sales are not as high as the S9...not to mention the profits.

Everyone on earth knows that Zhiyun mobile phones are a high-end brand, with high specifications and higher prices... and Zhiyun mobile phones have a large sales volume, which also means that the purchase volume of parts is extremely large, and costs can be greatly reduced in all aspects of procurement and OEM.

The purchasing volume of Zhiyun mobile phones is enough to allow Qualcomm and Texas Instruments to cooperate specifically to launch customized mobile phone SOCs... At the same time, during the research and development process of the new chip, consideration was given to its compatibility with Zhiyun's new mobile phones.

Qualcomm's 8X55 series chips...had already been communicated with the Zhiyun Mobile team during the R&D stage. After the first batch of chips was successfully taped out, people from Zhiyun Mobile were involved in conducting various chip tests.

As for the Qualcomm 8X55 chip project at the time...this thing was actually specially prepared for the new flagship phone of Zhiyun S series...Zhiyun Mobile was not only the launch customer of this chip, but also the only customer so far.

The performance of this chip is so powerful and the price is also so high that other mobile phone manufacturers cannot afford it for the time being!
As for Texas Instruments, due to the lagging development of new chips, in order to meet the mobile chip demand of Zhiyun's new flagship phone, they specially made a customized overclocked version...

Such a huge purchasing volume, coupled with the brand value brought by the high-end positioning of Zhiyun mobile phones... and even the huge orders and profits brought by entering the Zhiyun supply chain, has made it difficult for many supply chain companies to maintain their "bottom line" when facing Zhiyun Technology's purchasing negotiators.

The bottom line is often broken again and again, and finally the price is pushed to a relatively low level!

Of course, even so, Zhiyun’s huge purchase orders can also allow supply chain companies to make more money... The unit price is lower, but the purchase volume is larger, and the production costs of these suppliers can be reduced accordingly, and finally maintain a good profit.

If some small and medium-sized enterprises are able to enter the Zhiyun supply chain, the best proof is that their stock prices often soar.

Of course, because the order volume brought by Zhiyun Technology was so large, the companies in this supply chain from top to bottom revolved around Zhiyun, and finally developed "Zhiyun dependence".

Once they fail to keep up with Zhiyun's demands and are kicked out of the supply chain, they will often fall into operational difficulties in an instant.

This is basically the case for all companies that are overly dependent on large customers, and it is not just Zhiyun Supply Chain companies that are like this.

----

Zhiyun Technology's advantages in the supply chain are ultimately reflected in Zhiyun Technology's terminal products. Its hardware costs are often much lower than those of its peers, and even lower than those of fruit companies.

For the same hardware procurement, Zhiyun’s procurement costs are 10% or even more less than its peers, and that is normal!
All of these will eventually be reflected in Zhiyun Mobile's gross profit margin.

The high gross profit margin of Zhiyun mobile phones is not only due to the premium brought by the high-end brand, but also has something to do with its large size, low procurement cost, low OEM cost, and even lower transportation cost and advertising cost.

Even though Zhiyun Technology brags about its marketing budget every day, its total marketing budget is not small... but considering the huge shipment volume of Zhiyun phones, the average marketing cost per phone is actually very low... and Zhiyun Technology has never hired so-called endorsements, and rarely does costly and useless TV commercials. Zhiyun Technology prefers to conduct marketing on the Internet, which can inject many concepts into people's minds.

Finally...in fact, a large number of operators share most of the marketing costs!

Many of the advertisements for Zhiyun phones are actually not made by Zhiyun itself, but by the operators... For example, the promotional posters for Zhiyun phones that can be seen in almost every city's business halls, and the outdoor billboards at stations in many cities, Zhiyun Technology did not spend a penny on them... The operators paid for them out of their own pockets.

Because of the scale effect, the hardware cost, R&D cost, marketing cost and even administrative cost are lower, which ultimately leads to a very high gross profit margin for Zhiyun mobile phones.

This is true for both new and old phones.

----

In Xu Shenxue's office, Ji Chenghe introduced the sales of a series of old mobile phones, and also briefly talked about the sales of the newly launched C3 and S10 mobile phones.

However, because the C3 phone has only been on the market for a few days, and also because the C series phone is not a flagship model and does not have some very unique innovations or even high-tech features, it has not received much attention from the public, and there have been no queues to buy it.

Therefore, the sales in the past few days were not like the S10, where the inventory was sold out in one day.

But this doesn’t mean that the sales of C3 phones are low... In fact, the sales of C3 phones are very good and the sales are very stable.

Ji Chenghe said: "According to our forecast and the sales situation in recent days, we predict that the sales volume in the first few months after the launch will reach about 2 million units, which will continue the strong position of the previous C series."

"Of course... even if the C series is strong, it is not as strong as the current S10 series!" "Especially in the domestic market, since the S10 was launched, the sales have been very good, and it has completely suppressed the popularity of the Fruit 4."

“The market in other overseas regions is also very strong!”

"That's how we were able to sell more than four million phones in the first month and a half. Now that we're in August, I predict that monthly sales will remain stable at around two million units."

"However, the sales of S10 Pro have not been as good as they were at the beginning. Now the sales are somewhat calm. We have lowered the production capacity of this phone and gradually shifted it to the production capacity of S10 phones."

"Although this phone has attracted a lot of attention, it is still too expensive. Apart from some special phones sold as luxury goods, among the conventional mass-produced and large-scale smartphones sold in the 10 to yuan market, only our S Pro is available."

Xu Shenxue said: "This is normal. A mobile phone of 6,000 to 7,000 yuan is still a little inappropriate at the moment, but it's not a big problem. Even if the sales volume is lower, as the flagship of the brand, it's okay to anchor the model with a price!"

The S10 Pro phone, the high price alone is enough to bring a lot of popularity to Zhiyun phones!
Of course... there's nothing good to say. Almost everyone, except the users who bought this phone, is complaining that it's too expensive.

It’s just that high-end mobile phones are criticized for being expensive, which is not a bad thing in most cases.

If one day consumers think your phone is too cheap, that would be a big problem!
----

Xu Shenxue looked at the overall sales situation of Zhiyun Technology and was quite satisfied.

Overall, Zhiyun phones currently dominate the mid- to high-end market, competing on par with Apple in the high-end segment, and surpassing other traditional mobile phone manufacturers in the mid-range segment to gain most of the market share.

Ultimately, this led to the huge shipment volume of Contemporary Zhiyun mobile phones!
Although Zhiyun’s mobile phone shipments are not the largest in the entire mobile phone field... Nokia sells hundreds of millions of feature phones a year.

However, in the field of smart phones, Zhiyun phones have the largest shipment volume and a huge market share.

At the same time, relying on the high gross profit margins of mid-to-high-end smartphones, it also reaped nearly half of the profits in the entire mobile phone industry... and about 40% was taken away by fruit.

As for the countless other mobile phone manufacturers... they can only share the remaining few percentage points of profits. Many mobile phone manufacturers' smartphone businesses do not make much money.

It is a common phenomenon for other mobile phone manufacturers to have meager profits. Wecoo Electronics under Xu Shenxue is a typical example. In fact, its sales volume is not small. Relying on two sub-brands and multiple different models, it can sell three to four million mobile phones a month in total.

However, the profit of hardware is not high, and coupled with the large marketing expenditure and many other factors, the profit of Weiku Electronics' pure mobile phone business is not high, and it needs to rely on software Internet business and ecological business as a supplement.

The same situation also occurs in other mobile phone manufacturers, whether domestic or overseas, they are actually almost the same, with very low profit margins... At the price range of more than one thousand and two thousand, the competition is too fierce.

But they can't reach the high-end price range... Although they are very active and release flagship mobile phones every few days, they can't sell many units. The phones that sell well are still those priced between 1,500 and 2,500 yuan.

----

At the same time, the reason why Zhiyun is so profitable is not simply by grabbing the profits of traditional mobile phone manufacturers. This only accounts for a part of it... In fact, a large part of it is the profits from the new market.

How to say it, the profits of all traditional mobile phone manufacturers added together were not as much as Zhiyun’s now... Simply relying on grabbing market share and profits cannot actually maintain Zhiyun Technology’s current huge revenue and high profits.

In the past two years, the revenue and profits of the entire mobile phone industry have actually increased significantly, but this increase was driven by Apple and Zhiyun, and the increased profits were also pocketed by Apple and Zhiyun, with no impact on other traditional mobile phone manufacturers.

Because in the past era of feature phones, most consumers had no desire to consume and only regarded mobile phones as communication tools. A feature phone costing a few hundred yuan could solve all problems. There was no need to buy high-end feature phones that cost thousands of yuan and were actually no different.

But things are different in the era of smartphones. In addition to being a communication tool, smartphones have also become tools for entertainment and work, greatly increasing usage scenarios while also having a huge impact on phone performance.

This makes consumers more willing to spend more money on advanced mid- to high-end mobile phones.

Therefore, most of the money earned by Fruit and Zhiyun is not taken from traditional mobile phone manufacturers, but from the incremental growth of new markets they have developed themselves.

They use their own new high-performance products to get more ordinary people to spend more money on mobile phones.

After all, many users were unwilling to spend four or five thousand yuan to buy a feature phone in the past, but now they are willing to spend four or five thousand yuan on high-end smartphones.

This also means that Zhiyun and Fruit have gained more new markets... This is the main reason why their revenue and profits are so exaggerated.

(End of this chapter)