OPPO’s last fight

Source: Market value list

Author: Wu Zhanguo

Editor: He Yueyang

On April 18, Huawei’s Pura 70 series, priced at 5,499 yuan, went on sale and was sold out in one minute. From Mate 60pro to Pura 70, Huawei has returned after being blocked for three years, gaining a lot of attention and putting other mobile phone manufacturers under tremendous pressure.

Especially OV, which is impacting the high-end market.

OPPO, which had already carved out a place for itself in the feature phone era by positioning itself as a music phone, entered the smartphone era and once again swept China with its advertising slogan “charge for two minutes, talk for two hours”, becoming the country’s number one mobile phone brand in terms of shipments.

Last year, OPPO first gave up self-developed chips, and then encountered the return of Huawei. In the third quarter, OPPO mobile phone sales began to plummet. Entering 2024, in the first six weeks, OPPO mobile phone sales dropped by 30%, which can be called Waterloo. While the overall global smartphone market recovered in the first quarter of this year, OPPO's market share declined.

The panic of falling behind has enveloped OPPO.

At the beginning of 2023, OPPO became the biggest winner in the mobile phone market.

At that time, the overall market was still sluggish, and foldable screen phones were one of the few growth points. OPPO's Find N2 Flip foldable screen phone sold well, making OPPO the number one in the foldable screen phone market in the first quarter of 2023 with a market share of 35%, and a market share of 22% in the smartphone market.

In the second quarter, there was a "fight" in data from different data agencies. IDC data showed that OPPO was still the number one mobile phone manufacturer in domestic shipments, while Canalys' report showed that OPPO was surpassed by VIVO and ranked second. , but their market shares are very close.

The turning point came in the third quarter. Data from all parties showed that OPPO was surpassed by Honor and became the second largest mobile phone manufacturer in terms of shipments. With the release of Honor's new folding screen mobile phone and the return of Huawei's high-end models, OPPO's mobile phone shipments have begun to decline at an accelerated pace.

In the fourth quarter of last year, OPPO fell directly to fifth place, and Canalys classified it as Others.

In the first quarter of this year, OPPO's sales are still not optimistic. OPPO's lagging behind is not due to lack of efforts. In the second half of last year, OPPO released high-end folding screen mobile phones OPPO Find N3 Flip and OPPO Fine N3. It was expected to continue the success of N2 Flip at the beginning of the year. However, the release and sale of N3 Flip coincided with the launch of Huawei Mate60 pro and MATE X5.

OPPO, which has been robbed of its popularity twice, is also called Wang Feng in the mobile industry by netizens.

In the high-end market, OPPO mobile phones encountered Waterloo. In the mid-to-low-end market, OPPO is also facing unprecedented pressure.

In 2016, OPPO became the largest mobile phone manufacturer in China by market share from the fourth position in the previous year with the best-selling mobile phone R9 in China. The R9 that year was the stand-alone phone with higher sales than the iPhone 6s. In 2018, OPPO once again overtook Huawei to become number one in the Chinese market.

From the perspective of shipments, OPPO's basic products mainly include three brands: OPPO, realme, and OnePlus. OPPO is mainly a mid-to-high-end model, and its main markets are in mainland China, India, Southeast Asia and other regions; realme is a low-end model, mainly The market is distributed in India and Southeast Asia, and its domestic share is relatively small; OnePlus mainly distributes high-end models overseas, and its overall share is not large.

Until 2021, OPPO has basically maintained the top two positions in China. In 2022, OPPO mobile phones fell out of the top two in China. In the fourth quarter of last year, they fell to fifth place. In some lists, they have even fallen out of the top. five.

Looking at the global market rankings, OPPO mobile phones have long occupied the fourth position in global shipments. In the fourth quarter of last year, OPPO was surpassed by Transsion and VIVO at the same time and became Others. In the first quarter of this year, although it surpassed VIVO again, it was still behind Transsion and could only be ranked fifth.

BCI data shows that the number of OPPO (including OnePlus and realme) mobile phone activations in China fell by 15.1% year-on-year in the fourth quarter of 2023. OPPO's mobile phone shipments in the Southeast Asian market were 3.6 million units, a year-on-year decrease of 27%. Even in the hot Indian mobile phone market, OPPO's mobile phone shipments fell by 5%, making it the only brand among the top five to see a decline.

Whether it is the domestic or global market, OPPO is falling behind.

In 2011, when feature phones turned into smartphones, OPPO began to fully shift to the research and development and production of smartphones after selling 2.2 million feature phones at reduced prices.

OPPO's founder and CEO Chen Mingyong established seven R&D centers in China, Japan, the United States and India, and began to tackle camera and charging technologies. He also obtained a number of invention patents in the fields of photography, rotating cameras and flash charging.

For example, OPPO Find 7 ushered in the era of mobile phone flash charging, the rotating cameras of N1 and N3, and the front-facing beauty technology of Ulike2 are all OPPO's differentiated advantages.

At the same time, OPPO has quickly opened up the market with its extensive offline sales channels and ubiquitous advertising and marketing. The slogan "Charge in 5 minutes, talk for 2 hours" is simple and direct, and deeply rooted in the hearts of the people.

OPPO's differentiated strategy was quite effective under the growing trend of the global smartphone market before 2017. OPPO has become the main force in the mid- to low-end markets in China and the world by surrounding the cities in rural areas. Most of OPPO's users are concentrated in third- and fourth-tier cities and "third- and fourth-tier countries", such as India and Southeast Asia.

When the growth of the global mobile phone market stagnated and entered the stage of stock competition, mobile phone manufacturers such as Apple, Samsung, Huawei, and Xiaomi also began to learn from OPPO. At this time, OPPO's advantages were no longer available, and it could only choose to break through and enter the high-end market.

Miao Jianing, OPPO assistant vice president and head of the Strategy and Business Development Center, said that no matter from the perspective of user needs, mobile phone industry development trends or market competition, high-end breakthrough is almost an inevitable choice.

Huawei is the first domestic mobile phone manufacturer to start developing its own chips. In 2004, Huawei HiSilicon was established; in 2014, Xiaomi began to develop its own chips. After Huawei was sanctioned, it gave OPPO the opportunity to enter the high-end market, and OPPO also began to develop its own chips. At the end of 2021, OPPO released its first self-developed imaging chip, Mariana X, and began to install it on high-end models.

Although the global smartphone shipments are shrinking, the ASP (average annual shipping price) of Chinese smartphones has been growing since 2014. According to Counterpoint Research data, the market share of high-end mobile phones (wholesale price over US$600) has also been growing, from 6% in 2016 to 24% in 2023.

In 2018 , OPPO released its first high-end flagship phone - OPPO FIND X. The following year, Huawei entered a window period of sanctions. It was thought that mobile phone manufacturers such as OV would be able to get a share of the high-end market. As a result, everyone knows that most of the high-end market was taken up by Apple, and other manufacturers could only have a small taste.

At the end of 2021, OPPO launched its first Find N series folding screen mobile phone. The folding screen mobile phone gave OPPO a foothold in the high-end market. However, due to the lack of scale, it will only account for less than 1.5% of the entire smartphone market in 2023. %, coupled with the return of Huawei, it is not easy for OPPO to gain a foothold in the high-end market.

In 2021, OPPO's share of the global high-end market rose from 2% to 4%, but soon dropped to about 1%.

Last year, OPPO gave up its self-developed chips. Self-developed high-end chips are the inevitable way to promote the differentiation of flagship mobile phone products. The abandonment of self-developed chips has brought new difficulties to OPPO's large-scale high-end development.

In a market with stock competition, only high sales and high profits can support war with war. The continuous decline in sales is a very dangerous signal.

A last-ditch battle, Betting on AI phones

To maintain a competitive advantage in the mobile phone market for a long time, leading technological advantages are needed. Technology research and development not only requires huge capital investment, but also requires long-term patience.

Huawei's HiSilicon chip layout has taken 20 years to achieve its current status. Needless to say, there are twists and turns. This depends on Huawei's high proportion of annual R&D investment and long-lasting determination. After all, R&D investment is a consumption of profits. project, many shareholders are not willing to suffer short-term interests and gamble on an uncertain future.

In 2014, Meizu and Alibaba Cloud cooperated to develop Flyme, a truly self-developed mobile phone operating system based on YunOS. However, in order to compete with Apple and Android, only enough users can support the self-developed operating system ecosystem. Meizu launched the low-end Meilu mobile phone to achieve price-for-volume. However, the profit of low-end models is meager, and coupled with the price war, Meizu mobile phones fell into losses. Meizu could not continue to fight to support the war, and was eventually forced to withdraw from the market competition.

Therefore, OPPO's abandonment of self-developed chips can be regarded as a timely stop loss in the unfavorable situation of high-end products.

In 2023, AI large models will become popular all over the world. OPPO will turn its attention to high-end AI to self-developed large models, preparing to fight against the odds and betting on AI mobile phones.

On February 20 this year, OPPO held an AI strategy conference in Shenzhen. Chief Product Officer Liu Zuohu said: "AI mobile phones will be the third major stage of change in the mobile phone industry after feature phones and smartphones." This also means that AI mobile phones will be revolutionary products, the third generation of revolutionary mobile phone products after feature phones and smartphones.

At the same time, OPPO released the first AI mobile phone that uses a 7 billion parameter large model on the device side. The main selling points include AI elimination to save waste films, AI call summary, new AI assistant, etc.

At present, including OPPO, the selling point application scenarios of AI mobile phones are relatively narrow and highly replaceable. For example, third-party software with the same functions may not be as smart, but the effect may be better.

In other words, the battle for AI mobile phones is a long-term one, and a short-term lead is just like running a few dozen meters ahead in a marathon.

OPPO also added the suffix "AI phone" to the Find N3 folding screen phone released last year. This also attracted ridicule from Xiaomi Group President Lu Weibing, who said that adding "AI" to the name of a phone is meaningless, and talking about AI every day means that it has no AI capabilities.

In the AI ​​era, no one can say for sure what kind of products can become the central point of the Internet of Everything and whether the status of mobile phones will decline. The AI ​​equipment competition is currently unfolding rapidly. Companies releasing AI equipment include not only mobile phone and other hardware manufacturers, but also traditional home appliance companies, Internet companies, and many other manufacturers. Moreover, this AI equipment competition is full of uncertainties. This is also the biggest uncertain risk in betting on AI mobile phones at present.

For example, the AI ​​PIN released at the end of last year was once considered a revolutionary AI terminal, but after it was recently launched on the market, it "crashed". Some users said that the AI ​​PIN did not work half of the time, was very slow when working, and its basic functions were too imperfect.

At the same time, traditional Internet giants such as Google, Amazon, and Samsung have successively released AI glasses, AI speakers, AI projection robots, etc. Chinese startups have released LOOI robots that can be connected to smartphones. AI terminal devices are appearing in different forms. , began to explode rapidly.

Whether mobile phones are carriers of AI is a problem faced by all mobile phone manufacturers.

This article is reprinted from the "Market Value List" by Global Internet of Things Observation. The content is the independent opinion of the author and does not represent the position of Global Internet of Things Observation. It is for communication and learning purposes only. If you have any questions, please contact us at info@gsi24.com .