Winter is coming. Is the golden decade of the mobile phone market coming to an end?

Semiconductor Industry Observation , a new media focusing on the development of the semiconductor industry

Personal WeChat : 416000888

October is coming in 2014. According to the industry practice, September and October are the harvest seasons and the time to look forward to more harvests in the next year. Analysts are busy with predictions and manufacturers are busy with planning. They are busy and happy. In the past few years, everyone seems to have gotten used to this rhythm and even forgot the solar terms - October is not far from winter!

This inertia has changed in 2014. The winter of 2014 seems to come earlier than in previous years and has a stronger flavor! Many friends in the industry can't help shivering at the coldness that is coming. Confusion, worry, turning point, negative growth, one by one, unprecedented words appear more and more in their minds. Is the situation of the mobile phone market going to change?

Time goes back to the past 2 years or even 10 years. How did the market go? Is the golden decade of the mobile phone industry coming to an end?

According to Sino China's monitoring data, the monthly sales growth trend over the past two years (September 2012-September 2014) shows that in September 2013, the year-on-year growth was 37% compared to September 2012, and the year-on-year increase in monthly sales reached 9.35 million. The monthly market sales were close to 31 million, which was the peak level in the past two years (only March 2014 was close to 32 million). Since then, the market growth rate has been declining. In July 2014, the year-on-year growth was only 2%, and in August, the year-on-year growth began to decline by 9%, and in September, the year-on-year decline was 13%. From a month-on-month perspective, the market has been declining for four consecutive months, which is the first time in recent years!

From historical experience, the sales volume of mobile phones in the fourth quarter will rebound compared to the market size in the third quarter, and the continued improvement of LTE networks in the fourth quarter is expected to drive users to change their phones (in September, LTE mobile phone sales exceeded 10 million), but considering the crazy 2013, I personally think that the year-on-year recovery rate is limited. It is expected that the annual mobile phone market sales will be much lower than expected, and will maintain a slight growth trend compared with last year, which is also the first time in recent years! (In 2010, it increased by 20%, in 2011 it increased by 14.7%, in 2012 it increased by 20%+, and in 2013 it was as high as 45%).

Looking back at the history of domestic mobile phone development, GSM mobile phones appeared in the domestic mobile phone market in 1996; analog phones were withdrawn from the market in 2001; from 2003 to 2004, domestic strength reached its peak, and PHS developed rapidly; in 2006, low-end GSM mobile phones became popular; from 2008 to 2009, copycat phones reached their peak. From the second half of 2008, we entered the 3G and smart era. 2009-10 was the first year of 3G and the start-up period of smart phones. In 2011, the sales of smart phones rose rapidly, and 2012-13 was the passionate years driven by operator investment. Although there have been ups and downs, the scale of the mobile phone market has been in a period of rapid growth. Putting aside the long history for the moment, we are more concerned about the 3G market that started in 2008-2009. It was the dual drive of technological change and operator investment that created the passionate years of the domestic mobile phone market. If we must emphasize one aspect, 2009-2011 was technology-driven market development, and 2012-2013 was more driven by operator investment. In

2014, reality smashed the crazy inertial path-dependent prediction. Was it just due to external factors?

Even the craziest analysts believed that the growth in 2014 would slow down, but still predicted a result of 470 million, a 15% increase. I remember that at this time last year, when predicting the market development in 2014, more than one consulting company was constantly updating the forecast target. Why? Because China Mobile's target was raised! The sales volume of 4G mobile phones went from 20 million, 40 million, 70 million, and finally to 100 million! Why does this happen? Since 2012, the mobile phone market has entered a market driven by operator investment. People have formed the inertia of operator investment driving market development. Analysts have become accustomed to measuring the market from the perspective of competition/KPI/superior will instead of pure market analysis. As a result, they have forgotten that this year is the year of 3G-4G switching, that the development of 4G also requires a process, even if it is a compressed process, and that any great leap forward must be based on the basic objective laws. People who have not experienced the painful switching period of 3G to 2G in 2008 will find it difficult to make a rational prediction of the market development in 2014 and fall into a frenzy of following the trend! 2014

is destined to be an extraordinary year. For the continuous downward trend of the market mentioned above, people are accustomed to looking for reasons from external factors, attributing the decline of the market to sudden factors or policy variables. Indeed, there are at least two major external factors that have exerted a huge push on this year's market: 1. The policy on the issuance time and rhythm of FDD licenses; 2. The reduction of marketing resources by the State-owned Assets Supervision and Administration Commission.

This is a year with the most entertaining policies, just like the issuance of 3G licenses that year. History is always surprisingly similar. The industry is caught in an endless debate on FDD/TDD, from the guessing and guessing on every festival that has special significance for telecom people to the squeezing-out-of-toothpaste-style issuance of the first, second, and third batches of FDD/TDD hybrid networking trial cities. Time slipped away in entertainment and controversy, and what followed was the operators' confusion. The leader resolutely abandoned 3G and did not look back, wavered between 3-mode and 5-mode, and felt powerless about 4G in the first half of the year. Most manufacturers were entangled in whether to completely abandon 3G and turn to 4G. Some radical manufacturers were hurt when the 4G trend did not take off. The wait-and-see attitude and helplessness of the second and third leaders led to the hesitation of manufacturers to invest, and many users were so unfamiliar with 4G that they even worried about losing their houses. What a hesitant year it was!

If the license brought confusion and helplessness, then the rumored reduction of operator resource marketing and the implementation of "business tax to value-added tax" by the State Administration of Assets Supervision and Administration Commission of the State Council was a bolt from the blue, and became the last straw that broke the camel's back for the crazy investment-driven development model. For more information, please refer to the article "Reducing terminal resource investment, will the "terminal new policy" be a sharp weapon for transformation?" This new policy can be said to have put an end to some chaos that occurred in the process of operators dominating the mobile phone market in 2012-2013. It is not because of the new policy that there is a new trend. The "new policy" is just a booster of the trend. The innovation and transformation of domestic operators and mobile phone manufacturers will be accelerated!

In fact, user demand is the endogenous driving force for market development. The factors that drive the rise of the mobile phone market are gradually weakening, and the golden decade has become a thing of the past.

Let's first look at the penetration rate of smartphones. Nielsen's "2013 Mobile Consumer Report" states that China's smartphone penetration rate is 66%, while the domestic market research agency iResearch's smartphone penetration rate at the end of 2012 was 32.6% (at the end of 2012, China had 360 million smartphones and more than 1.104 billion mobile phone users). The difference between the two is obvious, but it is a recognized fact in the industry that China's smartphone penetration rate exceeded 50% in 2013, and this figure is close to that of developed countries in Europe and the United States. According to Nielsen's report in 2013, South Korea has the highest smartphone penetration rate of 67%, Australia 65%, Italy 62%, the United Kingdom 61%, and the United States 53%.

From the perspective of the proportion of new phone sales, starting from August 2013, the monthly sales of 3G mobile phones in China accounted for more than 90%; starting from September, the monthly sales of smartphones have reached 90%. In first- and second-tier cities, the demand for smartphone users has become increasingly saturated, and the growth of the mobile phone market is mainly maintained by changing phones. In third-tier and lower cities and township markets, the proportion of smartphone users is still relatively low, and there is still a lot of room for growth. With the popularity of smartphones in third- and fourth-tier cities, the space for first-time smartphone users is shrinking, and negative year-on-year growth in the new market will be the norm.

If we count from 2009, 3G accounted for 3% in 2009, 23% in 2010, 46% in 2011, 73% in 2012, 89% in 2013, and 3G+4G mobile phone sales accounted for more than 90% in 2014. To some extent, we can think that in 2012 and 2013, the investment of operators overdrew the development potential of the industry.

When the number of first-time smartphone users declined year-on-year, changing phones is the biggest driver of market development, and the frequency/cycle of changing phones becomes the key to whether the scale of the domestic mobile phone market continues to grow.

Let's take a look at the survey results of four institutions on the user replacement cycle in different years from 2011 to 2014:

2011: 29 months (Ericsson Consumer Research Room: "2011 China Urban Communication Behavior Research Report")

2012: 24 months (Ministry of Industry and Information Technology Telecommunication Research Institute: "Mobile Internet White Paper (2013)")

2013: 14-18 months (Umeng: "2013 Mobile Internet Year-end Report"),

2014: 18 months (360: "Used Mobile Phone Recycling Value Research Report").

First of all, it should be stated that this comparison is not rigorous (the data source is different, and the statistical caliber may also be different), and it does not reflect the differences between different grades of models/populations, but it does not prevent us from making a trend judgment on the replacement cycle:

1) The replacement cycle from 2011 to 2013 is accelerating, which is in line with the characteristics of the domestic market in the past few years. The penetration rate of smart phones has increased rapidly;

2) The trend of accelerated replacement has slowed down or rebounded since 2013-2014. This is because the mobile phone market has entered a mature development stage;

3) It is currently at the turning point of the mobile phone replacement cycle.

The extension of the replacement cycle means that the replacement volume will remain at the plateau scale or show negative growth in the future.

How many of the driving forces that drive users to replace their phones and drive the market growth will remain in 2015?

Next, let's analyze the driving forces that drive the replacement and drive the market growth in the past years. Are these driving factors strengthening, weakening or remaining the same in 2014-2015?

1. Mobile phone product technology and innovation upgrades encounter a plateau period, and innovation is weak and the motivation for replacement is lacking.

From 2009 to 2014, mobile phone products have undergone three key transformations: 3G/smart, large screen, and CPU nuclear war. The current situation is that the penetration rate of smart phones has reached nearly 70%, the screen has been upgraded from 3.5 inches to 6 inches, the limit size of the mobile phone form, and the CPU has been upgraded from single-core to eight-core 64-bit. In addition to these three points, there is also an upgrade to 128G storage and a camera from 300,000 pixels to 13 million pixels... At least in terms of configuration parameters, the key hardware of mobile phones has reached its limit, and product homogeneity is rampant. The development model of upgrading configuration and reducing prices in the past few years has truly reached a plateau.

As a vane of mobile phone innovation, Apple chose to stick to its guns in the Android configuration war, winning with the Apple brand, iOS applications and experience, but eventually succumbed to users' demand for large-screen mobile Internet and joined the road of configuration upgrade. In the mobile phone itself, in addition to the inherent ecology and experience advantages of iOS, Apple has entered the Android upgrade mode. We have reason to believe that after the iPhone 6/Plus consumes the long-suppressed and accumulated large-screen experience needs of Apple users, the iPhone will also enter a situation where there is no reason to change phones. Apple's lack of innovation in mobile phones has brought more confusion and confusion to Android manufacturers, and has lost its vane.

After the rapid upgrade of mobile phones, it is difficult to find new driving forces at the product level.

So: We found that the more homogeneous the products are, the slower the innovation, the lower the driving force for changing phones, and the longer the replacement cycle.

2. Mobile phone performance and quality improve, and users' willingness to change phones decreases

The current configuration and performance experience of Android phones are ahead of and in excess of user needs, especially the quality level of mid-to-high-end models is improving. After Apple users replaced iPhone6/Plus, they are close to the perfect phone (except for the price). Mobile phones are sufficient as a platform tool, and more experience upgrades and function expansions come from software and peripherals. Can micro-innovation in performance experience really drive phone replacement if it is not broken, stolen or robbed?

So: We found that the higher the average quality and performance of mobile phones, the lower the driving force for phone replacement and the longer the replacement cycle.

3. Ultra-low-end is no longer popular, the market chooses products with higher prices, and the frequency of phone replacement decreases .

The market below 700 yuan has a shrinking trend, while the expansion trend of the 1500-2500 price segment is gradually taking shape.

The market below 700 yuan has shrunk (from 41.8% in March to 30.6% in August, a decrease of 10 percentage points), while the 1500-2500 price segment has grown steadily (from 14% in September 2013 to 17.5% in 2014, an increase of 3 percentage points). The former is driven by the O2O of online models such as 799 yuan, and the latter is driven by the high-end and low-end/promotion/O2O of the popular price segment of 1999 yuan. The 1999 price segment is expected to continue to grow.

Users are no longer blindly focusing on low prices, but are beginning to pay attention to experience: more and more users will realize through bitter lessons that you get what you pay for, cheap products are not good, and free products may be more expensive; users are willing to pay for good products, and many people can afford to buy a mobile phone for 2000+, considering the depreciation of currency purchasing power, it is not a big deal. The trend has been established!

The dual effects of people's pursuit of mid-to-high-end products and the slowdown of product innovation have reduced the motivation of users to change phones.

So: We found that the market price segment selection range has moved up, the driving force for changing phones has decreased, and the replacement cycle has lengthened.

4. Operators' subsidy resource investment has decreased, and the user's replacement push has been removed

. In addition to product upgrade drive, the high subsidies provided by operators are considered to be the main driving force for users to change phones. The subsidy intensity is positively correlated with the frequency of phone replacement. Operators' 0 yuan purchase, free mobile phones with broadband, discounts for new network users, year-end discounts for free phones, and preferential purchases for old users have directly reduced users' replacement costs and accelerated users' replacement cycles.

The implementation of marketing cost reduction has a direct impact on the replacement cycle. In 2015, there is currently no trend of operators increasing resource investment. The temptation of cost subsidies has been lost. As the model of pre-depositing phone bills to get mobile phones has been restricted after the business tax reform, the preferential strength of phone bill subsidies is difficult to attract users. Operators have changed their marketing model under the influence of the business tax reform, from contract phones to encouraging bare phone sales. Ordinary non-reimbursement users will also be more inclined to choose bare phones rather than contract phones. The operator's resource pull has receded, and the market has returned to its product-driven origin.

So, we found that the resource investment of operators declined, the proportion of contract phones declined, the driving force of replacement decreased, and the replacement cycle was longer.

In summary, these four points are the four major driving factors that have driven users to replace their phones in the past few years, and these driving factors have weakened or disappeared in 2014-2015.

So is there any driving force for the market to rise in 2015? There is, at least there are still two points:

1. The policy environment is relatively more stable than in 2014, which is conducive to the organization of production in the industrial chain.

2. The threshold for 4G consumption has dropped, the 4G experience has improved, and the attractiveness to users has increased.

LTE coverage will continue to improve, and the LTE experience will be further improved. At the same time, driven by competition, 4G tariffs will inevitably be further reduced, 4G terminal prices will further decline, and the threshold for users to consume 4G will be further lowered.

At the same time, we should also see that in the case of weak new additions, 3G->4G is a replacement of the position, which is a structural adjustment within the market, and it is difficult to bring a large increase in the overall market. And 2G users upgrade to 4G, facing the threshold of Internet/traffic consumption habits, and it is difficult to achieve it overnight.

At this point, which trend is more dominant? I believe everyone has their own answer!

Summary: The winter of the mobile phone market has arrived, and negative growth is not far away. Is your little cotton jacket ready?

Click the word "Share" in the upper right corner and forward it to your friends. Thank you for your support and spread! !

Click on the blue text " Semiconductor Industry Observation ”Follow, official account icbank

recommend Semiconductor Circle WeChat Official Account icqua n This is the semiconductor world

Note: The article is reprinted from the Internet. If it infringes your rights, please leave a message to inform us and it will be deleted immediately.

Private WeChat 416000888 (Ban Keke)

QQ group with 1,000 members: 304078628

Jiangsu Zhongpeng , professional packaging Epoxy Molding Compound , For purchasing cooperation, please contact WeChat 416000888

If you have any questions, please leave us a message. We will try our best to answer your questions.

Official website www.icbank.cc View more information