Digital Theory: Honor's independence may impact the four giants of Huami, OPPO and Vivo

On November 17, 2020, Huawei released a statement on its official website, officially confirming the sale of Honor. Huawei said that the reason for selling Honor was mainly to allow Honor channels and suppliers to continue. Huawei does not own any shares in the sold Honor, nor does it participate in management and decision-making.

On November 26, Huawei's President's Office released the speech of Huawei founder Ren Zhengfei at the Honor farewell party, encouraging the new Honor to embrace globalization, become Huawei's strongest competitor, and even to call for the overthrow of Huawei.

From the statement on Huawei's official website to the speech of Huawei's Ren Zhengfei, it can be seen that Honor will have nothing to do with Huawei after independence, and the two sides are expected to move towards confrontation, which will also have a far-reaching impact on the structure of the Chinese mobile phone market. Honor's independence will not only make Huawei feel bitter, but also Xiaomi, OPPO, and vivo will not be much better, because they will face the strongest challenger. Let's analyze:

First of all, let’s take Huawei. Originally, Honor was an indispensable part of Huawei’s plan. Without Honor, it would be like Huawei losing its left and right arms.

As early as April 2019, Huawei Consumer Business CEO Yu Chengdong published a statement confirming Honor's goals and development direction: Honor brand will be among the top two in China and fourth in the world. Huawei will fully support Honor's development, will provide Honor with highly competitive products, and will increase investment in channels and retail. Honor must surpass and leave its competitors behind. Both Huawei and Honor must dare to innovate and become the king of the smart full-scenario industry.

According to the data released by Zhihu expert @安乎都護府长史, as of October 2020, Huawei's market share was 45.85%. However, if the 13.32% market share of the now independent Honor is removed, Huawei's market share is 32.53%. Although it is still number one in China, the gap with the second and third place has narrowed a lot.

Image source: Zhihu

Taking into account the limited number of Huawei's own HiSilicon Kirin chips and the fact that related suppliers have not obtained supply licenses, Huawei is struggling in the domestic mobile phone market. Its market share is expected to fall below 30% next year, which gives Huawei's other competitors (including Honor) an opportunity to strengthen themselves.

For Huawei, an independent Honor not only disrupts its original plans, but also adds an additional competitor.

Next is Xiaomi. Regarding Huawei's sale of Honor, Xiaomi President Wang Xiang recently stated in a financial report media conference call that no matter what, it will not be affected in any way. Xiaomi has always stuck to its own way of playing in the past three to five years and will continue to do so in the future.

Image source: Weibo

Xiaomi executives say Honor's independence has no impact on them, but in fact, the impact is not small. Honor's most recent mobile phone products were the Honor 30 Youth Edition and Honor X10 Max, which were launched on July 2. More than four months have passed, and there have been few leaks or appearances of Honor's new mobile phones. Even so, Honor's market share is as high as 13.32%, which is much higher than Xiaomi's (including Redmi) market share of 9.61%.

According to Zhihu expert @安乎都護府长史, Honor will conduct independent statistics starting next year and rank according to its current market share. Honor has actually become the fourth largest mobile phone manufacturer in China, while Xiaomi has fallen out of the top 5 and entered the Others category. This is a bit difficult for Xiaomi to accept.

It is worth mentioning that after becoming independent, Honor is no longer bound by Huawei, allowing it to fully impact the high-end mobile phone market. This puts Xiaomi, which has achieved some success in the high-end mobile phone market this year, under considerable pressure.

Honor’s independence will be a huge blow to Xiaomi.

Next is OPPO. Honor is a strong mobile phone brand both online and offline. At the launch of Honor 9 Youth Edition in 2017, Honor President Zhao Ming said that Honor has become the No. 1 brand of Internet mobile phones in China. Honor is not inferior to Xiaomi in online marketing. This makes OPPO, which is not good at online marketing, very passive.

Image source: Weibo

As for the offline market, we can understand it by looking at the situation of Shenzhen Zhixin New Information Technology Co., Ltd., which acquired Honor. It was jointly invested and established by Shenzhen Smart City Technology Development Group and more than 30 Honor agents and distributors, including Tianyin Communication Co., Ltd., Suning.com Group Co., Ltd., Beijing Songlian Technology Co., Ltd., Shenzhen Shundian Industrial Co., Ltd., etc. It has both state-owned backgrounds and offline distributor giants. It can be seen that Honor's offline channels are very strong. In the offline competition with Honor, OPPO's advantage is not obvious enough.

Even if OPPO redeploys its troops and integrates Realme and OnePlus, it will not have much impact on OPPO VS Honor. The main reason is that Realme has returned to China for less than three years and consumers are not familiar with it. OnePlus's previous positioning was niche and tended towards geek groups, making it difficult to attract ordinary consumers.

Image source: Weibo

After Honor becomes independent, its market share will be separated from Huawei. Faced with Honor, which has a market share of 13.32%, OPPO still needs to be cautious.

Finally, let's look at vivo. As a mobile phone manufacturer with a domestic market share second only to Huawei, vivo's second place is not very stable. Previously, the only challenger was OPPO, and the difference in market share between the two was less than 2%. Now there is Honor, and the difference in market share between them is less than 4%.

Image source: Weibo

Of course, compared to OPPO, vivo's situation is slightly better. Despite the shortcomings of the system, vivo has taken the second place in the domestic mobile phone market by relying on stable product line adjustments and domestically leading hardware support. After the release of OriginOS, vivo made up for the shortcomings of the system, which not only retained old users but also attracted new users. Therefore, in the face of independent Honor, as long as vivo does not make mistakes, its second place in the domestic market is still very stable.

Of course, vivo cannot underestimate its competitors. After all, after becoming independent, Honor enjoys greater autonomy and is more flexible in its market strategies. 

In general, Honor is independent, Huawei is hurt, Xiaomi is hit, OPPO and vivo are very nervous. As to whether it can impact the four giants of Huami, OPPO and Vivo, Jiwei.com will continue to pay attention.