Chapter 23 Cruelty of the Mobile Phone Industry

Chapter 23 Cruelty of the Mobile Phone Industry

Chapter 23 Cruelty of the Mobile Phone Industry

To be honest, the research and development of the smart phone project was more difficult than Xu Shenxue had expected... Although he didn't know much about technical matters, when he occasionally went to the smart phone project office and saw a group of top students thinking hard, he knew that this thing was not easy to do.

You know, the technical backbones in the smart phone project team, the project leaders and other middle and high-level technical talents all have D-level scientific research quotas.

The strength they displayed at this moment actually exceeded the strength they should have originally had!

However, even so, it is still very difficult to do.

Not only is it difficult, but the workload is also very large. There are dozens of ordinary engineers assisting these core engineers.

The core engineers plus a bunch of odd jobs, the entire smart phone team of nearly 100 people worked overtime every day, but until now, they haven't even made a prototype for him...

There are still many problems, such as the photography algorithm is not good enough, and the overall hardware design combination is also difficult. The engineers racked their brains but failed to make the body of the phone less than 10.5 mm. Or the thickness meets the requirement, but the heat dissipation is not good enough... If the heat dissipation is good enough, there is too little space left for the battery, resulting in too small battery capacity and poor battery life.

Just like a seesaw, if you press down on one end, the other end will rise up.

Then there is another problem that the project team had previously overlooked, and that is the metal body.

At first, I thought that making a metal body would be low-cost, easy to manufacture, not prone to damage, etc. But when I actually made it, I found that it was not the case.

Because the metal body made with ordinary technology will lead to insufficient strength when pursuing extreme thinness, and the feel, color matching and so on are also extremely troublesome.

The fuselage project team took the design requirements and consulted a lot of relevant manufacturers. Then, looking at the complex process flow reported by the manufacturers, the project engineers were overwhelmed...

Take a look at this process:
DDG→CNC roughing→T treatment→PMH injection molding→CNC finishing→polishing→sandblasting (brushing, spraying)→primary anode→C angle highlight→secondary anode→3D special-shaped polishing after anode→assembly.

It is not impossible to do it according to the process given by the manufacturer, but if the design requirements are to be met, the cost will be very high.

However, if the cost is controlled, the process flow is shortened, and the technical indicators are lowered, the resulting body will be mediocre, with poor strength, poor feel, color matching, etc., and will be completely unusable.

The progress on the system side is slightly more normal. After all, they are not making their own system, but directly using the Android system for localized optimization and improvement. The most important thing is to replace some of Google's background access processes with their own background access processes.

Simply put, the original native Android machine needs to call Google services to update the system and provide some basic services.

But Xu Shenxue knew very well that it would not be long before Google would be kicked out and these Google services would become unusable, so he had to have his own alternative options.

Of course, the above are only part of the reasons, and the more important reason is that these deep-level system services, such as software stores, are all occupied by Google. How can mobile phone manufacturers make money?

You should know that even in an open source system like Android, built-in APPs charge promotion fees, and the APP store that comes with the mobile phone is also a very important APP distribution channel, which allows mobile phone manufacturers to obtain a large amount of channel fees.

When a game is downloaded from the system store and the user recharges, the mobile phone manufacturer can charge a channel fee of about 15% to 60% during this process... The specific fee depends on the mobile phone manufacturer, software category and brand, among which the channel fee for games is the darkest.

There was a game in the original time and space. The reason why it was not available on domestic Android channels in the early stage was because the channel sharing ratio of domestic mobile phone manufacturers far exceeded the international practice... It was about 30% outside and 50% for domestic channels, which led to the two sides failing to reach an agreement.

But the game is really good, and it can make a lot of money by relying on the Fruit and overseas Android markets and official servers. In the end, domestic manufacturer channels could not help but reduce channel share, and finally it was put on various domestic Android channels.

But... there are only a few game manufacturers who can do this, and most of them have to accept a profit-sharing ratio of 50% or even higher.

Because channels are king!
I say this not to say that mobile phone manufacturers are too shady...but I want to say that system software stores are an important source of revenue for mobile phone manufacturers.

Some low-end phones are only a few hundred yuan cheaper than copycat phones. How do you think they make money?
On the one hand, as the sales of mobile phones increase, the hardware costs will gradually decrease, and money can be made in the later stage.

For example, a mobile phone will not make money if the sales volume is first 10 million units, and will only make money after the sales volume reaches 10 million units. In other words, the profit line is 10 million mobile phones. If the sales volume is lower than this, the company will lose money, and only if the sales volume exceeds this level will the company make money.

On the other hand, they rely on the huge number of mobile phone users to make money through value-added services such as APP malls... in other words, they sell traffic entrances. The combination of these two aspects ultimately led to a strong head effect in the later smartphone market, which ultimately resulted in only a few manufacturers surviving and the rest dying...

The first 10 million units of their phones were sold at a loss? Will you follow suit? If not, everyone will assemble the phones, and your price will be several hundred yuan higher than others, which will reduce your market competitiveness.

If you follow, not only will you lose all your profits from hardware, you will also be selling at a loss, and you may not be able to outsell others... If you give up the value-added services, then you may go bankrupt.

This is also the reason why a large number of domestic mobile phone manufacturers in the original time and space attached so much importance to the software mall channel.

Of course, this is just one way to play. There are other ways, such as establishing a high-end brand, using high-end models to shape the brand, and then using the brand to drive the selling price of mid- and low-end models. Mid- and low-end models are sold one or two hundred yuan more expensive than other competing products on the market, thereby avoiding direct low-price competition and maintaining hardware profits.

This is a model that uses high-end phones to build a brand and sells mid- and low-end phones to make money.

Then, you can also take advantage of the information opacity of offline channels and the fact that low-end users are unfamiliar with mobile phone hardware, increase first-line sales commissions, directly offer low configurations and high prices, and maintain hardware profits.

You can also create a unique closed ecosystem for fruit machines.

There are many ways to play, but no matter which one it is, it is not easy... You really can't do it without some strength.

For example, if you use offline channels to reap profits, do you think it’s that easy?

You should know that offline channels have always been the most fierce battlefield for major manufacturers. Do you think you are the only one who does this? Don't think too much, everyone does this.

In the early years when smartphones first became popular, the streets were filled with mobile phone stores of various brands.

If you don't have some unique advantages and all-round hard power, how can you be better than others?

And they also rely on sales volume to reduce hardware costs, and rely on market scale to exchange for value-added services... Are you really sure that you can sell tens of millions of mobile phones at low prices? Where is the confidence!

Can the supply chain be taken care of? Can the marketing keep up? Can the cost performance keep up? Can the after-sales service keep up?

If you can't keep up with any of them, you're doomed.

The model of relying on high-end brands to drive low-end models is even more difficult to implement... In the original time and space, a bunch of mobile phone manufacturers have been impacting the high-end market year after year, but how many of them have succeeded?
Under such fierce competition, a large number of veteran mobile phone manufacturers have died one after another, both abroad and at home!
The remaining ones are all kings of the kings, with very strong comprehensive strength in all aspects, and each has a moat formed by their own unique advantages.

----

As a latecomer, Xu Shenxue didn’t know much about the mobile phone industry. All he knew were hearsay. But even so, he was very clear about the cruelty of the future mobile phone industry.

In this case, in addition to the unique technology and R&D cost advantages brought by the scientific research system, he naturally also attaches great importance to the areas of brand, value-added services, and offline channels.

The marketing department has already started to develop offline channels. We will first use the brand of low-end feature phones such as Weku to slowly develop them. We don’t seek to make them great, but we want to lay a solid foundation and framework. Then, when the era of smart phones arrives, this offline channel will be able to play a significant role.

Brand building is the most difficult part. At present, all Xu Shenxue can do is to make a small blue mobile phone, focusing on the concepts of Internet brand, cost-effectiveness, and appearance, and taking the path of small and beautiful.

As for building a high-end brand, forget about it now. It doesn't mean that you can make a so-called high-end mobile phone, pile up a bunch of expensive hardware on it, and then sell it for four or five thousand yuan. Consumers will not accept it!

Let alone four or five thousand, even if Bluegogo launched a feature phone for two or three thousand, consumers would laugh at you: you are crazy about money...

Of course, just because it doesn’t work now doesn’t mean it won’t work in the future. Xu Shenxue is thinking about accumulating a few years’ experience and coming up with a bunch of black technologies ahead of other manufacturers, such as top-level chips, fingerprint unlocking, high-power fast charging, OLED screens, wireless charging, full screens, gesture operations, facial recognition, under-screen fingerprints, AI assistants, self-developed systems, etc. He doesn’t believe that he can’t create a high-end brand.

(End of this chapter)