Xiaomi’s 2023, Lu Weibing’s three problems

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Reporter Zhang Yongyi

Editor Gao Yulei

Xiaomi’s last good time was 2019.

At that time, Xiaomi was full of ambition: the growth rate of overseas markets increased rapidly, and even accounted for half of the total sales of Xiaomi mobile phones. Xiaomi also started the road to high-end branding in 2019: the Xiaomi CC9 Pro released that year won the first overall score for smartphone cameras released by the camera evaluation agency DXO for the first time. Xiaomi’s excitement is hard to hide ——The words DXO No.1 lined up with lights in the Xiaomi Science and Technology Park building are also the epitome of the era when domestic smartphone manufacturers generally “impacted high-end” that year.

This year, Lei Jun began to recruit a number of former executives of mobile phone manufacturers from the outside world for Xiaomi. In this lineup dubbed the “Avengers” by the outside world: not only the former Lenovo Vice President Chang Cheng, but also Yang from Meizu Miao Lei, co-founder of Nubia, Wang Xiaoyan, founder of Xiaojiao mobile phone , and Lu Weibing, who was originally the president of Gionee.

But at that time, no one could have imagined that Lu Weibing became the president of Xiaomi Group in less than three years, and he was also the fastest-promoted executive in Xiaomi’s history.

No one would have imagined that in 2022, three years later, Xiaomi would face a difficult test in terms of impacting high-end sales and maintaining sales growth. Some former Xiaomi people used the trough period encountered by Xiaomi in 2016 to describe the current situation. —— Both revenue and profit have declined, the impact on the high-end has not yet been completed, and the basic low-end machine business has been greatly squeezed by competitors.

Perhaps Lu Weibing is the one who “received orders in danger”.

The Difficult Road to Hitting the High End

Hitting the high end is the most important part of the Xiaomi Group’s strategy today: Lei Jun once shouted the slogan “Comprehensively benchmarking iPhone in terms of product and experience” when Mi 12 was released, even at the Mi 13 conference that has just passed less than a month ago. , Lei Jun also shouted the slogan of “impacting high-end” dozens of times.

Among Xiaomi fans, there is a proper term: “Mi Chonggao Key Year”, which is used to complain about Xiaomi’s publicity, and every year is the keynote of “hitting the high-end key year”.

“Critical year” may be just a marketing concept, but if you really want to complete the high-end transformation of the brand, it is almost a test of a mobile phone manufacturer’s all-round service: the part closest to the user and the most perceived by the user may be the after-sales service .

Starting from 2021, the core product in Xiaomi’s high-end strategy, the flagship mobile phone of the year – Xiaomi 11 series, users began to report problems such as “serious fever”, “Wi-Fi unavailable” and more serious “unable to turn on”.

The number of cases has grown rapidly, and it has quickly evolved from a small word-of-mouth storm to a storm that Xiaomi did not expect.

In this regard, Xiaomi’s solution is that “users with doubts” can apply for half-year extended warranty service by themselves. At the same time, the channel for users to directly replace the problem with a new one is closed, and only the maintenance by replacing the main board is supported. These handling measures, which seemed controversial even at the time, have laid the groundwork for a year-long problem.

In December last year, a reporter from the power plant consulted the person in charge of Xiaomi’s after-sales repair center on this matter, and the explanation he got was that “various problems caused by the motherboard (due to) the follow-up have been completely resolved”, but at least a number of Xiaomi 11 users appeared Situations where a similar problem reoccurs after replacing the motherboard.

Since Mi 11 is Mi 11’s flagship model that will be launched in 2021, by mid-2022, most purchasers will have passed the one-year warranty period, and there is no real feasible large-scale solution to this problem. There are various ways to deal with the same problem offline. A series of operations eventually led to Mi 11’s Wi-Fi/deadlines and other problems due to motherboard problems, which will once again focus on the network in 2022.

In 2022 alone, the topic of “Xiaomi 11 has repeatedly exploded quality problems” has appeared on Weibo hot searches three times, and there have even been news of collective rights protection by Xiaomi 11 users many times. caused great damage.

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This incident lasted for a year and even affected the subsequent release of Mi 12/13. Nowadays, when searching for related topics on Weibo, you can even see feedback from many users on this issue recently.

Mi 11 hit the high-end and finally retreated. It taught Xiaomi a heavy lesson in the road to high-end branding. Cost-effective products”, the quality control of mobile phones and the perfection of the after-sales system directly determine whether a brand can support high-end evaluation dimensions.

Just from the new actions of Xiaomi in the field of mobile phone photography in 2022: the new machine will stop sending for testing DXO camera ratings, and it will be co-branded with Leica. It is not difficult to see that Xiaomi will make strategic adjustments in 2022 for the high-end brand.

In the press conference after the release of the 22Q3 financial report, Wang Xiang, who was then the president of Xiaomi, told reporters that Xiaomi would not use short-term results to judge whether Xiaomi’s high-end success was successful.

“We have strategic patience and do not expect to completely win the high-end market through one or two products.”

Brand premiumization is a protracted battle, and now Xiaomi is finally acknowledging it.

Sales slump in desperate need of rescue

On November 23, 2022, Xiaomi’s 22Q3 financial report will be released.

In the third quarter of 2022, Xiaomi’s revenue was 70.474 billion yuan, a year-on-year decrease of 9.7%; adjusted net profit was 2.117 billion yuan, a sharp drop of 59.1% year-on-year.

Its business segments also showed a downward trend: Xiaomi’s smartphone business revenue was 42.5 billion yuan, a year-on-year decrease of 11.1%; Internet of Things and consumer products revenue was 19.1 billion yuan, a year-on-year decrease of 9%; Internet service revenue was 7.1 billion yuan, a year-on-year decrease 3.7%; other income was 1.8 billion yuan, a year-on-year decrease of 6.6%.

Compared with the data of the overall business, the change in smartphone sales may be more intuitive to explain the problem: in the third quarter of this year, Xiaomi’s global smartphone market shipments were 40.2 million units, a year-on-year decrease of 8.4%. Adjusted net profit was RMB 2.117 billion, a year-on-year decrease of 59.1%.

As Wang Xiang said, Xiaomi will not collapse because of the failure of a high-end model, nor will it rise overnight because of the success of a high-end flagship, but now Xiaomi’s real core competitiveness is still led by Redmi Inexpensive models.

In fact, the current situation of Xiaomi can even accept the failure of a few more flagship mobile phones to hit the high-end, but it cannot accept the status quo of the basic market-the market of cost-effective models is being eaten away by other mobile phone brands.

Nowadays, when analyzing the resistance encountered by Xiaomi’s impact on high-end, many people will quote Xiaomi’s classic 1999 pricing, trying to explain that it was Xiaomi’s cost-effective models and even the entire brand positioning that made today’s Xiaomi brand high-end strategy even more bumpy.

But these arguments are easy to forget the fact that Xiaomi would not even be where it is today if it hadn’t been for Xiaomi’s early adoption of the cost-effective strategy to quickly narrow the gap with international giants such as Samsung in the market.

For today’s Xiaomi, apart from Lei Jun’s slogan of “impact high-end”, another more pragmatic question is: how to regain the low-end machine market that belongs to Xiaomi?

Lei Jun builds cars, “newcomers” enter the battle

For Lei Jun himself, building cars has become a top priority at the moment. The first engineering vehicle has passed a number of production tests in early October last year, and even earlier this month, there were many rumors about the Xiaomi coupe model near the Xiaomi Technology Park. test car. Lei Jun has also held Weibo polls many times, seeking what price range netizens think is the most suitable for Xiaomi’s first car.

Perhaps for Lei Jun himself, he can still be the product manager and engineer at the forefront; but for today’s Xiaomi, there is still a long way to go before the mass production of cars is profitable.

According to the plan, it should have been Xiaomi’s mobile phone business that continued to infuse blood into the car-making business to help it get through the most difficult start-up stage: According to the data disclosed in Xiaomi’s financial report, Xiaomi’s investment in the car-making business in 2022 from the first three quarters was 425 million, 611 million and 829 million yuan, and the speed of burning money is increasing rapidly. “The Power Plant” has previously reported that Xiaomi’s progress is significantly slower than expected, and the pressure on Xiaomi’s mobile phone business is increasing.

Lei Jun directly leads the team in the car, and the mobile phone business that is at stake needs a person who can stabilize the morale of the army and be able to take on this important task. At this time, Xiaomi’s choice will not only determine the next high-end road of Xiaomi products, but also directly affect to overall sales.

At the end of December, the 61-year-old Xiaomi president Wang Xiang retired. He is another veteran who left Xiaomi after Li Wanqiang, Huang Jiangji, Zhou Guangping, and Cui Baoqiu.

At the same time, the other two co-founders of Xiaomi – Hong Fenghe, the soul of the MIUI operating system, and Wang Chuan, who led the Xiaomi TV business to achieve the No. 1 market share, will also withdraw from the front line of business this year.

Among the eight co-founders of Xiaomi, only Lei Jun is still on the front line .

The old man faded out one after another, and Lu Weibing took over the No. 1 position of Xiaomi. Now he is only 47 years old and is currently the youngest partner of Xiaomi.

Lei Jun also stated in an internal letter to all employees: “The series of news shared today is a milestone for Xiaomi.”

“This declares that Xiaomi’s management has achieved a smooth handover iteration and is ready for continued development in the future.”

Even though Lu Weibing was the president of Gionee before joining Xiaomi, in the eyes of some Xiaomi people, he is still a “newcomer” who joined Xiaomi in 2019. The too fast “triple jump” promotion also made some people think that he can There are still doubts about whether Xiaomi can stand up for the first batch of posts before the car is launched.

A former Xiaomi employee believes that Lu Weibing is a person with real business capabilities. He once brought three Redmi models into the list of the top ten best-selling smartphones in the world, which made many who doubted his ability have to look up.

But there are still some people who believe that Lu Weibing’s success in Redmi is more based on the fact that Redmi itself still focuses on the route of high cost performance + low price. No one can guarantee that Lu Weibing will lead the price in 4000-7000 The sales volume of the Xiaomi flagship series at the price of RMB 100,000 yuan has reached a new level.

The arguments of these ex-Xiaomi employees include: the Redmi Note 7 series, which really started the rapid growth of the Redmi brand and sold more than 15 million units in just six months, was released only eight days after Lu Weibing took over Redmi, so the most important The definition of product and brand strategy is hardly credited to Lu Weibing.

In addition to sales, the most important achievement when Lu Weibing was introduced in the past – helping Xiaomi to connect online and offline sales channels, under the trend of weak sales in the overall market this year, it has become the part that drags down Xiaomi as a whole.

In the third quarter of 2022, the revenue of Xiaomi’s smartphone business line fell by 11.1% year-on-year, which was the largest decline among Xiaomi’s three major business lines. Analysis agency Counterpoint reported that Xiaomi’s lack of online and offline channels relative to OPPO and vivo has affected its sales.

But in any case, Xiaomi at this time has already started a change in the management organization of the first and second generations in the throes: a younger team of professional managers headed by Lu Weibing has begun to take over the heavy responsibilities.

In the new year, the two completely different stories of Xiaomi’s “high-end brand” and “stabilizing the basic sales volume” will be written by Lu Weibing.

This article is from the WeChat public account “Power Plant” (ID: wonder-capsule) , author: Zhang Yongyi, 36 Krypton is authorized to publish.

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