Huawei Millet began to spell dad, embarrassed to talk about profits

Recently, Huawei, Millet has announced its 2014 mobile phone business related shipments volume, growth rate and revenue, and in the industry triggered the Huawei, millet who stronger debate. Of course, Lenovo, the domestic handset maker, has not yet released the 2014 annual smartphone shipments and revenues, but one thing is certain, like Millet and Huawei, profits are still a shame to talk about. So why domestic handset manufacturers are embarrassed to talk about or avoid profit? What is the reason for the competition between the manufacturers and the decisive factors?

Let's look at two sets of numbers first. A group of industry analyst Chetan Sharma A comprehensive analysis of Android hardware and overall revenue for 2014. The report found that the Android market's profits were significantly lower in 2014, with gross profits 50% lower than expected. In addition, since 2014 the year 40% smartphone sales from Chinese manufacturers (almost Android devices), and Huawei, Millet, Lenovo accounted for more than 50 of the 40% shipments of market share, it can be said that the past 2014, Huawei, Millet, Lenovo's profits on smartphones are bound to be affected by a 50% decline in the total profits of the Android device, and even play an important role.

Another set of data is the 2104 global smartphone gross Profit margin report and forecast issued by Merrill Lynch. The report shows that 2014, Huawei, Millet, Lenovo's smartphone is only a profit, gross margin in single-digit digits. With these more authoritative statistics, it's easy to see why Huawei, Millet and Lenovo are embarrassed to talk about profits. So with the 2015 slowdown in the global (including China) smartphone market and the growing sophistication of the industry, profits in the smartphone industry will also fall, although Chinese handset makers have said they want to raise profits and not blindly pursue shipments, but the past has proved that this is only one of our manufacturers to comfort and confuse opponents of a means. It is important that not only in the smartphone industry, but in the IT industry, there is little reliance on successful profit-seeking Chinese companies. Who's going to be the first one to eat a successful crab? It takes courage and strength. Otherwise eat crab not, but let the opponent took away the market share.

Of course, while ashamed to talk about profits at the same time, Huawei, Lenovo did not hide its entire group of revenue and profits, and these are also used by some people in the industry as millet is far from the main basis of the two opponents. Huawei, for example, said that its 2014 group's overall revenue was expected to be around $46 billion trillion, after Yu, CEO of Huawei's consumer BG Business, unveiled its smartphone business, and that its revenues should be comparable to Huawei's in the past, even though Lenovo has yet to disclose its full-year revenue. By contrast, Millet has just announced the annual revenue of 2014 years only 74.3 billion yuan (including tax). Do we not judge whether the comparison is fair? is a significant reflection of the competitiveness of all parties in the smartphone industry.

But according to the previous ASP (average price) statistics on smartphones, millet mobile phone ASP than Huawei and Lenovo, even from the recent Huawei and Millet announced the smartphone-related revenue and shipments of calculation, millet Mobile phone ASP is higher than Huawei, coupled with millet unique internet marketing model, means that its marketing costs will not be higher than Huawei and Lenovo, which is clearly higher than Huawei and Lenovo in terms of profitability. But the three sides are still on the same level. But compared with millet, Huawei and Lenovo still have the entire group of nearly 50 billion U.S. dollars of support (think of our industry to see the decline of millet or that millet is not the root of Huawei, Lenovo is also the reason for this), which means that even in accordance with this mode of competition, Huawei and Lenovo have enough capital to drag down millet.

Compared with Huawei and Lenovo, Millet obviously does not have "father" capital and strength. This millet is well aware of his belly name. This is why when Huawei, Lenovo Grand Show group strength, Millet is in a high-profile publicity of its own valuation and based on the eco-system of triathlon profit model. But as the industry analyzed, millet, despite drawing a picture of not relying on smart-phone hardware to make money (to differentiate itself from Huawei and Lenovo, and the prospect of avoiding the fact that their smartphone hardware is equally profitable has not been reflected in the most tangible results, but it has not stopped investors from holding on to millet, The recent 45 billion dollar valuation is the best proof. Although there are insiders that valuations are not equal to value, millet 45 billion dollars overvalued, but as long as investors believe that millet will rely on rising valuations to obtain increasing financing, and then for their own and Huawei, Lenovo, the same low profit smartphone development model to find sustained strong support, from this point of view, We understand why Lei to preach to the outside world Millet is an internet company, not through the hardware to make money. Because the people of Huawei, Lenovo does have a real business, and millet at present, in addition to storytelling to obtain the recognition of investors, there is no other way.

So the question is, what kind of model can support the three of the current mainstream Chinese manufacturers mobile phone business sustainable development, or to support the point can be sustained? Is it a real business, or a nice story? From our point of view, we are more inclined to the former, but from the recent trend of millet valuation and financing of the rise, millet this support method may not be unsustainable. So, we believe that, into the 2015, the decision of Huawei, the key to how far and deep the millet can go on smartphones lies not in how much they can gain in real terms (half a catty of 82), but in the "Fight Dad", who is the last winner who can sustain such a low-margin growth model effectively.