Millet and anti-millet will battle in 2015

Yesterday (January 15), Millet released two into the high-end market of new products-5.7 inch screen of millet note standard and top version, the price broke through 2000 yuan and 3,000 yuan respectively. For the Chinese mobile phone company, which has been known for its price-performance, the move seems unusual.

But it should be a chill for its rivals – Samsung in South Korea and Huawei, China's local rival. This is not to mention the Apple, one of the two prices from the lowest configuration of Apple products are still a step away, and the Apple seems to have never been on the aggressiveness of millet-otherwise why it still did not come up with any decent response?

Yin Seng that the millet move at least means 4:

1, never allow Chinese rivals to form the brand value in the high-end, Huawei, for example, has already begun to work in high-end operations over the past year, and the strategic intent to establish a tidal flat in the market has also been made public, and once the climate is formed, Huawei can subsidize future attacks at the lower end with the relatively high profitability of the market, Form a long-term offensive and defensive trend.

2, for Samsung, the millet to the high-end offensive, means that it is either to take, with a further low-end offensive to respond, or more entrenched in the high-end, and from the low-end to withdraw (at least distracted), and this is what millet wanted.

3, Millet needs high-end users to improve the average value of a single user. Millet has always wanted investors to see it as an internet company, and one of the most common indicators of internet company valuations is user value. At present, Apple's single user value is about 900 dollars, Yin Seng in another article that the single user value of millet in 300 U.S. dollars (and the average price of two companies), if it wants to continue to improve the single user value, improve the average price of products is the most direct way.

4, and most importantly, the key to the whole business model of millet is that users must have a strong reliance on their products, otherwise their value will be greatly devalued, and depending on the exclusive service that may eventually come from the millet platform, but before the exclusive service on the platform forms the climate, it needs other differentiated sources, and add a bit of high-end brand impression, is the best source, otherwise, once because of competition and other factors lead to low-end products, and the service is still young, the entire business logic may jam.

To sum up, millet into the high-end, is to attack the posture of defense in the low-end to obtain the existing status. But for Chinese rivals such as Huawei, the window of opportunity may be closed after the end of 2015:

Once the millet users reach a certain scale, will be able to form a service income subsidy products sales potential. My basis is: if the data of millet is reliable, as at the end of 2014 Millet sold about 87 million mobile phones, if millet can be expected in 2015 to increase the user by 100 million, if the user does not calculate the duplication of purchase, the MIUI authorized to use the third party to obtain users, Then its independent users are expected to be close to 200 million.

If the data is reliable, 2014 millet through the application of the distribution of income generated estimated more than 1 billion yuan, if the 2015 millet can be each user's distribution income increased by one times (as the millet eco-chain growth, which is possible), then 2015 will be expected to bring nearly 5 billion yuan distribution revenue, Accounted for the annual millet income of about 5%.

5% is estimated to be the more optimistic net profit level of millet and Chinese local competitor, so, if Millet is willing, it can almost completely sacrifice the profit on the handset, through the service income to subsidize it, so it will be able to not lose money in the case, will be almost all the local competitors into the situation of loss competition. At that time, the initiative will be fully mastered in the hands of millet.

It would also put Samsung in a very tough choice: if it doesn't want to be dragged down by profits, it will have to give up the low-end market. It also needs to calculate an account, is from the millet industry chain part (by selling parts), or the death of millet-even at the expense of spare parts profits. So far, it has not been seen as an internet company, which is likely to miss the opportunity to turn the scale advantage of the product into the scale advantage of the platform.

The premise, of course, is that millet will continue to expand overseas to maintain more than 60% per cent growth in the slowing growth of China's smartphone--and I continue to think that Huawei has a better chance in the international market--or that Samsung accelerates to retreat and set aside more space. At the same time, Samsung, Google and companies that have largely given up their mobile phone business but have key patents are likely to become spoilers.

In addition, if Huawei's layout on the industry chain, such as chips, is able to scale as quickly as possible, it will take some time, but fundamentally it still has to face up to the ecosystem model of millet, which will eventually radically change the pricing benchmark for mobile products.