Since the birth of the electronic TV in 1927, the global sales crown at every stage has been a leader in new technologies. From CRT to rear projection, from plasma to LED, Sony, Panasonic, and Samsung have taken turns dominating the global TV market.
The TV industry has always been dominated by technology, following the law of technological innovation, technological maturity, and a natural decline in product prices from high to low.
Until Xiaomi TV appeared and bombarded the market with low prices, the market law was once broken. The market trend changed rapidly, and the idea of technological breakthrough was replaced by competition for low prices. Domestic brands were dragged into the quagmire of price wars, which also artificially increased the difficulty for future high-end.
Xiaomi’s entry into the TV industry is not just a product, but a model.
In October 2013, the first Xiaomi TV went on sale, and only 18,000 units were sold until the end of the year. The total sales volume of the domestic color TV market was about 47 million units that year, and the market share of Xiaomi TV was only about 0.03%.
At that time, China’s per capita disposable income was only 18,311 yuan, and the price was still the top consideration for most domestic consumers to buy TVs. In China, rising stars such as Hisense, TCL, and Skyworth have left behind the slightly outdated Changhong technology. Although Japanese and Korean high-end brands have no match in the global market share, they are difficult to maintain the forefront in the Chinese market.
In the hearts of many consumers, Japanese and Korean TV brands are truly high-end. Sony and Samsung entered the industry early, with global leadership in patents and technologies and strong brand power. They have also gained higher premiums from it.
At that time, the technology of domestic brands was still growing, and foreign brands were "high and low", leaving a huge gap in the market.
With the launch of Xiaomi TV 2, Xiaomi TV sales exceeded 300,000 in 2014, entering people’s attention at a growth rate of 16 times. Xiaomi Internet + cost-effective play is suddenly enlightened.
Based on deep customization, MIUI TV transforms not only rice noodles, but the entire traditional TV client base, as well as the "Internet surfing" family.
Ambitious Xiaomi, a TV industry recruit with neither technical expertise nor strong brand appeal, has chosen its usual low-priced approach without suspense.
The first generation of Xiaomi TV has a 47-inch 8.4mm narrow frame, selling for only 2999 yuan. At the press conference, the Xiaomi-style slogan reappeared: "The first TV for young people"; perhaps it was consumers who waited and saw the new brand, which led to the first generation of Xiaomi TV’s listing being cold, while the second generation of Xiaomi TV pushed the price of the 40-inch ultra-narrow frame smart TV to 1999 yuan. This time, Lei Jun quickly made many friends.
In 2013, Internet TVs accounted for less than 1% of the domestic market. In an era when the Internet was developing rapidly and the smart TV industry had a market gap, Xiaomi TV used the Internet model to slash product prices.
The Internet ecosystem can become the main channel for Xiaomi’s TV profits, and the demand for hardware profits can be minimized, which almost replicates the way its mobile phones play and is also the model that Xiaomi is accustomed to.
Opponents have difficulty building an Internet ecosystem that can rival Xiaomi in a short period of time, and there is a relative lack of profit points other than hardware. The reason why first-tier domestic brands such as Hisense and TCL were able to successfully bring Changhong down lies in the great progress of exclusive technology until it surpasses. Xiaomi does not use technology to crush the market, but uses extremely low prices to drag opponents into unfamiliar battlefields.
The price is the appearance, and the support point is the Internet ecology. With Xiaomi TV becoming the domestic sales champion in 2019, the Xiaomi model has become the object of imitation in the industry, and the product price has become the focus of attention in the industry.
This has also indirectly led to an increasing number of peers prioritizing technological research and development over lowering product prices.
A team of domestic traditional TV brands began to make up for their shortcomings, each building a TV OS ecosystem based on it, increasing their profit points, and finally further reducing their hardware prices.
The price war is intensifying, consumers and brands are fixated on product prices, but fewer and fewer people pay for technology, craftsmanship and quality, and TV products are gradually "fast food".
At the same time, due to factors such as the relatively high cost of hardware due to brand identity and configuration of cutting-edge technologies, and the lack of profit points other than hardware in the Chinese market, foreign big-name TVs are gradually marginalized in the domestic low-end market.
According to Aowei Cloud Network data, only two foreign brands, Philips and Sony, ranked 8th and 10th among the top ten domestic TV sales in 2019, with sales of only a few million units, about one-tenth of Xiaomi’s.
Xiaomi TV has not only dragged domestic competitors into a price war, but also allowed foreign brands to further tilt their focus towards the high-end market in China.
With the traditional domestic TV brand Internet ecology, online channel construction and other shortcomings made up, no one has an absolute advantage in this price war, and some "micro-exercises" have begun to prevail. Real and fake 4K, old architecture towing new machines and other mixed industry chaos are frequent.
To some extent, this is a manifestation of manufacturers’ cost compression to the extreme.
In Q3 2022, Xiaomi’s internet service revenue was only 7.10 billion yuan, only about 10% of total revenue, and hovered between 7 billion yuan and 7.30 billion yuan for the sixth consecutive quarter, apparently not helped by hardware growth.
Internet revenue, as a fulcrum for Xiaomi TV to maintain low prices, may not be as strong as expected.
Once imitating the Xiaomi model, no one has succeeded in turning the Internet ecosystem into a revenue driver, while technology research and development has regained attention.
Consumption is under pressure, and brands that once pursued cost-effectiveness have seen an upward demand. The tide of high-end products has swept in, and low-end products have gradually become a painless spray.
Millet-style inner roll once triggered domestic peers to "actively go down", and the price melee undoubtedly solidified the "taste" of some users, and the brand was difficult to get out of trouble for a while.
Nowadays, brands that are proficient in going down have to consider how to go up.
Going high-end also means entering the home court of foreign brands.
Before 2016, Samsung also actively deployed low-end products in the Chinese market. However, as the price war intensified, domestic brand prices further declined, and online channels were already weak. Coupled with the lack of ecosystem in the Tizen system, Samsung TVs gradually fell short of their capabilities and completely withdrew from the price war stage. Since then, they have ranked last in the Chinese market for a long time.
The price war has squeezed Samsung and Sony out of the low-end market, and also stimulated them to completely move towards high-end. The industrial chain behind them also forms a virtuous circle around high-end.
The high premium of high-end products brings higher profits to the industrial chain. Theoretically, the investment in R & D can also be higher than the industry average to create cutting-edge technologies and consolidate high-end positioning. This is the logic of the industrial chain of high-end brands.
The Xiaomi model is completely different. By reducing the price of hardware to the extreme, the profit of the industrial chain is also reduced, which indirectly suppresses the technological progress of the industrial chain.
The cost-effective model is inherently unsustainable, prompting brands to rise; consumption is under pressure, the market is shrinking overall, and it has become more urgent for brands to raise demand.
Omdia data shows that global TV sales in the first three quarters of 2022 were 143 million units, down 4.4% year-on-year. TrendForce released data late last year, expecting global TV shipments to 202 million units last year, down 3.9% from 2021 and the lowest in nearly a decade.
The overall shrinkage of the TV industry has become a foregone conclusion, and domestic brands with an absolute share advantage in the domestic market have not shown a similar one-sided strong performance in the global market.
In the first three quarters of 2022, Xiaomi TV ranked fifth in the world with a 6.5% market share, and Samsung led the global TV sales list with an absolute advantage of over 20% market share.
Obviously, the "three-star model" is better.
The novelty brought to users by TV intelligence has long been gone, and Internet expansion has become a regular standard. As mentioned earlier, Xiaomi, which got up early, and the domestic brands that followed suit, failed to change the situation of low Internet revenue, but instead suffered brand damage in the price war.
Another drawback of the Xiaomi model is the potential for quality control after extreme price compression.
In May 2022, Xiaomi TV was exposed that the screen automatically fell off, and it was launched twice in three days, which once attracted widespread attention. In recent years, problems such as black screen and main board have also been complained by many Xiaomi TV users, and there is even a joke on the Internet: If it is over-insured, it will be bad.
Brands that have participated in the price melee have also frequently encountered similar quality control problems, but some brands can improve the problem to a certain extent by relying on their own production lines. In the fully OEM model, the quality control initiative is divided into two, and the extreme price compression will undoubtedly make things worse.
The frequent occurrence of quality control problems is extremely unfavorable for the brand to rise, and it relies heavily on the integration of third-party resources, and only "micro-innovation" to maintain fast-paced product iteration is not very helpful for technological development.
Comparing the data of the past four years, it is not difficult to find that although the market as a whole continues to shrink, the top ten rankings of global market share have hardly changed. In other words, relying on cost-effective tactics to kill the four parties in China, it is difficult to "eat all the sky in one move" in the global market.
Xiaomi TVs, which have often won sales in the domestic market in recent years, have been suppressed by TCL and Hisense in the global market. In the first three quarters of last year, TCL ranked third with a share of 11.7%, and Hisense ranked fourth with a share of 10.1%, continuing to lead Xiaomi.
The exclusive technological breakthrough has become a stepping stone to the high-end market of Hisense and TCL.
TCL has made technological breakthroughs in quantum dots, Mini LED, etc. to develop new display technologies; Hisense is also a major promoter of Mini LED, and it is a leader in the field of laser TV, accounting for 49.5% of the global laser TV market share in the first half of last year.
In terms of price, the flagship product of Hisense Laser TV is close to 100,000 yuan, the flagship of 8999 yuan flat-screen TV is "only" 85 inches, while the price of Xiaomi’s 86-inch flagship ES Pro is 7999 yuan, and Redmi’s 86-inch EA Pro is 5999 yuan.
The launch of Redmi has not allowed Xiaomi’s own brand to rise confidently, but has instead made Xiaomi’s TV product line slightly bloated and confused.
Redmi A, X, and MAX series are relatively easy to remember, while Xiaomi’s own brand TV models include Transparent, Master, Quantum Dot, Mural, Digital, EA, and ES series. This "machine sea tactic" reveals the chaotic product thinking of Xiaomi TV.
Users are easily confused when purchasing, and even if they recommend it to others, they are prone to misremember the model. It can be said that their ability to distinguish and remember is being tested.
The product line confusion is just a symptom of the Xiaomi model. At most, Xiaomi is not well-prepared to rise, which has limited impact on its high-end.
However, Xiaomi users’ perception of the brand’s value and the "Xiaomi model" that has long relied heavily on the supply chain have led to a relatively lack of exclusive technology, which may drag down the high-end process of Xiaomi TV for a long time.
The aftershocks of the price war have affected the high-end TV industry, which is not special. Manufacturers with comprehensive capabilities have always been the protagonists.
Compared with the "Xiaomi model", the "Samsung model" easily wins because of its advantages in technology, brand, global channels, and long-term important role in the upstream supply chain.
Similarly, domestic leading brands such as Hisense and TCL also place great emphasis on comprehensive development. The difference is that the price war has directly stimulated the traditional domestic brands to make up for the shortcomings of the Internet ecosystem. Their low-end product lines already have a strong cost-effective foundation, while brands with exclusive technical routes are undoubtedly more prominent.
The high and low ends are strong enough, and in the context of consumption pressure, it is undoubtedly a two-handed preparation. The "Hisense, TCL model" seems to be more sustainable.
As products move towards high-end, brand temperament also needs to keep up. Although controversial advertising slogans catch the eye, they run counter to high-end, which is not conducive to growth. In the past four years, global TV sales have been solidified, and domestic brands may need to put more thought into improving their overall strength.
Just like the way it came, it relies on step-by-step technological accumulation rather than loud slogans.
Extreme krypton financing information, screenshot from Tianyan check.
