From "dark war" to "war of war": the price is the key
If the "true and false 5G mobile phone" dispute is a "dark battle" for mobile phone manufacturers to compete in the 5G market, then entering the market with "low price" has become a "fight war" for mobile phone manufacturers in the 5G market.
Vivo recently issued a poster to announce that its iQOO 5G version will be launched in August, which will be the third domestic 5G mobile phone listed after ZTE and Huawei. From the iQOO Plus 5G promotional poster, vivo's first 5G mobile phone is priced at 4,498 yuan.
In the previous interview, the general manager of the Vivo communication research institute once said that the iQOO 5G version of the mobile phone will bring surprises to consumers regardless of the price or quality. Sure enough, the price of 4,498 yuan will be extremely impactful.
Due to the relatively high cost of 5G mobile phone chips and antennas, the cost of 5G mobile phones is around 4,000 yuan, and the cost of some mobile phones is still higher. From the current 5G mobile phones that are currently on the market, almost all are listed at cost. Previously, the industry predicted that the price of 5G terminals will be around 5,000 yuan by the end of 2019. By the end of 2020, 5G terminals will drop to the mid-low price, and the price of some 5G mobile phones may drop to around 1,000 yuan. However, from the current mobile phone manufacturers' actions, the 5G mobile phone has entered the market with a price of around 5,000 yuan, which shocked the industry.
So why do mobile phone manufacturers sell 5G phones at a loss? In this regard, the general manager of the Vivo communication research institute said that the main reason is to sell 5G as soon as possible, at a cost or even a loss. President of Huawei's consumer business product line said that the current 5G mobile phone price is based on allowing consumers to use 5G mobile phones faster, so the pricing is relatively radical.
At the beginning of the development of 3G and 4G, the operator's large-scale subsidy terminal is different. At the beginning of 5G development, operators have almost no terminal subsidy policy. Previously, operators in the mobile phone terminal subsidies will be a big deal, 3G, 4G era, operators purchase subsidized mobile phones has been the most mainstream sales model in the mobile phone industry. In 2013, on 4G mobile phones, China Mobile's subsidy amounted to 26.3 billion yuan. In 2014, it increased significantly to 34 billion yuan. China Telecom and China Unicom also had a huge mobile phone subsidy of 10 billion. However, in recent years, operators have gradually reduced subsidies for mobile terminals due to pressures such as operating costs. China Mobile’s subsidies for mobile terminals in 2019 have dropped to 10 billion yuan, and China Telecom and China Unicom have significantly reduced terminal subsidies. Nowadays, the 5G era has arrived, without the support of the operator's subsidy policy, mobile phone manufacturers can only play their own "red arms", and only "low prices" to attract users.
Of course, most of the current 5G mobile phones are for young users and early adopters of new technologies. These users are still able to withstand the price of around 5,000 yuan. For mobile phone manufacturers, attracting these users will lay a good foundation for establishing a competitive advantage in the future.
At present, the global mobile phone market has entered a trough. According to market research firm Gartner's latest forecast, global mobile phone shipments will drop 68 million units this year, a drop of 3.8%. The latest data released by China's Information and Communication Institute shows that China's mobile phone market as a whole shows a downward trend. In June, domestic mobile phone shipments were 34.31 million units, down 6.3% year-on-year. In the first half of 2019, the domestic mobile phone market shipped 186 million units, down 5.1% year-on-year.
However, with the arrival of 5G, many old users who have replaced new machines are looking forward to using 5G mobile phones. Gartner predicts that 5G mobile phones will account for 6% of total mobile phone sales by 2020, and by 2023, the ratio will rise to 51%.
Therefore, for mobile phone manufacturers, the most important thing at the moment is to popularize 5G mobile phones at low prices and increase market share.