Rebirth 08: Rise from copycat phones

Chapter 135: Selling Data on Mobile Phones
Compared with Zhiyun Technology's hardware profits which are too high, the software and Internet business is just a small supplement.

The software and Internet business revenue of WeCool Electronics is more important.

In the afternoon, when Bai Qiwen of Weiku Electronics came to give a report, there was a lot more description about the software and Internet business.

Although WeCool Electronics' mobile phone hardware business is profitable, it is limited by fierce market competition, the overall selling price of mobile phones is relatively low, and the cost of components is also high, resulting in relatively low hardware profits.

WeCool Electronics relatively pays more attention to or relies more on the net profit provided by software value-added services.

Although the total revenue of Weiku Electronics' software and Internet business is not high, its net profit is high. On the other hand, the revenue of hardware seems high, but the net profit is low.

Ultimately, when the two are combined, the software and Internet business accounts for about 30% of Weiku Electronics' net profit. According to further speculation from Weiku Electronics, as smartphone prices continue to fall and competition in the low-end market becomes more intense, the proportion of net profit provided by the software and Internet business will further increase.

This is actually not a good phenomenon!

Because as time goes by, the hardware profits of mid- and low-end mobile phones will become smaller and smaller, and the growth of software and Internet revenue cannot continue forever, there will also be a limit.

What’s more, the value of software and Internet services carried by mid- and low-end mobile phones is not as good as that of high-end mobile phones…

This involves the issues of user value and traffic value.

Users who purchase high-end mobile phones are relatively well-off financially, and their spending on software and the Internet will be quite high. The payment rate for software will be higher, so the channel fees or traffic revenues received by mobile phone manufacturers will be higher.

Users who purchase mid- to low-end mobile phones are relatively less financially well-off, so their payment rate for software will be lower. As a result, the unit price of traffic provided by these groups will be relatively lower, which will ultimately be reflected in built-in fees, channel sharing, and content fee sharing.

It may take several users of mid- to low-end mobile phones for their traffic value to be equivalent to that of a user of a high-end mobile phone.

However, it is not easy to sell a large number of mid- and low-end mobile phones.

The profit margin of hardware is too low and the income from software and Internet business is also limited. So what should WeCool Electronics do?
Xu Shenxue gave Bai Qiwen several new strategic ideas: "First, we must continue to unswervingly promote the construction of offline channels. According to our feedback over this period of time, there are still too many limitations in selling low-end and mid-range mobile phones through online platforms. Online consumers pay too much attention to cost-effectiveness and are too sensitive to prices!"

"The offline market is much better. Consumers have a higher tolerance for prices due to cognitive bias, salespersons' marketing skills, physical stores, etc."

"So in the next stage, the online platform will still allow the Bluegogo brand to continue to be maintained, but the focus should be shifted to the construction of offline channels. The current self-owned channels are still not enough and not wide enough. We must try our best to set up mobile phone stores of the Bluegogo and Weiku brands in every city in China. We should not limit ourselves to first-, second-, and third-tier cities, but further sink into the fourth- and fifth-tier markets and widely build channels in small cities, especially in county towns!"

“I hope there will be at least one Weiku Xiaolan mobile phone store in every county.”

"In addition to continuing to promote the construction of offline self-built channels, the construction of Weiku Electronics' ecological chain will be accelerated!"

"We can't make a lot of money just by selling low-end mobile phones. We need to change our mindset... We can make mobile phones a smart terminal and a traffic entrance, and use the appeal of mobile phone brands to promote our other ecological chain products!"

"Zhiyun Technology has started to develop business notebooks, tablets and other smart devices, but due to the characteristics of Zhiyun, it will only produce high-end products. Can you, Weiku Electronics, take over the remaining low- and mid-market niches?"

"You can make all kinds of things, such as TVs, rice cookers, water heaters, laptops, tablet computers, etc., as long as they are connected to electricity. Then, use Bluetooth technology to connect them with mobile phones as the core, and come up with the concept of smart home!"

"Of course, we don't have to do everything ourselves. There's no need. We can find some manufacturers in the industry to work together. We have money and brands, and they want orders and profits. Isn't this the basis for cooperation?"

"Of course, don't get yourself into trouble when you do it. What's the point of bothering about cost performance? Remember what the purpose of smart home is? It is to monetize the traffic of the mobile phone business. Why do it if there is no money to be made!"

As he spoke, Xu Shenxue remembered something else, and then said, "No, if this smart home is established, it can also serve as a huge traffic entrance. Later, we can also sell advertisements, that's right... sell advertisements, such as TV startup advertisements, refrigerator door advertisements, and other electrical appliances. If you think about it, you should be able to sell advertisements. What is this called? This is called a new advertising model, which directly delivers advertisements to consumers' houses, covering every corner of life, and carrying out high-frequency and ubiquitous advertising bombardment... If you don't want to run advertisements, you can become a VIP member to exempt from advertisements, but you need to have a high-level advertisement, which can only be exempted by high-level VIP members!"

Listening to Xu Shenxue's increasingly outrageous remarks, Bai Qiwen on the side could not help but refute: "Well, Mr. Xu, although I am quite shameless at times, I really haven't reached this level...

Xu Shenxue raised his head and glanced at him: "So you deserve to work for me for the rest of your life... I told you the smooth road to making a fortune, but you didn't dare to take it!"

Bai Qiwen chuckled: "There's nothing wrong with working. The money is good anyway!" This is true. As a veteran employee of WeCool Electronics, Bai Qiwen is very capable, so Xu Shenxue treats him quite well. His fixed salary is at the level of senior executives of large companies, amounting to several million a year.

In addition, when Wecoo Electronics accepted the strategic investment from Zhiyun Technology, Xu Shenxue also implemented an option plan at Wecoo Electronics, and Bai Qiwen obtained a large number of options.

If we talk about Bai Qiwen's net worth, he is at least a billionaire.

I am no longer an ordinary worker!
Not only Bai Qiwen, but also the old employees who had followed Xu Shenxue all the way here, their net worth is basically over 100 million.

When the first batch of options were distributed, many people got options to varying degrees...These options were actually not that valuable at the time. After all, when Zhiyun Technology raised funds for the first time, its valuation was only US$1.2 billion.

After a while, when Zhiyun Technology officially granted options, it allocated options based on an internal valuation of US$3 billion.

However, the valuation of Zhiyun Technology later expanded rapidly like a balloon to the current more than 150 billion yuan. The options held by the first batch of employees who received options became very valuable, a 50-fold increase!

To be honest, Xu Shenxue himself didn't expect the valuation to inflate so quickly!

If the old employees of Zhiyun Technology could get options worth one million at that time, it would become fifty million today!
Getting rich overnight...

Well, the prerequisite is that Zhiyun Technology continues to maintain this valuation and then goes public smoothly, and then waits until the option shares are unblocked and can be sold.

Well, by the way, there were actually not many people who could get options worth millions at that time, only a few technical experts and senior executives.

Later, Zhiyun Technology recruited top talents on a large scale, and offered options worth tens of millions of dollars at every turn... In fact, they were options with a valuation of more than 100 billion US dollars, which was already a bit exaggerated...

However, the options that Zhiyun Technology gives to top talents when recruiting are generally half-sale and half-gift models. As long as you achieve the performance target, you can directly get a part of the stock for free, and then buy another part of the stock at a very cheap price.

Well, you can't just take these options. You have to meet performance targets. If you don't meet the performance targets, you won't get any...

This is actually a bet between companies and employees!
After chatting with Bai Qiwen for a few words, Bai Qiwen left.

Although what I said just now was mostly a joke, the smart ecological industrial chain is indeed a way forward. Since the profit margin of mobile phone hardware is low, we have to think of other ways.

As long as you have hundreds of millions of existing mobile phone users, you can make money no matter what you do!

Therefore, Xu Shenxue is not too worried about the subsequent profitability of Wecoo Electronics. The current focus is still on how to sell more mobile phones. Even if the profit is lower, he must seize market share as soon as possible and establish brand value.

After Bai Qiwen left, Xu Shenxue continued to look at his work emails, then saw that it was almost time and left work.

His work pace has been relatively stable recently, and he no longer has to work overtime frequently... After all, all aspects of the work of his subsidiary Zhiyun Technology have entered a relatively stable development stage, and Xu Shenxue doesn't need to worry too much about everything.

After getting up, he called Secretary Li to go home together after get off work, and then went to the Yunhai Restaurant next door for dinner...Xu Shenxue still liked this restaurant very much. The food was to his liking, it was close, and the environment was relatively private, so he wouldn't be disturbed by anyone.

He basically has his daily working meals here.

After dinner, Xu Shenxue did not let Secretary Li continue to follow him, but let her drive back by herself.

Some time ago, Secretary Li spent a lot of effort serving him, and then Xu Shenxue gave her a car... To be precise, it was not a car, but he directly gave her more than one million and asked her to buy it herself.

He doesn't have the time to run to the car dealership to buy a car for his secretary... He can just give the money and let the woman buy whatever she wants.

(End of this chapter)