Rebirth 08: Rise from copycat phones

Chapter 628 Fruit Car Manufacturing, Cook Heads to Shenzhen

Across the Pacific Ocean, the fruit headquarters.

Cook and several executives from the fruit company were looking at a four-wheeled, four-door sedan with a futuristic design, somewhat resembling a coupe.

The car in front of you is a smart electric vehicle that Fruit Company has spent many years developing!
Cook walked around the car several times, and then got in and sat in it, experiencing not only the driver's seat, but also the passenger seat and the back seat.

Following Cook, other company executives also got on board to experience the ride.

The reason why the senior executives of the fruit company attach such importance to this car is that it is a core project that the fruit company has been meticulously developing in recent years and has cost a huge amount of money.

Apple has been talking about making smart electric cars for a long time, but it hesitated in the early stages... After all, Apple is a hardware company, and it has always attracted companies that control the supply chain and core components.

They design their own SoCs for mobile phones, and now they've launched their own M1 series CPUs for laptops. They also have very strong control over most other core components.

Fruit Company's smart terminal supply chain is among the top supply chains on Earth. Even the early supply chain construction of Zhiyun Group was largely based on Fruit Company's supply chain system. However, Zhiyun Group's supply chain system surpassed its predecessor and quickly outperformed Fruit Company's supply chain.

Zhiyun Group's global supply chain system relies on a global satellite communication network, directly reaching a large number of sensor terminals from various supply chain manufacturers, a large number of distributors in China and other countries, and a transportation system of its own and partner logistics companies, ultimately creating a highly intelligent supply chain network covering the globe.

This supply chain network is responsible for the production, transportation, and sales of all products of the Zhiyun Group... not only the products themselves, but also the movement of components and even some raw materials.

This level of supply chain network is something that fruit companies are extremely envious of... In fact, they are also learning from the supply chain system of Zhiyun Group and continuously improving and updating their own supply chain network.

They have also built a global satellite communication network and a global network of sensors and sales systems, but the scale is much smaller and less advanced than the supply chain network of Zhiyun Group. They also have to lease satellite networks. They do not have their own satellite communication company and use the Starlink network from Musk's SpaceX.

As a company that highly values ​​its supply chain, and with Cook himself being an executive who is extremely skilled in supply chain matters, it's easy to see how much importance they place on it.

however……

In the field of smart electric vehicles, they have very little say in the supply chain.

Take the word "intelligent" in "intelligent electric vehicle" as an example... This requires driver assistance technology. Even if they can't achieve Level 4 autonomous driving, they still want to develop Level 3 driver assistance. This is actually one of the reasons why Apple has been purchasing APO series graphics cards on a large scale in recent years and developing its own artificial intelligence technology.

Many people speculate that Apple's investment in artificial intelligence is aimed at developing large-scale generative AI or similar AI assistants for mobile phones, such as Yun AI or GTAI.

In reality, the purpose of the fruit company's pursuit of artificial intelligence is highly similar to that of the Zhiyun Group: they are investing heavily in artificial intelligence in order to create intelligent electric vehicles, virtual devices, and intelligent robots.

However, the company's technological progress in the field of artificial intelligence is relatively slow. It can't even keep up with the pace of Zhiyun Group, let alone the artificial intelligence technology of Google.

The company's progress in developing its own core algorithms was slow, so it started to take a two-pronged approach: developing its own core algorithms while simultaneously using open-source big data models from Zhiyun Group for training.

In order to sell various computing chips, especially the APO series graphics cards, Zhiyun Group has open-sourced more than ten artificial intelligence algorithms.

Besides large-scale generative AI like GTAI, there are also models for various fields such as robotic arms, and even a model for assisted driving has been announced... although its technical level is slightly inferior.

The fruit company uses the open-source driver assistance algorithm from Zhiyun Group, improves and optimizes it, and then uses it for training.

To be honest, since the algorithm used is open source, there's no need to worry about being held back... The code for this algorithm is directly available for free download by Zhiyun Group, and anyone can download it for research or use, including in the commercial field.

Furthermore, when Zhiyun Group open-sourced its software, it did not require other companies or individuals who used these open-source algorithms to also publish and authorize their own improvements and research results... Traditional open-source software generally requires others to publish and open-source their improvements or optimizations to the open-source program.

However, Zhiyun Group does not require other individuals or companies to disclose their results based on these open-source AI algorithms...

To put it bluntly, this is not pure open source in the traditional sense. Rather, Zhiyun Group directly releases a bunch of early-stage artificial intelligence algorithms for free, allowing anyone or any company to research and even use them commercially.

Of course, Zhiyun Group is not here to do charity... All these algorithms can only run within Zhiyun Group's YCUA framework, which means they can only run on Zhiyun Group's computing chips.

All of this is just Zhuyun Group's way of selling computing chips!

Many companies take these free and publicly available algorithms, optimize and improve them, and then use them for commercial purposes.

Fruit companies are no exception!

Moreover, their optimization and improvement results are quite good. After investing a lot of money, recruiting countless talents, and putting in a lot of effort, the assisted driving model they trained has reached the L2+ level in terms of performance.

In the field of algorithms, there is no need to worry about being held back... The problem is that running this algorithm requires purchasing PX series large-scale terminal computing chips from Zhiyun Group.

Although Zhiyun Group claims that its computing chips are available for sale globally, they still have to be mindful of Xu Shenxue's wishes no matter what!

As for other core components, the power battery, which accounts for a large portion of the cost, is also difficult to obtain. Currently, the most advanced power battery technology on Earth is the solid-state battery from Hailan Auto, followed by the semi-solid-state battery from Ningdai Battery. This technology actually originated from Hailan Auto.

Fruit companies only make top-of-the-line products and use only the highest-end components, so they only consider these two types of power batteries. They won't consider other types, such as traditional liquid lithium batteries... because they are too low-end.

The semi-solid-state batteries in Ningdai Battery are easy to obtain. Apart from GM and Ford, the two companies that promoted the sale of Hailan cars in the US with a 100% tariff in the early years, other companies can purchase them freely, and Fruit Company is no exception.

As for solid-state batteries, Xu Shenxue has already promised the outside world that by next year at the latest, Hailan Automotive Group will have some of its solid-state battery production capacity available for external supply... However, the external production capacity will not be too large at that time, and not only will the price be very high, but there will also be a need to compete for production capacity.

In fact, Apple also contacted Panasonic and LG Chem to purchase semi-solid-state batteries and even to cooperate in developing solid-state batteries... but it was very difficult.

Semi-solid-state batteries are alright; these two companies can grit their teeth and develop and mass-produce them within a certain timeframe.

But solid-state batteries... especially the hybrid oxide polymer solid-state batteries that Hailan Auto uses that don't even require lithium metal, they really can't make them!
They haven't even figured out the technical principles of the Poseidon battery system yet, nor have they figured out what the positive and negative electrode materials used in this battery are... Hailan Automotive Group hasn't even applied for a patent for this material, let alone announced any technical route.

Researchers from other companies haven't even figured out what the positive and negative electrode materials of this solid-state battery actually are, so how can they possibly replicate this non-lithium metal solid-state battery?

Lithium metal solid-state batteries, one of the three traditional technological routes, are also fraught with difficulties in research, and achieving commercial mass production is extremely challenging.

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The two most critical components of a smart electric vehicle, computing chips and power batteries, must be sourced externally by the fruit company, specifically from Xu Shenxue's company... This will inevitably lead to significant supply chain risks and greatly compress gross profit margins.

Since the power batteries, which account for a large portion of the cost, need to be purchased, the cost is difficult to control.

As for other components, they are less dependent on them. For motors, they acquired a company to develop them in-house, and they are doing quite well.

For subsystems like the braking system, parts can also be sourced from companies like Bosch. Not to mention Apple, even Tesla and Las Vegas use parts from these automotive parts giants for their braking systems and many other subsystems.

We rarely develop things ourselves... not because we can't, but because it's unnecessary.

As for ordinary parts such as the car body, seats, glass, and tires, there are even fewer problems.

The only problem is: there's no way to control the supply chain... These multinational giants in auto parts may sell goods, but they can't control the fruit industry.

Therefore, looking at the entire supply chain of the smart electric vehicle project, the number of core components that the fruit company can independently control or manage is very small.

This was one of the main reasons why Apple was hesitant and reluctant to develop smart electric vehicles in the early days. Another reason was that the gross profit margin of automobiles was too low... Apple was used to hardware products with gross profit margins of 40% to 50%.

However, such a high gross profit margin is not so easy to achieve... It can be achieved in the field of smart terminals costing a few thousand or tens of thousands of yuan, but it is very difficult in the automotive field... Because the price of cars is already very high, a high gross profit margin would make the price of cars too high, and if the price is high, sales will be low.

This is actually one of the reasons why Zhiyun Group doesn't do smart electric vehicle business... If you want to improve the gross profit margin, simply making high-end models would result in low sales volume, which is meaningless... If the price is lower, the gross profit margin will be poor, and selling them too cheaply will damage the brand.

Of course, this is also because Zhuyun Group itself holds a portion of the shares in Hailan Auto Group, and also holds shares in Weiku Electronics Group, which also has an electric vehicle business.

Ultimately, in Xu Shenxue's strategic plan, Zhuyun Group did not engage in the intelligent electric vehicle business, but instead focused on developing three new core businesses: intelligent robots, virtual business, and selling computing chips.

However, Zhiyun Group has a choice and can pick and choose... but the fruit company no longer has the right to pick and choose!
In recent years, the situation of Fruit Company has not been very good, as can be seen from its stock price. The current market value of Fruit Company is still hovering between seven and eight hundred billion US dollars. On the one hand, its smart terminal business has been severely suppressed by Zhiyun Group, and at the same time, it faces continuous challenges from three manufacturers: Four Star, Weiku Electronics, and Huawei.

Another reason is that the smart terminal market has now entered a saturated market, and is even experiencing a continued slight decline... This means that the smart terminal market has reached its peak.

Barring any unforeseen circumstances, the future of fruit companies is basically predictable... And a high-tech company that has lost its future and its imagination can't expect to get a high price-to-earnings ratio. If the price-to-earnings ratio doesn't rise, the market value naturally won't rise either.

The decline of fruit companies in recent years is also closely related to the continuous competition from Zhuyun Group!
This can be seen from the market share, revenue, and profits of Apple's core product, the iPhone.

While Apple phones still hold a major share of the US smartphone market, in overseas markets—primarily developed and populous high-end smartphone markets like Europe, Japan, South Korea, Australia, and Canada—they have consistently been overshadowed by the Zhiyun S series phones.

In terms of revenue, Apple's mobile phone business is far inferior to that of Zhiyun Group... Zhiyun Group's S series phones sell over 200 million units a year, and their average selling price is even higher than Apple's...

The entry-level phones of both brands are priced similarly, both around 5,000 yuan. However, the high-end models in the Zhiyun S series, namely the Max and Max Pro models, have very high sales... Their sales share has accounted for more than 50% for many years.

Fruit, on the other hand, fared much worse. Their best-selling models were the entry-level models priced at just over 5,000 yuan, followed by models priced at 6,000 to 7,000 yuan. Their sales share in models priced at 8,000 to 9,000 yuan or even 10,000 yuan was not that high.

If we consider sales of phones priced over 8,000 yuan in third-party markets like Europe, Zhiyun's S series phones would capture about 70% of the market, while Apple's high-end models would only account for about 30%.

As for the third one... there is no third one!

With lower sales volume and lower average selling price, the revenue gap is naturally quite large.

As for profits, the gross profit margins of the high-end mobile phone businesses of both parties are roughly the same, with different models having gross profit margins of around 40% to 60%... The more expensive the model, the higher the gross profit margin.

Fun fact: The S-series Max Pro from Zhiyun Group, priced at over 10,000 yuan, doesn't actually cost much more than the S-series Max, which costs 8,000 yuan... at most a few hundred yuan more, but the price difference is several thousand yuan.

The fruit side is pretty much the same.

Therefore, the gross profit margins of each model from both sides are actually quite similar, but the difference in the overall gross profit margin is quite large... To reiterate, in the S series phones of Zhiyun Group, the higher-priced models sell more, and these higher-priced models have higher gross profit margins, which in turn increases the overall gross profit margin of the S series phones.

With a large revenue gap and an overall lower gross profit margin, the final profit naturally falls short.

This doesn't even include the A series, SX/SXL from the Zhiyun Group, or the independent brand Xinyun.

If we compare the overall mobile phone businesses of the two companies, the gap becomes even larger.

In summary, for many years, Apple's mobile phone business has been consistently outpaced by Zhuyun Group, and it has always been relegated to the position of the world's second largest mobile phone manufacturer.

Nowadays, when people talk about smartphones, everyone knows that Smartisan is the world's number one... and people only remember the world's number one, who cares what the world's number two is like!
In other words, the US market is closed, and iPhones can't get in. Otherwise, Apple's mobile phone business would have plummeted to below 100 million units per year in no time... Just look at the millions of iPhones smuggled into the country from Mexico every year.

Smuggling alone can generate sales of millions of units. If the ban on sales is lifted... the annual sales volume could probably reach 20 to 30 million units or even more!
American consumers were also accustomed to high-quality food back then. The early Zhiyun S series phones, such as the S9, S10, and S11, sold very well in the US... There are still many people who fondly remember Zhiyun phones!
Moreover, although Zhiyun phones are banned from sale in the US market, Mexican smuggling gangs disregard the ban and smuggle large quantities of Zhiyun S-series phones into the country every year through various means. In addition, a large number of Americans travel to Zhiyun stores in neighboring border cities of Mexico and Canada to buy Zhiyun phones.

In the US today, there are actually quite a few users of the Zhiyun S series phones... For this reason, Zhiyun Group has always maintained the so-called 'North American international version'.

Many Americans are patriotic and support sanctions against core competitors like Zhiyun Group... but they also want the freedom to buy and use Zhiyun S series phones!
If they could, they would prefer to use Zhiyun S series phones to post comments online supporting sanctions against Zhiyun!
Under such circumstances, who knows what will happen if the restrictions on the sale of Zhiyun phones are lifted... Putting everything else aside, Apple will definitely suffer a major blow, and will be severely injured if not killed!

Because its overall mobile phone business is being overshadowed by Zhiyun's mobile phone business, the market appeal of its other smart terminal products is also gradually fading.

In the early years, Apple's tablets and laptops outsold Zhiyun's competitors. However, Zhiyun has now overtaken Apple in many third-party markets, which has led to the decline of Apple's overall smart terminal business.

The smart terminal business is not doing well, and although other businesses are still operating, they are also gradually declining.

The VR virtual reality devices that were developed before only sold a few units when they were first launched, but sales were not good afterward... It's not just Apple's problem; other companies, including Google, Sixing, Weiku Electronics, and Huawei's VR virtual reality devices, also didn't sell well... Consumers generally don't accept this VR glasses plus traditional keyboard, mouse/joystick virtual reality device model.

To reiterate, wealthy consumers are all buying VR glasses and virtual reality treadmills from Zhiyun Group...

The difference in user experience between the two is huge... One allows you to experience virtual games to some extent, with various actions at will. After all, these actions are actually human activities, just data collected by various sensors and then projected into the virtual world.

However, the control method using a mouse, keyboard, and joystick is not much different from traditional PC games and console games... so you can't move freely.

This leads to a huge difference in experience between the two, which ultimately translates into the market situation where wealthy consumers do not accept this type of VR headset with keyboard and mouse operation mode.

As for consumers who don't have the money, they want it, but they can't afford it!

Even the VR virtual reality devices proposed by Vcool Electronics cost seventy or eighty thousand yuan each, which is not cheap...

The VR virtual reality device industry is in a mess, and even Apple can't do anything about it!
Since the VR virtual equipment business couldn't sustain the company, Apple still needs to find new business growth points... Their board of directors is still hoping that the company's market value will one day rise to one trillion US dollars.

Ultimately, the fruit company focused its next phase of business development on smart electric vehicles!

Other businesses with excellent market potential, such as intelligent robots and virtual treadmills, are things they'd like to get involved in, but they can't manage to do it...

Among all the emerging businesses with great potential globally, and with a market space of hundreds of billions or even trillions of dollars, only one remains: intelligent electric vehicles!

Having made up their minds, the fruit company went all out in developing smart electric vehicles, and with continuous and massive investments, they have indeed created this very impressive smart electric vehicle.

Although it can't compare to Hailan Auto's top-of-the-line products... it still has certain advantages compared to Tesla's electric vehicles and Vcool Electronics' electric vehicles.

However, Apple is ambitious; they want to make top-of-the-line products. Even if they can't achieve autonomous driving, they still want solid-state batteries... at least to be used in high-end flagship models.

This high-end banner must be raised from the very beginning. It must satisfy the sense of superiority and confidence of the fan base, and provide the media with ample topics for reporting. Only in this way can it guide a large number of loyal fans around the world to pay for the wallets of shareholders!

To this end, not long after Cook saw the first prototype of his company's smart electric vehicle, he personally went to Shenzhen to meet Bao Yongyan, CEO of Hailan Automotive Group!

Hylan Automotive Group has limited production capacity for solid-state batteries next year, and Cook is personally involved to ensure that a portion of that capacity can be secured.

Therefore, when Apple's smart electric car is released and launched next year, its flagship model will be able to use solid-state batteries!
The flagship model of Fruit's smart electric vehicles must be high-end... especially since there is no Level 4 autonomous driving or even Level 3 assisted driving, it must be the best in all other areas.

Therefore, solid-state batteries must have...

(End of this chapter)