Rebirth 08: Rise from copycat phones

Chapter 634 The Global Influence of Zhiyun Group
Ji Chenghe handed Xu Shenxue the sales report after the launch of the S21 series mobile phones, and said, "The sales performance of the S21 series mobile phones after their launch is not much different from what our marketing department predicted."

"In the first batch of 18 countries and regions, including China, Japan, South Korea, and Europe, we received a total of 25 million orders on the day the official pre-orders opened. In the following five days, through online and offline sales, the 55 million mobile phones we had prepared in advance have been sold out!"

"We will now be operating on a production and sales model. Official orders are already booked for a month and a half, and offline orders are booked for two months!"

"This launch and sales can be described as a complete success!"

"Furthermore, judging from the order queue data, the sales share of our S21 Max model is higher than expected, reaching 40%. This is mainly due to the advantages brought by the dual unlocking mode, which has attracted a large number of users from other brands to switch to our camp, especially Apple, Samsung users, and users of mid-to-high-end models from other manufacturers!"

"In addition, our early models such as the S15 Max, S16 series, and S17 series, which released a few years ago, had very high sales of facial recognition. Users of these phones have also started to replace their phones in large numbers. This year, our S21 Max model has this dual unlocking mode, coupled with the traditional advantages of the mature and smaller Capsule design, all of which have attracted this group of users to replace their phones."

"According to our survey, users generally did not choose to place an order because of the S1203 chip's powerful local inference computing power and abundant local artificial intelligence functions... These performance advantages do bring competitive advantages, but they are not the main reasons that prompt users to place an order!"

"Because in the minds of users, our Zhiyun S series phones should inherently possess the world's best performance..."

At this point, Ji Chenghe said with some helplessness, "This is both a good thing and a bad thing for us!"

"The good thing is that this brand image allows us to continue to maintain our position as a world-class mobile phone brand, so that users will assume that our phones have the best performance when they buy them."

"But the downside is that users are generally not interested in our improvements to hardware performance..."

Xu Shenxue said, "That's how the consumer goods market is, especially for our products. But it is precisely because of our continuous commitment to top-notch performance over the years that we have been able to build a brand that users trust unconditionally today, so that users don't even need to look at the phone's specifications to know that our phone has the best performance!"

"Therefore, we must continue to push forward in terms of hardware performance for future mobile phones. We cannot ignore this point just because users don't look at the specifications!"

"We spent ten years making sure everyone knew that our S series phones were the best performing, but all it takes to destroy that brand image is a single instance of downgrading the phone's performance!"

Ji Chenghe said, "Chairman Xu, you're right. Building a brand takes a long time and a huge investment, but destroying a brand only takes one failure!"

"Among the other models in the S21 series, the 128GB standard version accounts for a large proportion of sales. This version of the S21 not only provided us with a large number of sales at the price of 5,200 yuan, but also set a ceiling for other manufacturers!"

The latest Zhiyun S21 phone only sells for 5,200 yuan, making it very difficult for other manufacturers' high-end phones to break into the market above 5,000 yuan, and even in the 4,000 yuan price range... Especially in the domestic market, unless they are brand fans or users with special needs for the operating system, people who are willing to spend more than 4,000 yuan on a phone will most likely choose to spend a few hundred yuan more to buy the standard S21 phone.

In major overseas markets such as Japan, South Korea, and Europe, Zhiyun's S-series standard laptops are priced ridiculously high, basically hitting the ceiling of Apple and Samsung's Galaxy series...

If the phones from these two main competitors are priced higher than the Zhiyun S series, then sales will be very poor. Consumers aren't stupid: you're not as good as the Zhiyun S series in any way, so why should you be priced higher?

However, if they sell their phones for less than the Zhiyun S series, their gross profit margin will not be high... because the cost of their phones is not low either, and is even much higher than that of the S series phones.

The main components of Zhiyun S series mobile phones are all made in-house, especially the three core chips that account for a relatively high cost: SOC, memory, and flash memory. All of these are made in-house by Zhiyun Group.

Then, the screen and the phone battery, which account for the other major costs, are from sister companies, so the purchase price is relatively cheaper.

Most importantly, the sales volume of Zhiyun S series phones is huge, around 250 million units a year. Such a huge sales volume will give Zhiyun Group greater bargaining power when purchasing various components or raw materials. For the same components, many supply chain companies supplying Zhiyun Group's S series phones often have a lower unit price than Samsung and Apple.

Moreover, even if these supply chain companies wanted to offer cheaper prices from Zhiyun, they were more willing to accept Zhiyun's orders because the purchase volume was so large. In addition, Zhiyun Group always made timely payments without delay, resulting in much higher profits in the end.

Furthermore, for Zhiyun Group itself, larger sales volumes will significantly reduce various costs such as R&D costs, supply chain and transportation costs, marketing costs, and administrative costs.

In the end, the S-series phones from Zhiyun Group are actually cheaper in terms of overall cost than competing phones from Apple, Samsung, and other similar brands... yet they are sold at a higher price, resulting in a higher gross profit margin.

The pricing of the Zhiyun S series standard edition is putting Apple and Samsung in a difficult position, as it hits right at their price ceiling, leaving them with no choice but to accept the dilemma of raising or lowering prices for their new models.

This ceiling-based pricing model is also the main strategy of Zhiyun Group in suppressing fruit and the four-star Galaxy series, setting a price ceiling for them in order to seize more market share in the high-end market above 5,000 yuan.

"Moreover, many of the components for our S21 standard version and Pro this year are from last year's products, which are cheaper. This allows us to better control costs and improve gross profit margin!"

Using mature components in the standard and Pro versions to reduce costs has been Zhiyun Group's established strategy for the past two years with its S series phones.

On the SOC, these two models use the S1103 chip, which is the N5 process chip released by Zhiyun Group last year. After more than a year of large-scale mass production, the various costs of this chip have been reduced a lot, and its price is relatively cheap.

The memory chips used are LPDDR5 memory released two years ago. This type of memory chip has a larger production volume and a lower cost.

The flash memory chips are similar, also using mature products from two years ago.

Of course... these so-called mature products are only relative to some of the top flagship products released this year. In fact, even the S1103 chip used in the standard version of the S21 is still the second best performing chip in the world, second only to the newly released S1203.
The LPDDR5 memory chips and flash memory chips it uses, although they are two years old, are actually flagship products from two years ago, previously used in the S19 Max model...

However, you can't find this high-end chip in some of the new mobile phone models released by other brands this year that cost three or four thousand yuan, because they can't afford it!
The new Blue Max model released earlier this year by Blue, a brand under the Vcool Electronics Group, uses even more outdated memory and flash memory chips.

Therefore, the mature components used in the standard and Pro versions of Zhiyun Group's S series phones are only relative to the latest flagship components in their own Max/Max Pro models. Compared to the so-called high-end phones of other manufacturers, their hardware performance is still very powerful.

Putting everything else aside, the S1103 chip alone is enough to crush all the other competitors!

This also gives the S21 standard version a significant competitive advantage in performance...

For just over five thousand yuan, you can buy a phone like this, which is extremely cost-effective in some respects.

Although cost-effectiveness has never been the main marketing concept of Zhiyun Group, and they even dislike this notion, the S21 standard edition phone this year is, to some extent, the king of cost-effectiveness.

This is also why the standard version of the S21 sells relatively well.

The S21 series got off to a good start, which put Xu Shenxue at ease... Although various market surveys had previously indicated that the S21 series would maintain the sales volume of the S20 series from last year.

However, before the products actually go on sale, no one can say for sure what the specific situation will be like.

Now that the sales report is out, Xu Shenxue is relieved.

After discussing the sales performance of the S21 series, Ji Chenghe also mentioned the sales performance of other newly released products. The sales of the other products were just average, with no surprises or unexpected results.

The new fourth-generation Bluetooth earphones, however, are selling quite well. The upgraded solid-state battery provides longer battery life, and the new self-developed Bluetooth 5Y protocol gives the fourth-generation earphones a greater competitive edge. Of course, this is also related to the fact that Zhiyun Group previously stopped including wired earphones with its phones.

At the time, with the fourth-generation Bluetooth earphones equipped with solid-state batteries, the earphones could provide eight hours of battery life on a single charge, basically solving the battery life problem of Bluetooth earphones. As a result, Zhiyun Group decisively canceled the bundled wired earphones with mobile phones that year, under the guise of environmental protection...

Despite being criticized by many at the time, removing the included wired headphones saved more than 20 yuan in costs and significantly boosted sales of Bluetooth headphones.

This strategy led to a surge in sales of the third-generation Bluetooth headset that year, and this upward trend has continued until the release of the fourth-generation Bluetooth headset this year.

As time has passed, fewer people are criticizing Zhiyun Group for not including wired headphones anymore, and a large number of ordinary users have gradually accepted and purchased Bluetooth headphones.

Last year, a single Bluetooth headset sold 27 million pairs, generating approximately 40 billion yuan in revenue. If this revenue were ranked among the many listed companies in China, it would probably rank around 270th. And there are over 5,000 listed companies in China…

In other words, the revenue of most listed companies in China is less than the revenue of Zhiyun Group from selling a single pair of headphones... and that's not even talking about profit, just revenue.

If it's about profit, then it could rank in the top fifty.

Well, it's not that Zhiyun Group's Bluetooth headset business profits are too outrageous, but rather that the profits of most listed companies are too outrageous.

Fun fact: Just because a listed company doesn't make money doesn't mean its owner doesn't make money.

Here's a simple trick: Boss A actually controls a listed company. In the course of the company's business operations, he can transfer a large number of various OEM orders, spare parts orders, design orders, advertising orders, etc., to other non-listed companies controlled by himself or his family members, or even offshore companies, at prices higher than the market price... Or he can simply acquire useless enterprises or businesses at high prices, or pay high prices for business consulting, etc.

This allows for the transfer of profits from listed companies.

In the end, the listed company controlled by Boss A was operating normally and had good annual revenue, but its net profit was very low or even resulted in losses... Where did the profits go? They all went into Boss A's private pocket.

Even more straightforward, Boss A uses insider information about his own listed company's operations to trade his company's stock through a secret third-party stock account. This kind of insider trading is pure profit, and if done well, the risk is actually lower, no different from picking up money directly.

Moreover, this only fleeces the retail investors in the stock market and does not affect the operation of the listed company itself... The money is harvested, and the company can continue to operate normally and pay dividends. It's wonderful!
Of course, this is just a simple explanation of the basic principles; the actual operation will be more complex and covert…

These practices are common worldwide... They're typical tactics used by business owners, only the specific methods of implementation differ.

Of course, those who play poorly can easily end up in jail...

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Zhiyun Group's Bluetooth headset business can generate 40 billion yuan in revenue a year... but such a business can only be considered a peripheral business within Zhiyun Group.

After all, the smart terminal business alone in the Zhuyun Group generates more than two trillion yuan in annual revenue!

Then there's the semiconductor design and manufacturing business, which generates even more revenue... The revenue from semiconductor manufacturing mainly comes from outsourcing, which also amounts to hundreds of billions a year.

The semiconductor design business, encompassing various SOC chips, CPUs, consumer-grade graphics cards, APO computing cards, various terminal computing chips, semiconductor sensor chips, and a whole host of other chips, is enormous in scale. Its revenue and profits have already surpassed those of the smart terminal business.

In terms of revenue and profit, Zhiyun Group is a veritable behemoth on the planet Earth today.

If it were just about making money, it wouldn't really reflect the importance and huge influence of Zhiyun Group... The key point is that this company is also a high-tech manufacturing enterprise!

Not only does it have the world's largest semiconductor manufacturing system, but it also has an enormous supply chain system behind it!
With over 800,000 employees worldwide, operations span more than 160 countries and regions, and R&D or technical support centers in dozens of countries.

Its R&D centers are located in various parts of the world, from China to Europe, ASEAN, North America and South America, India, West Asia, and even in Egypt and South Africa in Africa, in order to recruit outstanding local talents.

In the research, development, and sales of the S21 series phones, in addition to the domestic support, the overseas R&D centers, technical support centers, and administrative sales subsidiaries in various countries and regions also provided tremendous support.

After all, for a mobile phone to become a global bestseller, it must be localized and optimized for the local market. At the very least, the operating system must be understandable to locals, and it must also be integrated with a content ecosystem that suits the local users' habits!

Zhuyun Group's Yun OS system supports almost all mainstream languages ​​in the world and can cover almost all user groups worldwide.

The system optimization and content ecosystem adaptation for these overseas markets, as well as local sales efforts, all require support from local talent.

This has also resulted in a large number of overseas employees for Zhuyun Group.

Zhuyun Group is a truly global multinational giant!

Its global influence exceeds the imagination of many ordinary people... Many ordinary people in China do not know or understand the huge influence of Zhuyun Group overseas!
With the release of the S21 series smartphones, this top multinational giant has launched a new wave of high-profile activities, resulting in news about the Zhiyun S series smartphones flooding news media and social media platforms around the world.

While Zhiyun Group was launching a massive global campaign to promote the sales of the S21, Xu Shenxue had temporarily put aside his work on the S21 series.

Sales of the S21 series have met expectations and are on track. Going forward, all we need to do is proceed step by step without making any mistakes.

Xu Shenxue has now shifted his attention to other businesses, especially semiconductors!

Zhuyun Microelectronics, a subsidiary of Zhuyun Group, is actively advancing its equivalent 3-nanometer process technology, aiming to complete technology verification this year and make a final technical sprint for mass production of the equivalent 3-nanometer process next year!
At this critical moment, Xu Shenxue also paid close attention and personally supervised the operation!
The equivalent 3-nanometer process, scheduled for mass production next year, is not only related to the mass production of the next-generation mobile phone SOC chip S1303, but more importantly, it is also related to the mass production of the next-generation APO7000 computing card and other advanced computing chips!

The technological advancements in various computing chips are directly related to the progress of artificial intelligence technology at Zhiyun Group, which Xu Shenxue attaches great importance to!

The mass production of the equivalent 3-nanometer process next year is crucial and cannot be compromised!
On August 23, Xu Shenxue left Shenzhen and took a special plane to Tongcheng to inspect Zhiyun Microelectronics.

This visit to the headquarters of Zhiyun Microelectronics in Tongcheng was not only to boost morale, but also to demonstrate the importance I attach to the project and urge the relevant project teams not to slack off. The equivalent 3-nanometer process must complete technical verification this year to prepare for large-scale mass production next year.

Xu Shenxue's arrival meant he would stay for many days, not only to hold high-level meetings but also to meet with key technical personnel from relevant project teams and to visit the 32nd Factory, which was responsible for the preliminary technical verification of the equivalent 3-nanometer process, to see the latest technical progress.

This has put immense pressure on the senior management and some core scientists of Zhuyun Microelectronics!

(End of this chapter)