"OPPO's decline has been faster than expected. Facing sales pressure, it chose to launch new products in October, hoping to bring good luck."

@TechNewKnow Original

Following the usual rhythm, Apple and Huawei launch their products in September, leaving other domestic manufacturers to release theirs after November. However, this year's competition has intensified significantly, evident in the golden autumn of October.

On October 24, OPPO released two models of the Find X8 series: Find X8 and Find X8 Pro. Additionally, under the same roof, the OnePlus brand also introduced the new OnePlus 13. Within such a short time span, OPPO continuously launched new devices, presumably aiming to seize market share in October.

With over a dozen new models, including vivo X200, Honor Magic7, Xiaomi 15 series, iQOO1, Realme GT7 Pro, making their debut, OPPO's absence would undoubtedly diminish its market presence. Amidst sales pressure, OPPO seems eager to rush into the market. However, this urgency also suggests the smartphone giant is deeply entrenched in a sales crisis.

01

AI Smartphone Battle, a Game That Cannot Be Lost

OPPO is fully committed to AI.

Founder Chen Mingyong predicted that 2024 would be the first year of AI smartphones, prompting OPPO to focus on AI throughout the year.

At the OPPO AI Strategy Conference earlier this year, OPPO unveiled its 1+N agent ecosystem strategy, consisting of the AI Super Agent and AI Pro Agent development platform. The goal was to drive smartphone technology innovation through AI and boost sales. Simultaneously, OPPO's first AI smartphone, the Find X7, was released. Recently, OPPO acquired the startup Wave Intelligence, marking another step in the AI field.

OPPO's urgent push for AI implementation is closely related to the overall trend in the smartphone industry. Since the second half of 2023, many smartphone manufacturers have been embedding large models into their devices and interacting with AI applications and cloud data.

Prior to this, as early as 2022, OPPO built its first computing power center in Dongguan to serve users, ensure core data security, and further reduce AI computing costs.

With these frequent moves, OPPO's expectations are naturally high. However, despite its full-scale efforts, the company has seen little success, leading to inevitable disappointment. The Find X7, a key AI product, heavily promoted AI features such as AI image removal, AI call summaries, and AI assistants during its launch to attract consumers. However, the market did not respond enthusiastically, especially for the Find X7 Ultra priced at 5,999 yuan and above.

"Within five days, the price had already dropped below the initial offering," recalled a dealer about OPPO's first AI smartphone receiving a cold reception in the market. The unpopularity of the new product and the subsequent price drop made it impossible to achieve a premium. This became an unbearable pain for OPPO: high investment and high expectations, but ultimately low returns.

The launch of the new Find X8 smartphone is considered a comeback battle for OPPO in AI. From advertising to event promotion, OPPO attaches great importance to this AI turnaround. However, regarding AI functionality, OPPO seems to lack new ideas.

During a visit to a large digital electronics market in Beijing by "TechNewKnow," salespeople promoting new smartphones mainly focused on AI image features.

"Look at the ghosting in this photo. After pressing this button to enhance it, it all disappears. This feature is very useful for sports photography." "When we are in the office building and see a particularly beautiful sunset and clouds at the end of the day, we definitely want to take a picture. However, the biggest problem with taking pictures through glass is reflection. With this feature, I can press it, and the reflections and light reflections all disappear."

The concentrated promotion of AI image functions reflects the plight of the entire AI industry: applications fail to impress consumers. While images, as a visual medium, have a strong impact on users, it's important to note that image AI has become a standard feature among major smartphone manufacturers and can no longer provide a sense of novelty. Other AI application functions face the cost of educating non-professional users. In simpler terms, less intuitive AI features are even less effective in captivating users.

Regarding pricing, when asked if the Find X8 would experience a price drop similar to the Find X7, salesperson immediately stated that the online and offline prices of the new model were the same and that there was absolutely no possibility of a price reduction.

Clearly, this decisive and consistent response reveals OPPO's determination to fight to the finish.

02

New Products to Bring "Good Luck"; Siblings Join Forces

OPPO's next step is to rely on new products to bring good luck.

According to the latest rankings from IDC, a global authoritative research firm, global smartphone shipments increased by 4% year-on-year in the third quarter of 2024, with total shipments reaching 316.1 million units. This was the fifth consecutive quarter of shipment growth. However, while vivo and Huawei experienced rapid growth, OPPO found itself in a difficult position.

The latest reports from Canalys and IDC, two major market research firms, reveal that in the just-concluded third quarter, OPPO (including OnePlus) fell out of the top five in terms of market share and shipments in China's smartphone market, ranking only sixth with a market share of 9.68%. A year ago, the scenario for OPPO was completely different: its dual flagship products, the Find X6 series and the Find N2&Flip series, continued to shine in the high-end market, and OPPO topped the Chinese smartphone market rankings with a 17.7% market share.

From heaven to hell, OPPO's decline has been faster than expected. Facing sales pressure, OPPO chose to launch new products in October, hoping to bring good luck.

In terms of market positioning, the OPPO K12 Plus and OnePlus 13 fill the price ranges of 1,000-2,000 yuan and 4,000-5,000 yuan, respectively. Regarding functional highlights, both new models seem closely related to all-round devices. The OPPO K12 Plus focuses on large-capacity battery life and durability, while the OnePlus 13, as a brand flagship with a price differentiation but equal status to the OPPO Find X8, fully meets users' diverse needs.

However, even if these two new models receive positive reviews, they cannot conceal the embarrassment of serving as a stepping stone for others. A mobile phone dealer said, "OPPO's low-end phones barely make any money, with profits rarely exceeding 200 yuan. They mainly focus on volume. For a price like the OnePlus 13, the profit margin is higher, but everyone knows who gets the lion's share."

In fact, low profit margins can be considered a double-edged sword for OPPO. On the one hand, it allows the company to quickly capture market share; on the other hand, it significantly affects its revenue. On the occasion of OnePlus's 9th anniversary, the company proposed a vision for the next three years where the combined net profit rate of OnePlus hardware could be zero. Subsequently, OnePlus indeed ranked among the top in market sales data, but relying on OPPO's subsidy of billions, its strategy of approaching business bottom lines to compete for customers has indeed raised questions.

An even more unstable factor lies with dealers, who lack motivation without profit. According to Indian media reports, the South India Retail Association recently announced that more than 4,500 retail stores in the Indian states of Andhra Pradesh, Telangana, Tamil Nadu, Karnataka, Maharashtra, and Gujarat would no longer sell OnePlus smartphones starting from May 1 this year. The main reason is that the low profit margin of these models cannot adequately support the operating costs of retail stores.

In fact, OPPO's profit margin issue is also common among domestic brands.

According to institutional data, despite domestic mobile phone shipments ranking among the top, Apple and Samsung's revenue shares in 2023 were still as high as 50% and 16%, respectively, while OPPO, Xiaomi, and vivo accounted for only 7%, 6%, and 4%, respectively. Among them, Apple accounted for 20% of global mobile phone shipments in 2023, earning half of the revenue with one-fifth of the shipments. Even more striking data emerged in the second quarter of last year, when Apple accounted for 85% of the operating profit in the global mobile phone market, Samsung for 12%, and the remaining mobile phone manufacturers, including OPPO, shared only 3% of the profit.

Why can't OPPO provide a higher premium?

The fundamental reason likely lies in the lack of core technology support. Three years ago, when Huawei was deeply entrenched in a supply disruption crisis, the market experienced a vacuum. OPPO subsequently announced its first self-developed chip, the MariSilicon X, and the several thousand-strong Zheku team behind it emerged. The market immediately held OPPO in higher esteem for its technological capabilities. However, two years later, OPPO's chip research and development was completely terminated, and another cutting-edge business based on virtual reality technology, XR, also came to an end, dimming OPPO's technological prospects once again.

The timing of OnePlus's new product launch further solidifies OPPO's supporting role in the competition. Amid this wave of new product releases, the OPPO Find X8 will compete with numerous models such as the Xiaomi 15, iQOO 13, Honor Magic7 series, Realme GT7 Pro, ROG 10 series, Red Magic 10 series, and Samsung Galaxy S25. Despite the intense promotional efforts of each company, there is only one true protagonist: Qualcomm's new flagship chip, the Snapdragon 8 Gen 3.

On October 22, Qualcomm officially released the Snapdragon 8 Gen 3. This chip boasts a 45% increase in CPU single-core performance and a 45% increase in multi-core performance, along with a 62% improvement in browser performance, a 40% boost in GPU performance, and a 35% enhancement in ray tracing performance. With such significant improvements, smartphone manufacturers must fully keep up. Companies such as ASUS, Honor, Realme, Nubia, vivo, and Xiaomi have all stated that their flagship models equipped with this chip will soon be available. The strength of Qualcomm's ecosystem is evident, and OPPO must naturally follow suit at this time.

Qualcomm's unshakable position in the ecosystem is also evident in its financial data. The day before yesterday, Qualcomm announced its financial results for the fourth fiscal quarter ended September 29, 2024. Non-GAAP adjusted revenue was $10.244 billion, a year-on-year increase of 19%, significantly higher than analysts' expectations of $9.91 billion. Adjusted earnings per share (EPS) were $2.69, a year-on-year increase of 33%, significantly exceeding analysts' expectations of $2.57. Pre-tax profit was $3.491 billion, a year-on-year increase of 33%.

OPPO must envy such financial data. In the mobile phone industry, some eat meat while others only get soup. OPPO's embarrassment lies in its seemingly waning bargaining power.

03

Collaboration with BYD Requires Caution

As the mobile phone industry becomes increasingly challenging, OPPO's attempts to break through through other avenues become understandable.

On October 23, BYD and OPPO announced a strategic partnership, encompassing innovative technologies such as AI integrated cockpits, healthy cockpits, digital car keys, vehicle management, integrated desktops, multimedia service sharing, and computing power sharing.

From the demand side, as a new energy vehicle giant, BYD is virtually guaranteed to sell over 4 million vehicles in 2024. Facing competition from both established and emerging automakers, BYD's dominance in electrification does not guarantee continued success, especially in boosting sales of high-end models, which urgently needs to change. According to data, BYD's sales exceeded the 500,000-unit mark in October, reaching 503,000 units, a year-on-year increase of 66.5%. However, the three series tasked with elevating the brand—FANGBIAO, DENZA, and NIO—collectively sold less than 18,000 units.

The reason for this is that BYD has been slow in the path of intelligentization. The Xpeng MONA, marketed as the "only high-end intelligent driving car under 200,000 yuan," sold over 10,000 units in October. The Deep Blue S07, empowered by Huawei's Kunlun intelligent driving system, received 47,952 orders in just three months after its launch. In the 200,000 to 400,000 yuan price range for household SUVs, city NOA is among the key features of ideal, AITO, and GWM's Blue Mountain, which excel in their respective niche markets.

With intelligentization becoming a constraint on BYD's development, OPPO's partnership with BYD naturally seems to have found its largest customer. However, it should be noted that OPPO's previous experience in the automotive field is not deep. The greater potential of this collaboration lies in the exploration of an ecosystem that integrates mobile phones and the Internet of Vehicles. It can be speculated that OPPO is more likely to participate by focusing on in-vehicle software. Even if BYD utilizes OPPO's computing power, it remains unclear how much dominance OPPO, as the service provider, will have over the valuable data ownership.

From this perspective, the greatest attraction for OPPO lies in the potential sales boost that BYD will experience once it achieves intelligent driving equity next year. By creating value for customers, OPPO can also reap significant benefits.

However, it is still unknown whether BYD is willing to maintain a long-term cooperation with OPPO, a leading smartphone manufacturer. Judging from the automakers' attitudes towards intelligence, Geely's acquisition of Meizu, Huawei's leadership in the AITO brand, Xiaomi's self-reliance in the Internet of Vehicles, and Great Wall Motors' support for Horizon Robotics all reflect the OEMs' priority on control.

Moreover, it cannot be ignored that BYD itself is a super supply chain company. With all necessary hardware and raw materials, BYD can directly engage in production as long as it has the technology, as evidenced by its contract manufacturing business for smartphones and battery production.

'The last time I collaborated with BYD on a robotic arm production line, they demanded that we follow through with the entire process from design, drafting, construction, debugging, to production. Although they offered a decent amount of money, I dared not accept it,' said the head of a Shenzhen-based smart robotics application company. BYD is well-known in Shenzhen for its ability to assimilate technology. 'If BYD completes this entire process, it won't take long for them to do it independently, and the opportunity for cooperation will be drastically reduced,' he added.

Observing from a narrow perspective, BYD's strength lies in its eagerness to learn. However, for OPPO, this will determine its position and value in the automotive industry. The smartphone giant aiming to break through will need to make careful choices.