Content/Zhou Chuan

Editor/Yong'e

Proofreader/Mangfu

'Congenitally traffic-blessed' Lei Jun has recently become a wishing well for netizens on social media. The 'strongest performance in history' announced on November 18 - the third-quarter financial report of 2024 - has also garnered significant attention.

The core reason for Xiaomi Group's financial report growth lies in the growth of its core consumer electronics and automotive businesses. Smartphone revenue reached RMB 47.5 billion, a year-on-year increase of 13.9%, with global smartphone shipments of 43.1 million units. Such a performance is not only attributable to the general recovery of the global smartphone market but also related to the latest product strategy research and judgment of major smartphone brands on current consumption trends.

'Compatibility' is becoming a common choice for mobile phone manufacturers.

Part.1

After 28 years, Lei Jun throws a historical boomerang

At Xiaomi's new product launch event on October 29, Jin Fan, Vice President of Xiaomi's Mobile Phone Division, said, 'When you see Xiaomi phones and Android apps on Apple computers, you suddenly feel a sense of great ecological integration.'

In Xiaomi's MiUI OS 2.0 system, Xiaomi phones enable rapid file transfer with iPhone/iPad/Mac, and can even mirror the desktop to Mac via Mi Share. Some files in Apple-specific formats can also be viewed through Xiaomi phones.

The long-standing barriers between Android and Apple are gradually being broken down.

In fact, Lei Jun learned the true lessons of business warfare in which compatible systems swallow product markets as early as 28 years ago.

In 1996, when Microsoft first entered China, it eagerly wanted to transfer WPS's old users to Word, so it actively reached out to Kingsoft, hoping to achieve compatibility with WPS in document formats.

According to Shen Jiazheng, one of the leaders of WPS97, 'At that time, Kingsoft did not consider the WPS format to be a big secret.'

Therefore, both parties signed an agreement to read each other's files through their software's intermediate RTF format.

A few months later, Microsoft introduced Windows 97, a graphical user interface operating system, to China, replacing the outdated DOS system that required commands to be entered through a black character box.

However, the old version of WPS was developed based on the DOS system, while Word was forcibly bundled with the new Windows 97 system. As it spread in China, more and more people chose Word, and file format compatibility became a 'bridge' for users to seamlessly transition.

Lei Jun, then CEO of Kingsoft, led his team to fight back by developing a giant software called 'Pangu' that integrated word processing, spreadsheets, and electronic dictionaries to regain market share. They invited more than 20 media outlets to a press conference and spent over 2 million on promotions, but sales fell short of one-tenth of expectations.

In Lei Jun's 2022 annual speech, he vividly described the situation at that time: 'Many nights, I sat alone on the sofa, watching the lights in the opposite building go out one by one, and then watching the sky gradually brighten. This kind of pain can only be deeply understood by those who have experienced it.'

Today, 28 years later, Lei Jun, who has experienced all this, seems to have turned the 'pitfall' of the past into 'wisdom' through 'compatibility.'

Apple has the iPhone and HomeKit, and only needs one more car to form a closed ecological loop. However, Apple has chosen not to enter the automotive industry.

It was also around this time that Lei Jun announced on multiple occasions that Xiaomi cars would become the best option for Apple users. In practice, Xiaomi's Mi Smart Cockpit system supports wireless Apple CarPlay, and even displays Apple's native map navigation interface on the HUD.

After Xiaomi SU7 orders were released, 56% of car owners were iPhone users. Apple's users are gradually being stolen by Xiaomi, just as Kingsoft's users were stolen by Microsoft in the past. This historical boomerang has finally been 'thrown' by Lei Jun at another competitor.

Part.2

It's not just Xiaomi that is compatible with Apple's ecosystem

In fact, in recent years, it's not just Xiaomi that is working on compatibility with Apple's ecosystem; OPPO, vivo, and Honor are all doing the same.

For example, OPPO ColorOS 15 claims to break the iOS sharing barrier, allowing the transfer of hundreds of 4K photos to Apple devices in just 8 seconds. vivo X Fold3 boasts seamless connection with Apple devices, and its Universal Document feature can open 57 professional file formats such as Pages, Numbers, and Keynote.

Clearly, compatibility with Apple is no longer a unique case.

This is actually counterintuitive because, for a long time, mobile phone brands have actually disdained 'compatibility.'

Take charging as an example. There are indeed universal charging protocols in the industry, namely the PD protocol and Qualcomm QC4.0, with the PD protocol supporting charging efficiencies of up to 240W, representing advanced technology.

However, Apple, Huawei, Xiaomi, OPPO, and vivo have all developed their proprietary protocols that are not interoperable. Users must use the original charger to achieve fast charging.

Another common scenario is changing phones.

Xiaomi uses 'Mi Mover,' Huawei uses 'Phone Clone,' vivo uses 'vivo Share,' and OPPO uses 'Phone Transfer.' These apps are generally not compatible with other brands' phones. To change phones between different brands, users must find a third-party application supported by all brands.

Therefore, incompatibility is the norm because it creates a unique binding effect, locking in a specific user group and fostering path dependency - this is the logic behind 'incompatibility.'

But what has changed now that prompts domestic mobile phone brands to make different decisions collectively?

Part.3

The underlying logic behind 'compatibility'

'To put it bluntly, we want to convert Apple users and give them another option,' said Liu Zuohu, Chief Product Officer of OPPO, in a media interview. This may reflect the sentiments of many domestic mobile phone brands.

Converting Apple users is the underlying logic behind compatibility with Apple's ecosystem, and now is the most opportune time.

We can understand this from three perspectives:

First and foremost, the competitive landscape.

Apple's ecosystem being 'compatible' with that of competitors to some extent indicates the plight of domestic mobile phones as a whole.

For many years, domestic mobile phone brands (excluding Huawei) have been firmly trapped in the mid-to-low-end market.

In 2023, Xiaomi shipped 146 million phones, nearly 80% of which were provided by the mid-to-low-end Redmi series.

OPPO's best-selling series is the Reno series, priced between $200 and $300. In Q1 2024, its activation volume reached 4.511 million units, almost twice that of the flagship Find X7 series.

Honor's best-selling product is the X series, with 15 million X50 units sold in the past two years.

The core market for these mobile phone brands is entirely in the mid-to-low-end segment.

After Huawei's decline in 2020, mobile phone brands engaged in fierce competition to seize Huawei's vacated high-end market, with domestic market share fluctuating as a result.

However, after all the fighting, the gap between brands has actually narrowed.

In 2021, vivo's domestic mobile phone market share was 22%, ranking first and almost twice that of fifth-placed Honor. However, by 2023, second-placed Honor was less than 4% higher than fifth-placed Xiaomi.

In the end, each brand's core market stabilized, with neither gaining a significant advantage over the other. Instead, Apple emerged as the leader in domestic market share.

While the mid-to-low-end market tends to balance, Apple dominates the high-end mobile phone market above $600, with an increasing share. In 2021, Apple had a 60% share, which grew to 71% in 2023.

In the past, mobile phone brands could choose 'incompatibility' and coexist peacefully in their respective lanes, such as 'cost-effectiveness,' 'offline channels,' 'audio-visual entertainment,' or others. However, to achieve further growth now, they must compete for Apple's high-end users.

Secondly, there is a growing demand. An increasing number of iPhone users are choosing Android phones as their secondary devices.

In the past, one iPhone was sufficient due to its sleek design and smooth system. However, over the years, Apple's incremental updates and the comprehensive challenges posed by domestic mobile phones have made iPhone's shortcomings increasingly glaring and even unbearable.

The iPhone 16 has a traditional 60Hz screen, while Android phones priced at just over $100 offer 120Hz screens. The iPhone's battery capacity is generally below 4000mAh, while Android flagship phones typically have batteries over 5000mAh. This year, the iPhone 16 finally upgraded to 40W fast charging, while Android flagships have long supported 90W or even 120W charging. As for signal strength, one Zhihu user directly complained, 'Every time I enter the subway, I have to use my Android phone to create a hotspot for my iPhone.'

The tides have turned. Now, in many aspects, domestic mobile phones 'have it,' while Apple 'does not.'

For example, in terms of foldable phones, domestic brands offer a variety of options such as scroll folds, vertical folds, and horizontal folds. Additionally, in the field of AI, during the Honor Magic7 series launch event, Zhao Ming demonstrated the AI capabilities of Honor phones by using YOYO, the intelligent assistant integrated into the Magic7 series, to order 2000 cups of coffee for the audience on-site.

So what will Apple users do? It is difficult for them to change their iOS ecosystem usage habits and directly switch phones. Therefore, they choose Android phones as secondary devices. However, this creates a pain point: transferring data between two phones is very cumbersome. Therefore, domestic mobile phones' compatibility with Apple addresses user needs and presents an opportunity to steal Apple's high-end users.

Finally, there is the technological aspect. Mobile phone manufacturers have always been working on 'compatibility,' but it has recently reached new heights.

Transferring files between different ecosystems and devices is not technically difficult. It can be achieved using a local area network file transfer software, and even URLs or text can be sent directly.

However, the shortcoming is that both devices must be connected to the same network. Moreover, such software generally does not convert file formats and cannot view certain professional file formats.

Later, Smartisan phones solved this problem. The file manager integrated into Smartisan OS includes an 'iWork' suite conversion function. Users can view Pages, Numbers, Keynote, and other files on their phones. The files are uploaded to the Smartisan server, converted in the cloud, and then downloaded and opened on the phone.

Xiaomi has further upgraded this technology. It is not just about file transfer and conversion but also utilizes streaming technology to enable Mac operations on Xiaomi phones.

In recent years, domestic mobile phones have continuously broken through interconnection and interoperability technologies. Meanwhile, Apple has also shown intentions to move closer to Android.

This year, Apple updated a document on its official website titled 'Non-Confidential Summary of Apple's DMA Compliance Report,' which is essentially a disclosure of measures taken by Apple based on the European Union's Digital Markets Act.

It mentions that Apple is developing a new solution to allow iPhone users to easily transfer data to Android devices.

Whether it's from a competitive, user demand, or technological perspective, now is an opportune time to convert high-end users by being 'compatible' with Apple's ecosystem.

Part.4

Conclusion

According to the latest data from market analysis firm Canalys, in the second quarter of 2024, Apple remained at the top of the global high-end smartphone market (above $600), but its growth rate was only 5%. In contrast, Huawei, Xiaomi, and vivo showed growth rates of 80%, 71%, and 39% respectively, indicating that domestic mobile phones are making progress in the high-end market.

Hey, who would have thought that mobile phone manufacturers would turn to military strategy rather than engaging in commercial warfare?