The only constant in the market is change, and the companies that can achieve leapfrog development are often those that can best adapt to change and innovate.

In the current era of digital transformation across industries, the online smart device sales model is ushering in a new chapter.

On October 12, at the 2024 China Mobile Global Partner Conference, Honor, China Mobile, and JD.com announced the official launch of their tripartite strategic cooperation and jointly unveiled the industry's first exclusively customized online direct-supply light contract product, the Honor Play9C. Using this new model as a medium, the three parties will deeply integrate their respective superior resources to maximize business synergies and bring more high-quality products and services.

This represents an innovation in the online channel model of the smart device industry. More importantly, it sets a benchmark for cross-industry cooperation in the industry, opening up new possibilities for imagination.

This innovative cross-industry cooperation will continue to bring about a mutually beneficial win-win situation.

01

Alliance of Three Powerhouses, Riding the Trend

In August of this year, China Mobile made a strategic investment in Honor, which was seen by the outside world as a potential catalyst for upgrading and developing the entire smart device industry.

This cooperation is the first significant move since the investment. China Mobile has exclusively matched its online direct-supply light contract policy with the custom-made Honor Play9C, while JD.com has become the first online channel for China Mobile to sell this model.

In simple terms, consumers previously had to purchase China Mobile contract phones only from the "China Mobile Official Flagship Store," but now they can enjoy the same products and services at the Honor JD.com Self-operated Flagship Store.

The head terminal manufacturer, leading telecom operator, and top e-commerce platform have hit it off, not only following the trend through high-energy aggregation but also breaking boundaries through the recombination of strong resources.

In recent years, with the deepening of digital transformation across industries, smart devices have found wider applications, with the large-scale application of 5G being a significant driving force.

"5G networks have become the main artery for the flow of social information," said Yang Jie, Chairman of China Mobile at the conference. In fact, 5G applications have significantly accelerated China's digital industrialization and industrial digitization processes, driving the integrated development of China's digital economy and real economy.

However, reality shows that as of the end of 2023, there were 1.727 billion mobile phone subscribers in China, of which 805 million were 5G subscribers, according to data from the 2023 Communications Industry Statistical Bulletin. The 5G penetration rate of domestic smartphones was only 46.6%. Despite 5G's official commercialization in China for five years, this adoption rate has been slower than expected. The reason is that 5G has yet to be widely adopted in lower-tier and niche markets.

If 5G can be more widely accessible to lower-tier groups, promoting its large-scale adoption will not only allow more people to enjoy the benefits of 5G but also accelerate China's digitalization process and drive the development of the digital economy. This requires manufacturers to join forces with operators and channel partners to actively promote inclusive technology and further accelerate the scale and speed of 5G adoption.

The cooperation between Honor, China Mobile, and JD.com represents a significant step towards this goal.

Moreover, this cooperation aligns with the current trend of omnichannel integration in the smart device industry. Through effective resource integration, this tripartite cooperation can create more convenient and personalized services for consumers, addressing the urgent needs of the market.

Furthermore, through business synergies, the three parties have jointly embarked on a new exploration of upgrading China Mobile's "Pan-Alliance" model, setting an example for innovation in the online channel model of the smart device industry and opening up new possibilities for imagination.

This cross-industry "vertical and horizontal integration" represents an upgrade to traditional sales models and marks the beginning of a new stage of development.

02

Collaborative Sharing for a Win-Win Situation

Upon closer inspection, all three parties can leverage their respective strengths in this cooperation and enjoy mutually beneficial results through resource sharing and business synergies.

Firstly, they can leverage their respective leading positions.

The three parties involved in this cooperation are leading enterprises in their respective fields.

Honor is a leading smart device manufacturer in China. According to data released by IDC Consulting, Honor held a 17.1% market share in domestic mobile phone shipments in the first quarter of 2024, ranking first. Over the past year, Honor has consistently ranked among the top in the domestic market, driving significant development in the smartphone industry. Additionally, Honor boasts a diverse product portfolio and impressive achievements in technological innovation for smart devices.

As a leading domestic operator, China Mobile has significant advantages in channel and user resources. As a top e-commerce platform, JD.com is a leading digital 3C retail channel with a vast user base and a wide presence in lower-tier markets, making it easier to reach niche user segments regardless of geographical barriers.

Combining Honor's powerful product capabilities with China Mobile's largest, most connected, and technologically advanced 5G network in the world, as well as JD.com's traffic and user scale advantages, can maximize business synergies and enhance user experience.

For Honor, it is essential not only to continuously innovate and lead the way towards high-end products but also to reach out to the broadest user base.

The online-exclusive smartphone Honor Play9C, jointly customized by Honor and China Mobile, can be described as a "budget-friendly powerhouse." Equipped with a large 5200mAh battery, 12GB+256GB of storage, and system-level optimizations, it ensures smooth long-term use and boasts advanced features like eye protection and shatter resistance.

With the Honor Play9C as a starting point, more categories and price ranges of smart devices will be included in the cooperation channel after the tripartite cooperation, satisfying the diverse needs of different user groups. This represents a vast market with significant potential for long-term development.

Secondly, collaboration and resource sharing lead to a win-win situation where 1+1+1 is greater than 3.

By deeply integrating their respective superior resources and leveraging joint research, supply-demand connections, and achievement sharing, the three parties can rapidly increase the online shipment volume of China Mobile's 5G contract phones, injecting new vitality into the development of the smartphone industry while also benefiting from the intimate cooperation.

For China Mobile, promoting large-scale 5G adoption is its mission as a leading operator. Currently, China Mobile has over 2.3 million 5G base stations, more than 330 5G-A commercial cities, and over 780 million 5G plan subscribers. This strategic cooperation further advances its vision of "5G for All."

As a significant force in the domestic smart device industry, Honor aims not only to continuously innovate and lead the way towards high-end products but also to actively promote inclusive technology. This cooperation will help Honor reach a broader, more segmented, and deeper consumer base, offering diverse technological products. At the same time, it presents an excellent opportunity for Honor to further optimize its omnichannel operations, achieve coordinated online and offline development, and serve a wider range of users.

JD.com, as a leading retail channel, can leverage this opportunity to further expand its sales channels and optimize the upstream and downstream industrial chain from supply to demand.

By combining Honor's terminal innovation capabilities, China Mobile's communication technology and network service advantages, and JD.com's sales capabilities and traffic focus, the three parties can bring more innovative products and high-quality services to the market while achieving a mutually beneficial and exemplary innovative cooperation.

Demonstration and Benchmark, Elevating Value

Peter Drucker, a management expert, once emphasized that the focus of corporate competition has shifted to the competition of business models. The novelty and effectiveness of a business model have become crucial to the development of enterprises and industries.

In the industrial age, there were linear serial relationships within industry boundaries, but in the digital-intelligence era, these serial relationships have gradually evolved into a web-like network, with collaboration becoming an innovative mechanism for division of labor and cooperation. Its core value lies in connecting and leveraging the advantages of all members to integrate resources with maximum efficiency.

Therefore, strong alliances among upstream, midstream, and downstream enterprises in the supply chain, industry chain, and value chain can create superior business models and robust development momentum, empowering other enterprises and achieving mutual benefit and coexistence.

The same is true for the smart device industry.

The cooperation between Honor, China Mobile, and JD.com, as a pioneering innovative business model, has profound implications for the participating parties and the smart device industry as a whole.

This is not only a strategic move following the trend but also a courageous attempt to "be the first to eat the crab" with innovative spirit. While occupying an industry advantage, the three parties will also reap the first wave of benefits from innovative business models.

More importantly, this innovative attempt at a business model serves as a benchmark for all participants in the industry to learn from, contributing to the collective effort to elevate the value of the digital industry.

It is foreseeable that a vast blue ocean of business opportunities is rapidly emerging.