Content/Zhou Chuan

Editor/Yong'e

Proofreader/Mangfu

'Innate traffic saint' 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 attracted much attention.

The core reason for Xiaomi Group's financial report growth lies in the growth of its core consumer electronics business and automotive business. Among them, smartphone revenue reached 47.5 billion yuan, a year-on-year increase of 13.9%, with global smartphone shipments reaching 43.1 million units. Such results are not only due to the general improvement in the global smartphone market but also related to the latest product strategy judgments of major smartphone brands regarding current consumption trends.

'Compatibility' is becoming a common choice among 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 the mobile phone department, said, 'When you see Xiaomi phones and Android apps on an Apple computer, you suddenly get a sense of a great ecological fusion.'

In Xiaomi's Pengpai OS 2.0 system, Xiaomi phones achieve rapid file transfer with iPhone/iPad/Mac, and can even mirror the screen to Mac through Miaoxiang Desktop. Some files in unique Apple 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 business lesson of a compatible system swallowing the product market as early as 28 years ago.

In 1996, when Microsoft first entered China, it eagerly wanted to transfer WPS's old users to Word. Therefore, it proactively extended an olive branch 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 didn't think the WPS format was a big secret.'

As a result, both parties signed an agreement to mutually read each other's files through the intermediate RTF format of their software.

A few months later, Microsoft introduced Windows 97 with a graphical user interface to China, replacing the outdated DOS system that required commands to be entered through a dark character frame.

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 across China, more and more people chose Word, and file format compatibility became a 'bridge' for users to switch painlessly.

Lei Jun, then CEO of Kingsoft, once led his team to fight back by developing a monolithic software 'Pan Gu' 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 yuan on promotion, 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, 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 'pitfalls' of the past into 'wisdom' regarding 'compatibility.'

Apple has the iPhone and Homekit, lacking only a car to form a closed ecological loop, but Apple has chosen not to manufacture cars.

It is also at this time that Lei Jun has repeatedly announced with high profile that Xiaomi cars will be the best choice for Apple users. In practice, Xiaomi's intelligent cockpit system supports wireless Apple CarPlay, and even displays the card interface of Apple's native map navigation in the HUD.

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

Part.2

Xiaomi is not the only one compatible with Apple's ecosystem

In fact, in recent years, it is not only Xiaomi that has been 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 with Apple devices in just 8 seconds; vivo X Fold3 claims to seamlessly connect with Apple devices, and vivo's Universal Document can open 57 professional file formats such as Pages, Numbers, and Keynote.

Obviously, compatibility with Apple is no longer an isolated case.

This is actually counterintuitive because mobile phone brands have traditionally disdained 'compatibility.'

Take charging as an example. There are universally recognized charging protocols in the industry, namely the PD protocol and Qualcomm's QC4.0, and the PD protocol supports charging efficiency of up to 240W, which is very advanced technology.

However, Apple, Huawei, Xiaomi, OPPO, and vivo have all magically modified their own proprietary protocols that are not interoperable. Users must use the original charging head of the phone to achieve fast charging.

Another common scenario is changing phones.

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

So incompatibility is actually the norm because it is a unique binding mechanism. By defining a specific user group and making them form a path dependence, this is the logic behind 'incompatibility.'

But what has changed now that domestic mobile phone brands have collectively made different decisions?

Part.3

The underlying logic behind 'compatibility'

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

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

We can understand this from three levels:

First and foremost, the competitive level.

The fact that Apple's ecosystem is being 'compatible' with competitors somehow also hints at the predicament of the entire domestic mobile phone industry.

For many years, domestic mobile phone brands other than 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 product is the Reno series priced between 2000 and 3000 yuan. In the first quarter of 2024, its activation volume was 4.511 million units, almost twice that of the flagship Find X7;

Honor's blockbuster product is the X series, with 15 million X50s sold in the past two years;

The basic markets for these mobile phone brands are all in the mid-to-low-end segment.

After Huawei's decline in 2020, mobile phone brands competed fiercely to seize the high-end market left vacant by Huawei, with open and covert battles leading to fluctuating domestic market shares.

As a result of this competition, the gap between brands has instead narrowed.

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

In the end, everyone's basic markets stabilized, and no one could outdo the other. Instead, Apple took the lead in domestic market share.

While the mid-to-low-end market tends to balance, the high-end mobile phone market with prices above 600 USD is dominated by Apple, and its share is increasing. In 2021, Apple's share was 60%, which grew to 71% in 2023.

In the past, mobile phone brands could choose 'incompatibility' and coexist peacefully in different tracks such as 'cost-effectiveness,' 'offline channels,' 'audio and video,' or other sectors. However, to achieve further growth now, they must compete for Apple's high-end users.

Secondly, at the demand level, a breakthrough gap has emerged, with more and more iPhone users choosing Android phones as their secondary devices.

In the past, one iPhone was sufficient, praised for its exquisite appearance and smooth system. However, over the years, Apple's incremental improvements and the all-round challenges from domestic mobile phones have made the shortcomings of the iPhone increasingly glaring and even unbearable.

The iPhone 16 has a traditional 60Hz screen, while Android phones priced at just over 1000 yuan already have 120Hz screens; the iPhone's battery capacity is basically within 4000 mAh, while Android flagship batteries are generally above 5000 mAh; the iPhone 16's fast charging has finally been upgraded to 40W this year, while Android flagships have long supported 90W or even 120W; as for signal strength, a Zhihu user directly complained, 'Every time I enter the subway, I have to use my Android phone to create a hotspot for my iPhone.'

Times have changed, and now domestic mobile phones 'have' many features that Apple 'lacks'.

For example, in terms of foldable phones, there are scroll folds, vertical folds, horizontal folds, and 'any fold works'; in terms of AI, at the Honor Magic7 series launch event, Zhao Ming even demonstrated on-site ordering 2000 cups of coffee through the YOYO intelligence entity equipped on all Magic7 series phones and delivering them to the audience.

So what will Apple users do? It is difficult to change their usage habits in the iOS ecosystem, and directly switching phones is unacceptable. Therefore, they choose Android phones as secondary devices.

Then a pain point arises: it is very troublesome to transfer data between two phones. Therefore, domestic mobile phones' 'compatibility' with Apple to address user needs is precisely an opportunity to seize Apple's high-end users.

Finally, at the technical level, mobile phone manufacturers have always been working on 'compatibility,' but recently, it has reached a new height.

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

However, the shortcoming is that these two devices must be connected to the same network to use such software, and such software generally does not convert file formats or allow the viewing of certain professional format files.

Later, Smartisan phones solved this problem. The file manager integrated into Smartisan OS has a 'iWork' suite conversion function. When users view files such as Pages, Numbers, and Keynote with their phones, the files are uploaded to the Smartisan server, converted in the cloud, and then opened on the phone after downloading.

Xiaomi has further upgraded this technology. It is not just about file transfer and conversion but also utilizes streaming technology to enable the operation of Xiaomi phones through Macs.

In recent years, domestic mobile phones have been continuously breaking through interconnection and interoperability technologies; at the same time, Apple also has intentions to move closer to Android.

This year, Apple updated a document titled 'Non-Confidential Summary of Apple's DMA Compliance Report' on its official website, which is actually a public notice of some measures taken by Apple based on the EU's Digital Markets Act.

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

Therefore, whether it is at the competitive level, user demand, or technical level, we have now reached an appropriate time node to convert high-end users through 'compatibility' with Apple's ecosystem.

Part.4

Conclusion

According to the latest data from market analysis firm Canalys, in the second quarter of 2024, Apple still ranked first in the global high-end smartphone market (above 600 USD), but its growth rate was only 5%. In contrast, Huawei, Xiaomi, and vivo had growth rates of 80%, 71%, and 39%, respectively, indicating that domestic mobile phones have made some progress on the high-end path.

Hey, who would have thought that mobile phone manufacturers would engage in strategy rather than business warfare?