Recently, there have been new changes in the domestic mobile phone market. OPPO mobile and OnePlus Mobile, an international brand targeting high-end flagship products, confirmed to each other that the onePlus team and OPPO team will be fully merged, and OnePlus will become an independent brand under OPPO.
All the while, the two have been targeting completely different markets. OPPO’s main audience is female users in China, while OnePlus has done well in overseas markets, and its users are mostly male. But while the tone of the two brands is different, the merger is not unexpected.
(Illustration from Canva can be drawn)
Combine to develop domestic high-end market
From a historical perspective, The onePlus brand was founded by Liu Zuohu from OPPO’s management team, and OnePlus has always shared OPPO’s supply chain and production lines, so the formal merger was well in advance of the public announcement.
By the end of 2020, OnePlus’s R&D, e-commerce and customer service departments had been successfully integrated with OPPO. In March, OnePlus released a new phone, the OnePlus 9 Series, using the same Color OS operating system as The OPPO phones, instead of onePlus’s original Hydrogen OS.
For this comprehensive merger, OPPO said, is to further leverage the advantages of collaborative operations, better integration of resources, promote brand development, the future of the two sides will jointly launch more innovative and differentiated products. The internal structure can improve their competitiveness in the high-end market.
There are two main reasons why OPPO has begun to move upmarket.
On the one hand, Huawei Honor mobile phone is limited in the global market, and there is a vacancy in the domestic high-end market. Many domestic manufacturers are taking the opportunity to make efforts one after another, which is also an opportunity that cannot be missed for OPPO. On the other hand, OPPO’s audience is mostly young users. With the upgrading of young users’ consumption power, their focus gradually shifts to the middle and high-end market, and OPPO’s existing market share will inevitably be impacted.
Oneplus mobile phone is positioned at the high-end market. Although it is a niche brand in China, it has achieved good sales performance in the overseas market, and has even been the sales champion in the high-end market in India. In addition, from the perspective of OnePlus mobile phone products, its exquisite industrial design and corporate philosophy of “no compromise” have made the brand form a stable high-end brand image at the consumer level. Therefore, whether in terms of sales volume or brand image, the return of OnePlus can make the outside world have more expectations for OPPO mobile phones to enter the high-end market.
In order to grab a share of the high-end market, OPPO has made more preparations besides merging the OnePlus brand.
For example, optimize the mobile team. One is to hire Zhu Haizhou, who used to be in charge of Smartisan mobile phone business, to join OPPO’s OnePlus mobile phone team as software product manager, mainly to improve Color OS system. The second is to invite Li Kaixin, the former vice president of sales of Huawei and Honor, and appoint him as vice president of OnePlus Technology, so as to further open up the domestic sales market for OnePlus.
In addition, recently OPPO and Gome also signed a strategic cooperation agreement. It is indicated in the agreement that the two sides will deepen cooperation on mid-to-high-end mobile phone marketing, brand image building, IoT full-scene sales and other aspects. With gome’s accumulation of sales channels and process manufacturing, OPPO can step into the high-end market more vigorously.
In general, the merger with OnePlus is a powerful step for OPPO to enter the high-end market. After the merger, OnePlus and OPPO can also make breakthroughs in sales market and software system, so as to become more competitive in the domestic high-end mobile phone market.
The high-end mobile phone market is difficult to break through
From the industry background, the domestic middle and high-end mobile phone market is gradually expanding. Points price section of the annual sales of the China mobile phone market change shows that under the influence of consumption upgrade and 5 g mobile penetration, from 2018 to 2020, China’s $one thousand machine market shrank by nearly 50% (from 20% to 11%), in the low-end models to high-end upgrade trend is very obvious, namely, the country’s main mobile phone manufacturers are to adapt to the market trend upward to upgrade.
But for a variety of reasons, their success has been inconsistent.
According to the survey data of professional bloggers, in 2021, the high-end market of 5,000 yuan or more will still be occupied by Apple and Huawei, with OPPO, VIVO and Xiaomi taking less than 3 percent of the market share. In the market priced at 4,000-5,000 yuan, Xiaomi has a higher market share. In the market priced at 3000-4000 yuan, OPPO and VIVO perform better.
It can be seen that in the process of brand upgrading, OPPO’s pace is almost the same as VIVO, slightly behind Xiaomi. This is mainly because the formation of high-end brand premium requires product innovation and good user experience. Because of the linkage between series of electronic products, Xiaomi has formed its differentiated competitiveness. However, OPPO’s main advantages are reflected in marketing and camera. In the case that Xiaomi has also improved camera configuration, OPPO’s advantages are limited to translate into brand premium.
In addition, similar to OnePlus under the OPPO system, VIVO also owns a high-end flagship brand — iQOO. Due to its good performance in game performance, most of its users are male, which overlaps with OnePlus’ target market.
Therefore, OPPO needs to find its own differentiator, unique software system and convenient channel supply are good places to start, can help it break the current situation. But its layout has just been laid out, and its future success is uncertain.
In the process of breaking through software and channels, OPPO still needs to face pressure from rivals.
For example, Xiaomi is also accelerating the speed of offline store opening, and has begun to gradually reform the channel of offline stores to impact and improve the market share. Although Honor mobile phone is separated from Huawei, its Magic series and digital series, as flagship and high-end products, have a stable performance in the market; And Huawei phones with hongmeng system support, after solving the chip supply problem, its competitiveness in the high-end market can not be underestimated.
In the face of fierce competition in the industry, OPPO is running out of time to grab more market share.
It wasn’t easy building the next car
OPPO’s merger with One Plus has bigger ambitions: making cars.
OPPO is already in the car business. Data from Tianyan shows that OPPO applied for patent authorization of “intelligent vehicle finding method, device, equipment and computer readable storage media” at the end of 2019, and recently obtained these patents. Oneplus founder Liu Zuohu also said in a letter to employees that onePlus needs stronger platforms and resources as it builds more product lines, expands into more product categories, and builds an IoT ecosystem.
As you can see, the merger is not just aimed at the high-end of the mobile phone market.
The automobile industry with higher technical barriers to entry can not only increase the profit space, but also enhance the core competitiveness of enterprises, thus driving the brand premium and facilitating their competition in the high-end mobile phone market.
In particular, new energy vehicles are different from traditional fuel vehicles. They can have more imagination after being powered on and become a key link in the future Internet of Things. Moreover, the formation of intelligent vehicles and Internet of vehicles will also have an impact on people’s consumption of mobile phones and other electronic products. OPPO is also making cars as other mobile phone makers such as Xiaomi and Huawei move out of the market.
But for now, OPPO has a lot to make up for compared with other players in the industry.
OPPO, for example, has made slow progress in IoT (Internet of Things), lacks a strong product, and is losing money on its business. Xiaomi, which has a rich product system, has gradually removed the label of low-end due to the breakthrough of IoT business. Huawei, which recently released the Hongmeng system, is also highly anticipated. In particular, hengchi automobile, an external competitor under Evergrande, has launched hengchi intelligent network connection system, and is also committed to the linkage between car and residence.
OPPO has plenty of rivals to contend with, from high-end mobile phones to cars.