Geely makes mobile phones, is it the next Gree?
Last September, Hubei Xingji Times Technology Co., LTD. (hereinafter referred to as “Xingji Times”), founded by Li Shufu, chairman of Geely Holding Group, signed a strategic cooperation agreement with Wuhan Economic and Technological Development Zone, officially announcing its entry into the mobile phone field.With a total investment of over 10 billion yuan, the project is positioned at the high-end smartphone market.In late January, Geely was also rumored to be in takeover talks with Meizu, which sources said was in the due diligence stage.Although both sides are ambiguous to the media’s request for confirmation, some media confirmed the information from the source is true.Li Nan, the former CMO of Meizu, also hinted at the acquisition when he said on social media, “I hope meizu can be sold at a good price.”Why did Geely make phones?Chairman Li Shufu’s answer: to build an ecosystem, to integrate vehicle and machine, to build software capabilities, to make smart cars more competitive.Industry sources told The Red Star Capital Bureau that Geely’s acquisition of Meizu is highly feasible.On the one hand, Meizu is in a difficult situation, but it has brand awareness, mobile phone r&d and manufacturing experience, perfect channels, and ready-made Flyme OS operating system.On the other hand, in the face of the general trend of automobile intelligence, Geely must seize the intelligent entrance of mobile phone and occupy the heights of vehicle-machine collaboration and everything interconnection.”Traditional Oems like Geely must hone their software capabilities or they will become hardware contractors for tech companies.”However, Red Star Capital bureau noted that there are consumers and dealers worried, “Geely mobile phone will be the next Gree mobile phone?”Since 2015, Gree Electric Appliances (000651.SZ) has released 6 gree mobile phones in total, with performance and configuration lagging behind mainstream mobile phone manufacturers, but the price is not cheap, and the sales volume has always been a puzzle, and it was also revealed that it forced employees and dealers to buy.Gree denies it, but employees and dealers say “almost everyone has one”.In order to build an ecosystem and the Internet of everything, the traditional manufacturing industry wants to control the entrance of mobile phone in its own hands. Gree mobile phone has not made a splash in the market.Will geely’s high-end mobile phone be bundled with cars, and even eventually become a car purchase benefit and employee internal purchase indicator?Why mobile?Li Shufu has publicly stated his views on mobile phones: “The mobile phone business is of profound significance to the entire Geely Auto (00175.HK) industry.Better development of mobile phones will bring better development of vehicles, and better development of vehicles will promote the continuous improvement of intelligent cockpit level, which will help the competitiveness of smart electric vehicles continue to improve.”He believes that mobile phones are fast and iterative portable mobile terminals, and can transfer some of the achievements of safety and reliability to automobile applications, so as to realize the close interaction between vehicle and mobile phone software technology, and provide users with multi-screen interactive life experience of interconnection of all things.The relevant person in charge of Geely Auto also said to Red Star Capital Bureau that the mobile phone business will give full play to and series geely’s industrial chain experience and advantages, and at the same time empower each other in automobile intelligence, software capacity building, technological transformation and other aspects to achieve super synergy.Obviously, from fuel cars to new energy smart cars, Geely has realized that smart cars are the mobile terminal of the future, and mobile phones are the core of this intelligent ecology.If you do not want to hand over your soul, you must master this portal of wisdom.Musk, the founder of Tesla (TSLA.us), has publicly talked about building a mobile phone many times before.There is no sign of a Tesla phone, but there are signs of a carrot-and-stick business ecosystem.Tesla may be developing an App Store similar to Apple’s App Store, creating a unique in-car ecosystem and allowing customers to enjoy a variety of software services, according to overseas media reports.In the age of intelligence, hardware is a one-time purchase, software is a constant source of income.For traditional car companies like Geely, hardware manufacturing is not a problem, but software system development and content ecological operation is a big problem.This is the main reason why Geely is likely to acquire Meizu.Geely has no experience in mobile phone business, so it would take too much time and economic cost to build a mobile phone research and development, manufacturing and sales system and polish an operating system from scratch.While Meizu has fallen, it has brand recognition, experience in handset development and manufacturing, well-established channels and a ready-made Flyme OS operating system.Meizu also has a certain amount of accumulation in smart home and smart wearable devices, plus the luxurious staffing in the Star Era:CEO Wang Yong, a former ZTE vice president, supervised Zhang Yadong, a former ZTE PHS mobile product line general manager and vice president of mobile research and development, and Wang Wenjun, xiaomi’s former chief MIUI architect, all contribute to Geely’s Internet of Everything ambitions.Is the acquisition of Meizu Geely mobile safe?Why is Geely’s mobile phone eye-catching?The reason is that only mobile phone giants have entered the car industry before, while it is rare for traditional car companies to make mobile phones.”Software capabilities, including autonomous driving, will become the core of smart cars, and in this respect, the phone giant has a natural advantage,” an industry source told Red Star Capital.”There is also a significant gap between traditional Oems and tech giants in terms of content operation capabilities and user experience insights.”According to a report released by McKinsey, automotive software currently accounts for 10% of the value of large passenger vehicles, and is expected to grow at an annual rate of 11% in the future. By 2030, automotive software will account for 30% of vehicle content, and the overall market size will reach more than $400 billion.In the future, data and software will become the core of the profits of intelligent cars, and the hardware manufacturing that traditional car companies are good at will be withdrawn.The Acquisition of Meizu does allay doubts about creating a premium smartphone that is tightly integrated with a smart car, but Geely still has a long way to go.Moreover, geely’s choice to go high-end is an even bigger challenge.In November 2021, Apple accounted for 85.6 percent of the sales of models costing more than 5,000 yuan on the Chinese mainland, Huawei accounted for 7.9 percent, and other brands combined accounted for 6.5 percent, according to CINNO Research.In the same period in 2020, the figures were 60.6 percent for Apple, 31.1 percent for Huawei and 8.3 percent for others.In other words, The high-end phone market vacated by Huawei has been almost eaten by Apple.OPPO and VIVO did not hit the high-end market smoothly, and Meizu failed to hit the high-end market.Will Geely succeed?Some car dealers told Red Star That it was too early to talk about geely’s sales channels, pricing and sales methods, but did not rule out the possibility of bundling sales with cars in the future.”If consumers do not buy the phone, it is a heavy burden on the dealer,” the dealer said. “It is impossible to force consumers to accept it, and it may end up as a free gift, with the cost borne by the oEMS or dealers.”Consumers can choose not to buy or use mobile phones from car companies.For Ms. Wang, the owner of a new energy vehicle, a mobile phone is a “remote control” using the vehicle system, with the focus on software rather than the phone itself.Nearly half of her home appliances are Xiaomi brands. “Even for smart home, I will not buy a car company’s mobile phone, unless it will affect the driving experience.”In the eyes of industry insiders, geely mobile phone into a free welfare is unlikely.Geely is “short of money”, and Geely mobile phone burns money.Geely Auto’s 2021 semi-annual report shows that the operating revenue in the first half of the year was 45 billion yuan, up 22% year on year;Net profit of 2.41 billion yuan, profit growth of only 3.67 percent.In the same period of 2019, Geely’s net profit was 4.01 billion yuan, and in 2021 it will nearly halve.Geely Auto plans to sell 570,000 new energy vehicles by 2030.If every car comes bundled with a phone, it’s a gold mine.Is the Geely phone the next Gree phone?Some consumers and dealers worry that The Geely phone could be the next Gree phone.Since 2015, Gree has launched a number of mobile phones, but the configuration is basically behind huami VO and other mainstream mobile phone manufacturers, the price is not cheap, for the netizens ridicule “high price and low configuration”.In 2016, Gree mobile phone II was released, equipped with snapdragon 820 processor and priced up to 3,599 yuan.In 2017, Gree mobile phones were released, still equipped with snapdragon 820 processor and priced at 3,200 yuan.In 2019, Gree mobile phone iii was released, using the then outdated Snapdragon 821 processor, with the price still as high as 3,600 yuan.In December 2020, Gree’s first 5G mobile phone was put on the market. The brand was changed from Gree mobile to Dasong mobile, powered by Qualcomm Snapdragon 765G processor, and the price started at 2,699 yuan.Gree’s handset sales have long been a mystery.It has been estimated through e-commerce data that gree will sell about 100,000 mobile phones in three years by 2019.According to the 2020 annual report, gree electric Appliances’ smart equipment sector accounted for only 0.47% of the total revenue.It also emerged that Gree forced employees and dealers to buy the phones.It has been reported that employees’ internal purchase of Gree mobile phones has almost become a mandatory target, and the year-end bonus is issued to employees in the mall voucher, which stipulates that they must buy a Gree mobile phone.When selling air conditioners, dealers are forced to purchase a certain number of Gree mobile phones at the same time before signing orders.Even Gree’s air conditioning installation and maintenance workers have been forced to use gree phones.Gree Electric Responded on its official Weibo account that the news was untrue.But a Gree employee and dealer said “almost everyone has one”.The Internet has never stopped questioning and worrying about Gree’s mobile phone.But Dong Mingzhu insisted that Gree mobile phone must be done, and must be done.She pointed out that the smart home of the future won’t work without the phone fully controlling it.Gree Electric Appliances once said on the investor interactive platform that mobile phone, as an important connection center of the Internet of everything, is one of the five control entrances of “Gree Zero-carbon healthy home”.The company attaches great importance to the independent control of core technology and strives to build gree smart home ecosystem.This is the same as Geely.Source: Red Star Capital Bureau Original title: Geely makes mobile phone, will it be the next Gree?