After a long comparison, Lei Jun asked the audience,
"How much does the Xiaomi phone actually sell for? We haven't released any data until now. Some online say 2600, some say 1600, some say our cost is 1200. Anyway, the suppliers are all here. Can it be made for 1200? If you can make it, I'll give all the production to you."
"Well... after a long period of consideration and repeated discussions with suppliers, we hope to meet our fans' goal of high quality and low price. In particular, General Manager Chen of Orange Tech, who first adopted e-commerce methods to launch new phones, gave me the idea. We eliminated all channel costs. I don't even plan to invest in marketing costs. I believe good products speak for themselves. We want to bring the product to a sufficiently low price."
After speaking, Lei Jun pressed the PPT clicker, and the four Arabic numerals "1999" appeared on the large screen.
The entire venue instantly erupted in cheers!
Many people started shouting excitedly.
After the commotion subsided, Lei Jun smiled and said,
"I want to tell everyone that this price is actually under immense pressure for Xiaomi. This is because it includes customs duties, value-added tax, education surcharge, urban surcharge, and patent fees. We also genuinely chose first-class suppliers and first-class products in the market, and we welcome our peers to help us conduct tear-down tests. A price like this is truly like jumping off a cliff."
At the end of the press conference, Chen Nian, Li Xueling, and Yu Yongfu all went on stage to express their support for Lei Jun.
If you ask why Chen Pingjiang didn't go on stage, it's because Lei Bus didn't dare...
After the press conference, Chen Pingjiang, Lin Bin, and Zhou Guangping said goodbye to Lei Jun and then left the 798 Art Zone.
As Chen Pingjiang had expected, as soon as the press conference ended, the internet was already flooded with reports.
"It's exactly as you, Chairman Chen, said. Lei Jun adopted the same strategy we used when selling the S1: first conducting online pre-sales to get orders, then using those orders to purchase components and find factories for production."
Chen Pingjiang smiled and asked the two,
"How many pre-orders do you think they'll get?"
Lin Bin thought for a moment and said,
"200,000?"
"I can't guess the exact number, but it certainly won't be as high as ours."
Lin Bin smiled and said,
"How can they compare with us? First, Lei Jun's popularity can't compare to Chairman Chen's. Second, their publicity channels are much fewer. When we held our press conference, the iPhone hadn't even entered the domestic market, and the smartphone market was almost a blank slate. Now, the Xiaomi phone's competitors include not only iPhone, Samsung, and HTC, but most importantly, us."
Just one day later, Xiaomi announced that the first batch of pre-orders reached 300,000.
Chen Pingjiang was skeptical about this number.
Perhaps it was 300,000 before, but is it still now?
Back then, Xiaomi officially began selling through Xiaomi Mall on October 20th of the same year.
After 4 rounds of flash sales, despite severe shortages of funds and production capacity, it sold its 1 millionth Xiaomi phone by early March.
Would it still be the case now?
Chen Pingjiang had to put a question mark on it.
However, no matter what, Xiaomi's online discussion topic had gained traction, though its popularity was not insignificant compared to when Orange released the S2.
"What a conscientious phone! A phone with such high specifications only costs 1999 yuan. Sorry, Orange S2, I'm leaving you."
"Good money drives out bad money. Xiaomi breaking into the sub-2000 yuan price range will shut down many small workshops producing fake phones."
"It's so appealing! It's not that the Orange S2 is bad, but Xiaomi offers better value for money."
"Sorry, I'm used to my Orange S2. I really can't see anything appealing about Xiaomi. The camera function, Hi-Fi audio – it lacks everything."
"As an iPhone 4 user, it doesn't stir any waves in me. If I were to change phones, I'd wait until the end of the year for the iPhone 4S."
"The first generation Orange had 43,642 pre-orders in 1 minute and 510,000 in 1 hour. In comparison, Xiaomi only had 300,000 pre-orders in a day, which is a bit weak."
"Not just that, Orange phone pre-orders require payment, while Xiaomi pre-orders are free. There's definitely a lot of fluff in their numbers."
"..."
Netizens spontaneously divided into three factions.
Mi Fans, Orange Fans, and Apple Fans.
At first, they could converse normally, but then war was directly ignited.
Netizens of this era were infinitely more fierce than those of the 20s; when something happened, they truly went for it.
In the end, Lei Jun had to come out to extinguish the flames, issuing a statement.
The gist of the content was: Xiaomi is still a new company, currently learning, and holds immense respect for the industry's veterans.
Chen Pingjiang had already returned to Dongjiang for a meeting at this time.
"Xiaomi won't officially go on sale until October 20th. Only the first 100,000 customers will receive their phones by the end of October, and the remaining 200,000 are estimated to get theirs by year-end. Currently, it doesn't seem to have a significant impact on us. While Xiaomi's approach of taking orders to factories can reduce inventory, its production capacity can't keep up. They didn't prepare a large batch of ready-made phones like we did back then."
Zhou Guangping also suggested,
"Hmm, I believe they'll resolve the production capacity issue after the New Year, meaning the Xiaomi phone will have a substantial impact on our sales next year, but this latter half of the year should be fine. By March, our S3 will also be released, and we will once again create a generation gap with Xiaomi. Its price will then not impact us, and at that time, we will lower the price of the S2 phone."
Chen Pingjiang nodded in agreement.
As Zhou Guangping said, the real explosion of Xiaomi phones would have to wait until January or February of 2012.
Chen Pingjiang saw no need to hurt himself first.
But if the S2 didn't drop in price, it didn't mean the S1 couldn't.
On the day of the meeting, the price of the Little Orange S1 was reduced by 500 yuan, bringing its selling price to 1999 yuan.
Although the Orange S1 was an older generation model, it had only been about a year and a half since its release and was not considered outdated.
That day, Lei Jun called specifically to express his gratitude.
For Xiaomi, as long as the Orange phone didn't lower the price of the Orange S2, it was considered giving them a lifeline.
As for the S1, it didn't matter.
What Chen Pingjiang didn't expect was that the online debate about which phone was better and which offered more value for money became increasingly fierce.
Each side had its own valid point; some thought Xiaomi was good, some thought Orange was good, and others were eyeing Samsung and Apple.
"Doesn't it feel a bit like a publicity stunt? Xiaomi's total pre-orders are only 300,000, and it's free to reserve. Why are so many people discussing Xiaomi?"
"Did you just realize? Many of these accounts are low-level alts, and some were registered just two or three days ago. Clearly, they came prepared. They're targeting Apple and Orange, aiming to piggyback on their popularity."
Many people had already realized something was off, as, after all, even with free reservations, the Xiaomi phone only had 300,000 pre-orders, and it shouldn't have generated such a high level of discussion.
Chen Pingjiang shook his head.
Since Xiaomi wanted to leech off the hype, let them.
Anyway, the Xiaomi M1 currently had little impact on Orange phones.
Orange phones' only rivals were Samsung and Apple.
The only ones who would be wary of Xiaomi would be manufacturers like Lenovo, Huawei, LG, ZTE, and Coolpad.
High-end phones were one battlefield, mid-to-low-end phones another.
Everyone fought their own battles and had their own opponents.
Chen Pingjiang suddenly thought of Yu Dazui, wondering if he was panicking now.
"How are your preparations for the overseas launch of the S3 coming along?"
Chen Pingjiang refocused on Orange phones themselves.
The most critical task for Orange phones in 2012 was to go global.
This move had been in preparation for a long time!
"Currently, many distributors in the EU, Southeast Asia, and even South America have expressed interest in our phones and PADs. Preliminary liaison work, including qualification reviews, is underway. Additionally, we have initiated communication with telecom companies in various regions. In the EU, we are conducting tests according to the RED Directive to obtain approval, and we must also possess a CE mark."
"Lithium batteries shipped by sea require MSDS. For air transport, UN38.3 is also required. The EU's EN62133 certification also mandates that we conduct five tests: vibration test, high-temperature impact test, temperature cycling test, short-circuit test, and free-fall test. In addition, consistency testing, safety testing, field trial testing, and EMC testing are also required."
Listening to Lin Bin list a large number of certifications to obtain and tests to perform, Chen Pingjiang couldn't help but click his tongue.
Europe and America really have a hell of a lot of rules; Southeast Asia has fewer.
But no matter how difficult, expanding overseas was a must.
Firstly, to prevent internal competition domestically, and secondly, to achieve growth.
In the process of overseas expansion, they would inevitably face challenges in policy compliance, cultural adaptation, marketing efficiency, and talent management.
It could be said that challenges and opportunities coexisted.
Lin Bin said,
"Our overseas strategy generally has several models, with different approaches taken for different countries and regions. One is to quickly enter the market by acquiring or forming joint ventures with local companies, utilizing existing sales channels of foreign-invested enterprises. The advantages are rapid entry and low risk, while the disadvantages are large capital investment and potential conflicts due to differing business philosophies."
"The second type is cooperation with overseas operators, providing them with customized phone products, essentially domestic contract phones. The advantages are stable sales channels and strong market adaptability. The disadvantages are excessive reliance on operators; if an overseas operator's strategy changes, we would directly lose our original channels, and profits would be discounted."
"The third is to establish local production lines directly in the target market. This can reduce logistics costs and enable faster market response. The downside is excessive initial investment, and training local workers is also troublesome."
"Finally, we can replicate the proven domestic business model by operating as an independent brand and seeking distributors, leveraging e-commerce, direct retail stores, and franchised agents to open up the market. The benefits of this approach are the ability to build and maintain our brand image and loyalty, and complete freedom in operations and decision-making. The problem is that our current brand influence overseas is not yet sufficient."
Zhou Guangping continued,
"Domestically, ZTE once cooperated with an Indian operator, and the results were quite good. Another small brand, Transsion phone, also went to Africa in '08. OPPO went to Thailand in '09, replicating the domestic model for direct operations. I suggest we invest more in Southeast Asia. After all, the cultures are somewhat similar, and the time difference is consistent, making it easier for us to manage. Moreover, countries like Malaysia and Thailand have higher per capita GDP than our domestic market, and Indonesia, Philippines, and Vietnam all have populations over 100 million."
This caught Chen Pingjiang by surprise.
He didn't expect Lin Bin and Zhou Guangping to have a disagreement; one hoped to enter the EU, while the other wanted to focus on Southeast Asia.
Chen Pingjiang nodded,
"The first point Old Lin mentioned is out of the question; frankly, it's not very reliable. Cooperation with overseas operators is feasible, but only in secondary regions. In places like Southeast Asia, the EU, and South America, I recommend direct operation. Of course, building factories directly overseas is definitely viable. One in Europe, either France or Hungary. For Southeast Asia, it could be Indonesia or Malaysia. For the Americas, Mexico."
Zhou Guangping and the other knew Chen Pingjiang's style, and this was essentially the final decision.
Of course, Chen Pingjiang wasn't shooting aimlessly.
France is slightly more neutral, Hungary is pro-China, Indonesia has an industrial chain, and later OPPO/vivo/Xiaomi all had factories in Indonesia, and Malaysia has a large Chinese population.
As for Mexico in the Americas, it's because Mexicans are so industrious, they even wash dishes incredibly fast.
"Let's tackle overseas markets one segment at a time. 2012 is the first year of going global. It would be good if we could increase our sales by fifty percent based on domestic figures."
Lin Bin thought for a moment and said,
"Our brand recognition overseas isn't strong enough. Should we invite well-known international celebrities as brand ambassadors? Ideally, one from Europe/America and one from Southeast Asia."
"Hmm, yes, you can. Go look for candidates first, and then show them to me."
Basically, at this time, Samsung firmly held the top position in the overseas market, followed by Apple.
As for the third place, if all went as expected, it would be Orange.
The difference lay in how many positions the future Orange S3 would lag behind Samsung and Apple after its overseas launch.
In the global smartphone shipments over the next few years, domestic brands would all be in single digits, perhaps not even a meager 5%.
This situation would change in 2019.
In 2019, global mobile phone shipments totaled 1.371 billion units.
Samsung shipped 295.7 million phones for the entire year, while Huawei's 2019 shipments reached 240.6 million units.
Apple, in third place, shipped a total of 191 million phones throughout 2019.
The global market shares of the three companies were 21.6%, 17.6%, and 13.9% respectively.
It was also in this year that Huawei was GANKed.
In 2020, Huawei fell behind Apple again, and in 2021, it even dropped out of the top five, becoming 'Others'.
Once Orange phones went global, they would truly engage in a head-on battle with Apple and Samsung.
Patent lawsuits that would follow were nothing new.
(End of chapter)