Translation

文 | Karakush

If I want to drink coffee, I will go to Starbucks and buy a hazelnut latte.

If Li Shufu wants to drink coffee, Geely will go to Colombia and buy a coffee plantation.

Li Shufu seems to have no business boundaries.

Home appliances give birth to motorcycles, motorcycles give birth to cars, and cars give birth to everything.

On July 4th, Star Era, a subsidiary of Geely, officially acquired a 79.09% controlling interest in Meizu, gaining sole control over the latter.

Geely is making phones, taking a serious step forward.

Li Shufu said that the competition in the future of smart cars and smartphones will no longer be one-sided, each going its separate way, but rather a unified and immersive merged relationship aimed at a common user experience across multiple terminals and all scenarios.

Therefore, the ultimate vision for this controlling interest is to “work together to provide users with core products that offer a multi-terminal, all-scenario, and immersive fusion experience.”

Although there are three attributives, the meaning is still unclear but it has been repeated over and over again.

It is worth careful consideration.

We must have an enterprise-level understanding and think big.

Good phone, made by Geely

In September of last year, Star Era was registered, marking Geely’s official entry into the smartphone market.

In the eyes of industry insiders in the automotive sector, Geely is taking a big gamble:

First, empower the onboard system;

Second, enhance the machine-to-machine connection;

Third, connect the service ecology;

Fourth, offer smart-phones as free gifts for car buyers;

……

After the other eight hundred reasons, if we have to mention one, then just create a phone.

Because the phone is considered a downstream red ocean, the competition is excessive, and no one understands this better than the automotive industry. After all, the mobile phone giants are crossing the three-eight line and entering the car manufacturing business.

However, Geely’s actions do not seem to be solely for technical support for the automotive industry.

First, after the merger and acquisition, Geely will have a two-brand layered layout in the smartphone field:

Meizu is still Meizu. In addition to Geely’s Shen Ziyu serving as Meizu’s chairman, the senior management team of Meizu will remain stable, and founder Huang Zhang will serve as a product strategy consultant. Meizu will continue to operate as an independent brand and team and will release new products next year.

Star Era will enter the high-end intelligent market, “hoping to compete with overseas competitors and gain a market position in this lane.” Currently, there is not much information about specific products. According to a previous report by Titanium Media, its new phone will be released in the first quarter of 2023, and its price will be above 6,000 yuan. In April, they applied for two “phone” appearance patents and have been authorized.The two do not conflict on the product planning and roadmap, and will be promoted to different audiences.

Not only acquiring the team, but also operating two brands, heavy investment is not advisable if only “Flyme system” is seen as the key factor.

Secondly, Geely admitted that there is still room for high-end smartphones. “The original intention of the establishment of Star Era was to fill the gap of lack of choices for users in the high-end market.” said Wang Yong, co-founder and CEO of Star Era.

This idea itself is very dangerous. The high-end blank is not because no one is doing it, but because it is difficult to do it well. Of course, old players do not like to sink together in the mid- to low-end market, but going high-end alone results in loneliness. Ask about Meizu Pro6/7.

For most of the past 20 years, Chinese cars have been the same. But the recent emergence of self-owned high-end cars in the past two to three years has made people feel optimistic everywhere.

Shen Ziyu said that the total number of cars is also declining, but new energy vehicles are growing, and users always expect new products. Now the decline of the mobile phone industry is due to serious homogenization, and efforts are needed in product innovation. Many players in the mobile phone industry have been in the business for more than ten years, and cross-border players may have greater innovation.

The confidence in being chosen comes from the innovative point of “new energy” in the phone industry, which seems to be in the automotive industry: the first is the trend of technological development, and the second is the demand for integration experience from users.

With the gradual application of intelligent driving and autonomous driving, new requirements will be put forward for mobile phones, which need to be more intelligent, responsive, smoother in operation, and most importantly, better in integration experience with cars. This is a “very important driving force for fully entering the mobile phone field.”

“The technological innovation and ecological integration of the consumer electronics industry and the automotive industry are imperative.” Li Shufu said. “Recently, mobile phone companies have begun to make cars, and car companies have also tried to make mobile phones. In the end, they are all to create a better user experience, which can be said to be different paths to the same goal.”

Two-pronged approach

Considering experience as the end goal, many problems are not problems.

For example, is the difficulty of making smartphones underestimated, and how can new brands challenge companies like Xiaomi and OPPO?

For example, will consumers give up Apple or Huawei and buy your phone because of a better integrated experience?

For example, why can’t we focus on cars and develop a diversified strategy?

In terms of experience, it’s not a matter of whether a car company or a phone company does it, it’s only about good or bad experience.

As the saying goes, “good experience leads to a steady stream of consumers”. We are in contact with a terminal device every moment of the day, and all terminal devices have an impact on our experience. The better the experience, the longer the time occupied, and the greater the influence of the brand on users.

For example, the better the experience of mobile games, the less likely you are to carry a Switch when going out. Mobile phones occupy more time, and Apple’s influence is greater than that of Nintendo. In the past decade, relying on the development of mobile Internet, mobile phones have almost completed the occupation of all time.Except for cars. When driving, the use of mobile phones is prohibited, and cars need to provide more functions. Moreover, as the car experience improves, there are more exceptions.

For example, some cars now offer large screens, high-end audio, can connect to host games, and are themselves independent spaces with better gaming experiences, making the car a longer time occupation.

In another example, some cars offer headrests, mattresses, high-quality NVH, and fragrances, providing a better sleep experience in the car, thus making the car a longer time occupation.

The imagination of a car is not just about integrating all the smart tracks of the next generation, but also about the increasing amount of time spent in it, bringing variables to the situation. Its mobility plus its spatial properties will replace some of people’s mobile intelligent terminal needs.

The mobile phone experience itself is not that great. Its screen is small, how can it compare with the host experience? But because of its mobility and high integration, it temporarily becomes a super terminal that connects everything. Future experiences should be extremely extreme from end to end and require no central media to form a circulation without sensation.

The functions of mobile phones will be broken up, which is very scary and why the big mobile phone manufacturers must enter the car market, as cars are the foreseeable next terminal. In the end, the experience will be unified, consistent, and immersive. The giants will be those companies that control all time, and it doesn’t matter whether they come from phones or cars.

Huawei’s Wanjie is a terrible example. Its uniqueness lies in a brand that invades people’s minds through the mobile channel, plus its integration advantage, which can make people switch cars.

Since cars priced at tens of thousands or even hundreds of thousands can be replaced, why not the phone? “Different paths lead to the same goal, the same skills with different methods.” The direction of the trend can be changed.

Those who rethink the problem of cars are not just Li Shufu.

Musk also mentioned last year that he was tired of iOS and Android and wanted to create ElonOS, offering an unprecedented experience. In April of this year, he publicly recruited intelligent watch/mobile phone technical talents through Neuralink. There are rumors that the first Tesla phone will be launched in 2024.# Li Bin, the founder of NIO, confirmed in March that NIO is exploring the mobile phone business. Prior to this, the news was that it was led by Yin Shuijun, former CEO of Meitu Phone, and funds are continuously increasing investment. The relevant team is actively building, recruiting BSP engineers, communication test engineers, imaging chip design engineers and other mobile phone related positions. The future business line office will be located in Shenzhen.

These three people are all known for their strategic vision in the automotive industry. It is rumored that they have had plans to enter the mobile phone industry for a long time, and have taken action since last year or this year. Consensus may mean a forward-looking judgment, and the time has come to be prepared. From the perspective of competitive defense, Apple, Huawei, and Xiaomi have released dangerous signals in the high, medium, and low-end respectively. From the perspective of their own capabilities, the bottleneck in the development of in-car smart experience may have arrived, and experience improvement can hardly be achieved solely from the automotive side.

The predicament of the in-car system itself, which Geely particularly understands.

Geely has an independent company called ECARX responsible for developing automotive intelligence. Its capital level is very successful. This year, it plans to be listed on NASDAQ through the SPAC form and is expected to complete the transaction in the fourth quarter of this year. Its projects include automotive system chips, in-vehicle central computing platforms, integrated digital cockpits, advanced driving assistance systems, and operating systems and software for unmanned supervision driving, as well as functional safety solutions. The focus is on chips, which are indeed a weak point.

Meizu FlymeOS will bring substantial improvement. Its design thinking and technical capabilities are the reason why Meizu once became the king of Guoji (lost due to repeated company strategies). Geely and Meizu had their first contact in February this year. Shen Zi Yu described the meeting as a “predestined relationship” and “late to meet.” The entire discussion, negotiation and signing took only 4 months, and the speed and efficiency of the cooperation were extremely surprising. Both parties have the same understanding. FlymeOS will not only empower the mobile phone business, but also revolve around FlymeOS in the Star Era. In the future, Meizu will invest more in core technologies, including hardware and software development, and continue to create a concept similar to ONE OS, extending to the major travel ecology, connecting cars and more terminals. For example, Shen Ziyu said that they will learn from Apple and empower the phone to the car, similar to the CarPlay function. In fact, in April 2021, Meizu released the Flyme for Car car system. By June of this year, Lynk & Co had announced that it will use Flyme on Car.

The second is the interconnection dilemma. The efficiency of cooperation between mobile phones and cars is very low, and OEMs are very resistant to each other.

Li Bin once pointed out when explaining the logic of making a mobile phone: Over 50% of NIO users are using Apple phones, but Apple is currently very closed to in-car interconnection capabilities, and has not yet opened the UWB interface, which also means that Apple Phones do not support NIO cars’ electronic keys.Therefore, not making smartphones is like not having the key to your own home. What Li Bin refers to is not just electronic keys, but all connective experiences. If Apple cars hit the market in a few years, Li Bin believes that it is likely to threaten NIO’s market.

In reality, Apple is also having difficulty with car companies because they have not been releasing interface data. Essentially, this competitive mode still highlights how cruel business is and how limited civilization can be.

Third, the ecological predicament. Getting on an APP in the car is very difficult due to APP’s profit model, such as charging through pre-installation. Compared to earning a fortune from smartphones, cars make only half the effort.

In terms of user numbers, there are over 330 million smartphones per year and just over 20 million cars per year. Adapting a phone APP can only be done once and can last for three years. Car companies have many models, and the size of the in-car screens also varies, so they need to be separately adapted. Adapting it once incurs both manpower and technology costs, but the return is only marginal.

Possible solutions include: 1. improving the efficiency of the tool chain development; 2. negotiating bundling with smartphones; 3. forming a commercial model for automotive schemes.

From a business perspective, investing in these things would involve making a good smartphone directly.

“No good smartphone, no good car.” Li Shufu has been wanting to enter the consumer electronics market for many years.

In the first half of last year, he convened relevant teams for discussions, ultimately deciding to enter this field. So, on July 2 last year, Xingji Times was formally established, with nearly 1,000 team members. The company is registered in Wuhan, with a research and development company in Shanghai. There are already clear plans and frameworks for future product planning, ideas, and technical layouts.

The worst-case scenario is actually to use the smartphone to drive the car’s intelligent cockpit, enhance the competitiveness of intelligent electric vehicles, and strengthen the main business.

The greater vision is to connect all terminals through the experience. Therefore, Xingji Times will also spare no effort in investing in more core technologies such as XR and AR, future core smartphone AP research and development, and particularly AI technical capabilities.

Besides FlymeOS, Xingji Times also mentioned near-field communication when talking about its advantages and preparations:

Mobile communication has not yet fully solved the problem of ubiquitous connection in all scenarios. All mobile base stations combined only cover 21% of land areas, and there is nearly 80% of the place where there is no signal coverage. We will aim to achieve uninterrupted user access on a more extensive connection that we call “heaven-earth integration.” We call it Xingji Interconnect Technology.

BTW, Geely also has a company called “Times Aerospace” that independently develops and manufactures low-orbit satellites. Nine were successfully launched in early June, and the overall deployment plan will be completed by 2025, with satellite data application services covering the world estimated to be available in 2026.

Many people used to misunderstand that older generation Chinese entrepreneurs were obsessed with Jack Welch-style expansion and reckless growth.

But after two decades, it seems that the path forward has become a bit clearer.

The industries of cars and smartphones are businesses only for the big players.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.