Sticking to the Right Things in a Changing Situation: Exploring vivo's Breakthrough Strategy from WISE2024

The environment is constantly changing, and the times are continuously evolving. Whether it is technology, the market, or consumer demands, every transformation in the business world tests the resilience and adaptability of enterprises.

Compared with the rapid growth of the past decade, the Chinese economy in 2024 presents more rational and diverse characteristics. Against the backdrop of the major transformation of the Chinese economy, the 12th 36Kr WISE2024 Business King Conference was held in Beijing on November 28-29. With the theme of "Hard But Right Thing", this conference focuses on how enterprises can make difficult but correct choices and find new driving forces for development in the uncertain year of 2024.

This theme highly aligns with the current situation of the smartphone industry: In the context of the slowdown in market growth and the deceleration of technological iterations, how to find a new breakthrough point has become a common problem for industry players.

The global smartphone market in 2024 shows two dual characteristics of "fuzziness and change". On the one hand, according to IDC predictions, the shipment of smartphones is expected to increase slightly by 2% in 2024, ending the two-year consecutive decline; on the other hand, consumers' demands for mobile phones tend to be more rational, and they no longer blindly pursue parameter upgrades but pay more attention to the actual experience.

This change requires manufacturers to re-examine their own development paths. From technological innovation to user experience, and then to market strategies, everything needs to be "difficult but correct". Among all manufacturers, vivo is trying to provide a growth model that can successfully pass through the cycle.

Long Slope and Thick Snow: Finding the Real Opportunity

At the WISE2024 Conference, we learned from the speech of Jia Jingdong, Vice President of vivo Brand, that for vivo, the answer to "difficult but correct" is clear: choose a track with a long growth period and a large market, invest time and resources, and finally pass through the cycle. It sounds simple, but the actual operation is full of difficulties, and it is not easy to persist in the end.

Take vivo as an example. This enterprise has always focused on the field of communications. From making telephones in 1995 to now laying out the global smartphone market, the 29 years of deep cultivation is precisely its confidence to deal with the ups and downs of the industry cycle.

Looking at the entire communications industry, this is a typical "long slope and thick snow" track. According to Counterpoint data, the global smartphone market size reached 1.15 trillion US dollars in 2023. At the same time, the penetration rate of 5G mobile phones continues to rise, and it is expected to reach 60% in 2024, while the research and development of 6G has also entered the layout stage.

In addition, with the further integration of AI technology and the Internet of Things ecosystem, smartphones are becoming a comprehensive intelligent terminal, not only a communication tool but also the core hub for people to connect to the digital world.

However, after choosing a "long slope and thick snow" track, how to build one's own moat is a question that every enterprise must answer. vivo's answer is: find the core of "why users choose you".

For vivo, the moat is divided into two parts: technological leadership and user experience. Data shows that vivo's R & D personnel account for more than 75%, and the average increase in R & D investment in the past three years exceeds 20%. It is precisely this long-term investment in technological innovation that has enabled its "Blue Technology" technology brand to currently form a complete matrix including five modules: Blue Crystal Chip Technology Stack, Blue Map Imaging, Blue Sea Battery Life System, Blue Heart Large Model, and Blue River Operating System, and continuously innovate and upgrade based on the real needs of users.

Take imaging as an example. The self-developed Blue Map Imaging Chip V3+ carried by its flagship model X200 Pro this year has now reached the 6-nanometer process level, bringing the industry-leading 4K backlit portrait video recording, successfully helping vivo gain a firm foothold in the high-end mobile phone market and establishing a unique technical advantage for the brand.

This not only enhances the core competitiveness of the product but also strengthens its brand influence in the high-end mobile phone market. At the same time, vivo's continuous investment in 6G technology research and development has further consolidated its leading position in the field of communications. Continuously investing resources to build one's own technical barriers is precisely the key moat to pass through the cycle.

Jia Jingdong also emphasized that in business operations, it is necessary to maintain a "normal heart" and an "enterprising spirit". This is also the core of vivo's fundamental culture, requiring decision-makers and executors to maintain their determination in the face of short-term failures and temptations.

2024 is a year when the economy is seeking new kinetic energy. The uncertainty of the general environment requires enterprises to be more rational in responding to challenges. Slowing down and seeking progress while maintaining stability may instead become a better strategy. As he said: "When facing pressure and temptation, whether one can maintain the original intention is the key to determining the success or failure of an enterprise."

It is this persistence and focus that enables vivo to keep moving forward in the industry wave and also allows us to see the possibility of a brand moving from excellent to great.

Surviving in Three Dreams

Whether it is choosing a track or building a moat, "difficult but correct things" require time to be realized, and the ups and downs and uncertainties in this process place higher demands on the mentality of enterprises.

In the smartphone industry, an enterprise that can become a company that passes through the cycle must have shaped a stable and passionate core from the inside.

Therefore, vivo did not take the previous three paths for no reason. Looking inward, vivo has long determined its three dreams: culture, product, and brand. Culture is the cornerstone of everything, the product is the carrier, and the brand is the final result. Five years have passed, and this enterprise has persisted in them until now.

"Fundamental" is the core of vivo's corporate culture. It requires the enterprise to recognize what it truly loves and what is important, and persist in it. At the same time, it is necessary to have the attitude of concentrating on planting the cause, and the result will naturally follow, focusing on doing the right things and striving to do them correctly.

In terms of products, vivo's strategy is clear and effective. Its core concept is divided into three parts: positioning, experience, and selling points. Precise product positioning makes the product the first choice in the minds of consumers, the basic experience determines the user retention rate, and the unique selling points are the key to improving the success probability. Each generation of products needs to have innovation points that can attract consumers' attention.

Its brand strategy is also divided into three steps: "ability, style, and spirit". "The brand first needs to have the ability, which determines whether users are willing to understand you; the second is the style, which highlights the characteristics of the brand; the last is the spirit, which reflects the brand's values and pursuits." Jia Jingdong summarized this way.

This not only makes consumers trust the products but also creates an emotional dependence on the brand. This two-pronged approach from product to brand enables it to gain a foothold in the global market. According to IDC data, vivo's market share in the third quarter of this year reached as high as 18.6%, consistently ranking first.

These three dreams ultimately support vivo to gradually realize the vision of "becoming a healthier and longer-lasting world-class technology company".

For enterprises, the "long slope and thick snow" characteristic of the smartphone track does not lie in the short-term explosive power but in its long-term innovation potential.

Take the folding screen technology as an example. Although it is still in the popularization stage, its future market potential is huge. DSCC predicts that by 2026, the global shipment of folding screen phones will reach 100 million units, with an average annual compound growth rate of as high as 38%. In addition, the deep integration of smartphones and AI, such as image processing, voice assistants, and personalized recommendations, is becoming an important selling point to attract consumers.

Returning to vivo's growth path, from its establishment in 2011 to the launch of the sub-brand iQOO in 2019, and then to the launch of the "Blue Technology" technology matrix in 2023, from entering the wearable device market to covering multi-dimensional technologies such as imaging and batteries, vivo has successfully created an ecosystem that combines software and hardware - this process has always been accompanied by the ups and downs of the industry cycle.

However, vivo has always adhered to its own rhythm, making steady progress in key links such as technological research and development, product positioning, and user experience. Especially in the context of the saturation of the smartphone market, vivo has not blindly pursued "short-term blockbusters" but has laid out future technologies with a longer-term vision.

As Jia Jingdong said: "Concentrate on planting the cause and overcome it." In the face of new challenges and opportunities, only by persevering in doing the right and difficult things can enterprises truly pass through the cycle and move towards a lasting foundation.

Building Future Competitiveness: Social Responsibility and Technological Value

The characteristics of "long slope and thick snow" determine that the industry competition is bound to be fierce - as the smartphone industry gradually moves towards maturity, the product differentiation in the market is shrinking, and the competition is becoming more and more homogeneous. At the same time, the new technological cycle (such as AI, 6G) and changes in consumer habits make mobile phone manufacturers urgently need to find new growth points.

This determines the necessity for manufacturers to layout for the future, but at the same time, it is necessary to recognize the investment, income, and challenges behind it.

Take the AI track as an example. Since the large model technology has set off an upsurge worldwide, enterprises have been competing to layout, from infrastructure to application development, and the enthusiasm of the capital market has also contributed to it. However, precisely because the market is large and the potential is sufficient, the investment threshold in this field is also constantly increasing.

On this point, Jia Jingdong's reminder is worth pondering: "Whether the industry provides a large enough market size and time is the key that needs to be deeply considered before entering."

In addition, building a diversified intelligent hardware ecosystem can enhance the enterprise's ability to resist risks. Under this industry consensus, the intelligent hardware ecosystem chain has emerged for several years, but now it is gaining more momentum under the AI wave.

According to the analysis of the market research company Statista, the annual compound growth rates of smart wearable devices, home robots, and AR/VR products are all higher than 20%. Especially, the smart glasses market is expected to reach a global scale of 35 billion US dollars by 2028. The Counterpoint report also shows that the demand for AR/VR smart glasses is growing the fastest, and it is expected that the shipment will exceed 200 million units by 2025.

Layout in these fields can not only extend the brand's reach but also enhance the enterprise's ability to cope with market fluctuations. In this regard, vivo plans to release MR wearable devices in 2025, aiming to explore the next-generation intelligent hardware market. Its MR will be divided into two product lines - full-featured and heavy-experience, and lightweight and low-threshold, covering different user needs, and the popularization of AI technology will lay the foundation for the explosion of this category.

This is also a very delicate two-pronged strategy that balances innovation and cost. "Full-featured" and "lightweight" serve heavy users and ordinary consumers respectively, and by controlling the R & D cost of lightweight products, efficient product penetration can be achieved and the market scale can be seized.

In fact, the future competition is not only about products but also about technology and social value. In terms of social responsibility, vivo has also shown the social responsibility of an enterprise. It focuses on "information accessibility" and "inclusive education", that is, empowering special groups such as the hearing-impaired and the visually impaired through technology + public welfare, and is committed to promoting the development of aesthetic education in China with the power of technology, infiltrating children with aesthetic education, so that every child can discover, feel, and create beauty.

As Jia Jingdong summarized: "Ultimately, the significance of the brand's existence is not only to meet the needs of consumers but also to create greater value for society." The combination of technology and social responsibility enables manufacturers to not only become leaders in the communications industry but also is expected to become a model for Chinese brands to go global.

In a constantly changing environment, "difficult but correct things" always seem precious: the combination of technological innovation and user needs, the balance of social responsibility and enterprise value, every dimension requires enterprises to make great efforts and even go through repeated trial and error. This is a test of business resilience and a challenge to the original intention of the enterprise.

Looking back at the WISE2024 Business King Conference, this is not only an exchange on enterprise strategies but also a profound discussion on value and responsibility. Against the backdrop of the major transformation of the Chinese economy, every enterprise needs to re-examine its positioning and mission: The secret to passing through the cycle may be hidden in these seemingly plain but most profound persistences.