Visiting vivo: In the marathon of the mobile phone market, there is still a long way to go.

Among the numerous technology companies in China, it might be challenging to find one as unassuming as vivo.

On December 30, at vivo's headquarters in Dongguan, a visit involving over 60 experts, scholars, and enterprise representatives, as well as more than 20 top media outlets, was held as scheduled.

The scale is not insignificant, but there seem to be not many "sensational points": not manufacturing SoCs, not producing cars, and not attempting to outshine competitors; still prioritizing growth over expansion.

In this era where even watching dramas requires slapping someone's face in three seconds and the Dragon King reclaiming his position in ten seconds, and in an industry with such a high level of competition, vivo has emphasized in several public statements and internal values that users and technological innovation should be regarded as the top priorities, adhering to its responsibilities and prioritizing growth over expansion. This is an almost classic business logic.

However, in contrast to this: The latest data from Counterpoint reveals that in the third quarter of 2024, vivo has claimed the top position in the Chinese smartphone market for three consecutive years and three quarters, with an overall market share of up to 19.2%.

How did vivo manage to accomplish this?

In the Stock Era, a New Competitive Logic

The feast has come to an end.

Since the peak shipment of 500 million units in 2017, the domestic mobile phone market's shipment volume has been declining for seven years. The 260 million units shipped in 2023 have set a new ten-year low.

Accompanying the decline in sales is a change in the competitive logic.

During the peak period, at the press conferences of major domestic mobile phone brands, the slightest differences in camera evaluation scores and system operating speed comparisons were highly intense. During that period, driven by Moore's Law, chip performance improved rapidly, screens became larger and larger, battery life became longer and longer, and charging became faster and faster. The top and most professional hardware entrepreneurs and engineers in China have supported the golden decade of the Chinese smart phone industry.

In this constantly changing market over the past ten years, parameters were once an important basis for users to select mobile phones, and at one point, benchmarking even became a business.

But when the story enters the stock narrative, the logic begins to shift: While sales are slowing down, the user's phone replacement cycle has been extended to a historical high of 51 months. Compared to simply stacking parameters, how to make a mobile phone provide users with a high-quality experience for up to 51 months has become the key point.

However, no one anticipated that vivo, which emerged from the fierce competition and has consecutively ranked first in the domestic market for domestic mobile phone sales for three years and three quarters, has no KPIs, not many related entrepreneurial tales, and even while many of its peers have become super traffic on Douyin and Weibo, and its founder is so unassuming that he hardly appears in public except for the annual meeting.

Accompanying vivo's overall sales leadership is a breakthrough in the high-end market: In the first half of 2024, in addition to consecutively ranking first in the Chinese market, vivo also claimed the first market share in multiple price segments such as 1000 - 2000 yuan, 3000 - 4000 yuan, and 4000 - 5000 yuan, and entered the top two in the folding screen market.

*The above data sources: International Data Corporation (IDC), Counterpoint

In the just-concluded living room event, vivo confidently declared: "We aim to make breakthroughs in the high-end market, in the 4000+ and 6000+ segments. The largest source of users is Apple... Through our efforts in the past two or three years, in the core tracks of imaging, OS, and game performance, our gap has actually become very small, and even in imaging, we have begun to lead."

On one side is the leading position in the overall market, and on the other side is the breakthrough in the high-end market. What exactly has vivo done correctly?

In the view of Chen Wei, the chief editor of Zhenghe Island, vivo's competitive perspective is naturally distinct. Vivo's competitive perspective is an "ecological perspective" and a "co-prosperity perspective". Employees should be content, partners should be content, shareholders should be content, and most importantly, users should be content.

When it comes to the value level, it is to persistently insist that growth is more important than expansion, and growth will bring the greatest dividend to the enterprise - compound interest.

For instance, after repeated research, vivo discovered that the four directions of design, imaging, system, and performance are the core factors that determine the user experience, and therefore these have become the long-term tracks where vivo has been insisting on investing without limits in recent years. Among them, vivo has invested more than 1000 people in the imaging direction alone, and has obtained more than 1200 patent authorizations. In terms of products, from the professional portrait mode of the X30 series, to the full-link upgrade of the optical system in the X70 series, to the Zeiss periscope telephoto of the X200, each generation is a trendsetter in the direction of mobile phone photography.

Another example is that for special groups, vivo continuously iterates products such as "vivo See", "vivo Hear", "Sign Language Translator", and "vivo Read Score" to meet their needs for using electronic products.

But a new question arises: In a stock market, what is the significance of achieving the ultimate?

The Market Is No Longer Growing, But the Potential of Mobile Phones Is Still Expanding

In recent years, any vivo executive who appears in public occasions inevitably faces transformation questions:

Will you manufacture SoCs? Will you produce cars?

Not only the outside world asks, but also the inside. Especially after consecutively ranking first in domestic sales for many years, this anxiety, eagerness, and excitement-driven desire to expand territory once spread within the company. Not to mention that the global mobile phone market has been stagnant for many years, which is no secret. Will vivo, which "no longer expands territory", become the next Nokia or Motorola that rests on its past achievements?

Vivo's answer is as usual: No to manufacturing SoCs, no to producing cars, and focus on manufacturing smart phones and smart watches and other products strongly related to mobile phones.

At the same time, another question is also thrown back by vivo. Is the smart phone, whose sales are no longer growing, really perfect enough?

In fact, the operation of the consumer electronics industry represented by mobile phones is like an electric fan running at full power. From the outside, it appears relatively constant, but within the industry, various细分的 innovation directions and industrial chain changes are like the rotating fan blades that are constantly iterating and rotating at a high speed within a short period. And the smart phone is still far from its ultimate form, and these are vivo's opportunities.

For example, regarding mobile phone photography, Hu Baishan, vivo's Executive Vice President, Chief Operating Officer, and Dean of vivo Central Research Institute, judges that "The ceiling of mobile phone imaging is very high, and the ultimate goal is to replace most of the DSLR scenarios." Based on this perception, vivo has been continuously optimizing this for more than ten years. This year, more and more users are taking vivo X series to concerts, and even once led vivo X series to capture more than half of the market share in the mobile phone rental market.

Take the vivo X200 series, which set a new sales record for vivo's new phones, as an example. It not only continues the extreme pursuit of photography, integrates the Zeiss periscope telephoto, but also incorporates various configurations that are only available in pro or max versions, such as the 5800mAh Blue Sea super large battery and the micro-curved screen, into the standard version; in software, OriginOS 5, Blue Core Large Model, and Blue Core Mini V are full of surprises.

In October this year, vivo released a new self-developed Blue Core Large Model Matrix: In the language large model, the 100-billion-level Blue Core Cloud Large Model focuses on optimizing the ability of intent understanding and distribution and task planning. In the end-side large model, vivo officially released the new 3-billion-parameter-level Blue Core End-side Large Model 3B.

Based on the capabilities of the large model, vivo has also reshaped the underlying logic of the new operating system: Blue River Operating System 2 is not only the industry's first full-stack operating system written in Rust language, but also uses the capabilities of the large model to reconstruct 15 essential functions such as input method, phone, notes, and scanning, building a platform-based AI public capability;

At the same time, it also builds a connection service framework and platform, an intelligent body platform that integrates development and distribution for developers, and a complete intent framework system for lightweight and atomic services, allowing services to actively match the needs of users while users are looking for services. The third point is to build a personal intelligent system framework to make the mobile phone a dedicated personal assistant.

However, all these ambitions in software need to be carried by hardware. So, it comes back to that old topic: How does vivo choose between self-research and co-research?

What Kind of Leader to Be?

Before deciding whether to conduct self-research or co-research, vivo internally conducts a round of thinking, that is, what added value does the research and development ultimately bring to the user experience?

The answer is straightforward to the point of being somewhat unconventional in this era of prevalent Internet jargon. But in the view of Feng Lun, the founder of Vantone Group: A good strategy must be simple, focused, and sustainable. Simplicity can form a focus, focus can form capabilities, and only then can sustainable progress be achieved.

In the past, among different departments in large enterprises, often you had your OKRs and I had my KPIs. Under the layers of departmental barriers, the so-called research and development orientation often turned into a digital competition game between different departments. In vivo's research and development system, compared to the single-point innovations such as chips and photography that are widely emphasized in the industry, vivo emphasizes the linkage between different single points.

At the end of 2023, vivo innovatively launched the technology brand "Blue Technology", integrating and linking technologies such as the Blue Crystal Chip Technology Stack, Blue Sea Battery Life System, Blue Core Large Model, Blue River Operating System, and Blue Print Imaging to form a unified Blue Technology brand.

Reflected in the user experience, the Blue Core Large Model will deeply transform the Blue River Operating System, bringing a smarter and more "understanding" system-level experience; the Blue Crystal Chip Technology Stack will become the performance source of the Blue Core, Blue River, and Blue Print, making the system run more smoothly. At the same time, vivo's self-developed Blue Print Imaging Chip V3+ will also be combined with various self-developed imaging algorithm matrices in the Blue Print Imaging, from ultra-clear image quality, true color restoration to computing power acceleration, and combined with the Zeiss 200-million-APO super telephoto, achieving a significant improvement in detail performance of 20 times and above, and making the vivo X series the concert artifact of this generation.

But how to determine the boundary of self-research?

In the consumer electronics industry chain, often a snap of the fingers by the terminal is an earthquake for the supply chain. Stories of the upstream going "bankrupt" as soon as the terminal conducts self-research are not uncommon. In the past ten years, just around chip self-research, Apple and Dialog, as well as Qualcomm and Intel, have once launched lawsuits against each other for several consecutive years.

Vivo has no intention of following Apple's old path. In Hu Baishan's view, "The mobile phone industry is a typical representative of China's manufacturing and technology moving towards globalization and high-end. A good enterprise makes itself do well, and a better enterprise makes everyone do well." What vivo wants to do is to be that better enterprise - to balance resources in the still rapidly changing smart phone industry, create with the industry, and achieve a qualitative change in the quantitative change.

Famous business strategy expert Zhou Zhanggui summarizes this win-win cooperation model with the upstream and downstream as "Beyond Competition", that is, the upward airflow generated by the wild geese formation can ensure that the team significantly improves its efficiency. This is a sustainable competitive method, not like the ground animals fighting each other, and at the same time promotes organizational evolution through win-win cooperation.

For example, around chips, vivo, through co-creating the Dimensity 9400 chip with MediaTek, has achieved support for various native AI capabilities such as the Blue River system. In the future, vivo will continue to deeply cooperate with domestic IC design companies on V/Q chips to allow more domestic supply chains to participate in the mobile phone chip camp.

Regarding the screen, the vivo X200 not only incorporates the full-depth micro-four-curved screen into the standard version, making the phone more integrated, with equal narrowness on all four sides, and consistent internal and external R-corner curvatures, but also adopts the Zeiss Master Color Screen with full-link Zeiss natural color.

In the imaging system level, in addition to self-developed technologies, the vivo X200 series also uses the Zeiss large-bottom T* main camera, equipped with a new main camera sensor jointly defined by vivo and Sony, the Blue Print x Sony LYT-818 (1/1.28 inches), using a 22nm manufacturing process, and equipped with vivo's self-developed VCS bionic spectrum 3.0 technology.

Vivo currently has nearly 400 partners, covering multiple fields such as display, photography, electronics, structure, and semiconductors. 25% of the partners have cooperated for more than ten years, and in some fields (semiconductors), the partners that have cooperated for more than ten years account for up to 100%. Some partners' turnover has increased from more than one billion to more than ten billion, and even went public during this period. At the same time, vivo's payment period is also one of the best in China.

From software to hardware, from photography to the operating system, from single-point breakthroughs to technical linkages, Liu Donghua, the chief editor of China Entrepreneurs, summarizes vivo's success path as: "Calmly and freely grasping the destiny in one's own hands" and "Be a down-to-earth geek and achieve the extreme of what you believe in the most."

Vivo's Mobile Phone Marathon Has No End

Why is the quiet vivo the ultimate winner in the domestic mobile phone market?

Perhaps, for a considerable period of time, the borderless expansion of the Internet has given us an illusion that an excellent enterprise should be like Genghis Khan's Mongol Empire, concentrating on attacking one city, and after capturing it, moving on to the next target to achieve the borderless expansion of the organization and territory.

In this context, vivo, which focuses on its own rhythm and continuously creates value for consumers and the industry, once became an outlier. However, empires are as short-lived as a flash in the pan; most giants' border