"The Beautiful Little Waste" Draws Lei Jun into the Game

Author | Huang Yu

Editor | Zhou Zhiyu

"Beautiful little waste?" On July 12th, Xiaomi founder Lei Jun's post on Weibo sparked intense speculation and discussion.

This most marketing-savvy entrepreneur is undoubtedly creating buzz for Xiaomi's upcoming first small folding phone (also known as "vertical folding phone"), implying that Xiaomi wants to change the stereotypical impression left by previous small folding phones.

Xiaomi attaches great importance to its upcoming first small folding phone. Recently, Xiaomi product manager Wei Siqi revealed that the Xiaomi MIX Fold 4 (large folding) and Xiaomi MIX Flip (small folding) launch event will be hosted by Lei Jun.

It is worth noting that earlier this year, Lei Jun announced his departure as the keynote speaker at Xiaomi's phone launch events, focusing more on the automotive business. In February, Xiaomi's new phone launch event was hosted by Xiaomi President Lu Weibing.

According to Wall Street News, this year, Honor, Nubia under ZTE, and others have released their first small folding phones, while Xiaomi plans to release theirs in July.

In other words, this year, apart from Apple, all major phone manufacturers will gather on the battlefield of small folding phones.

Compared to large folding phones, the launch of small folding phones has been delayed by one or two years. Samsung introduced its first small folding phone in early 2020, while Huawei released the P50 Pocket at the end of 2021, the first small folding phone from a domestic phone manufacturer, followed by OPPO and vivo.

In the past, the market for small folding phones was relatively niche, and phone manufacturers were not very interested in such models. However, this situation has changed this year, with more and more phone manufacturers joining the competition in the small folding phone market.

Why has the small folding phone market attracted numerous phone manufacturers to join in succession?

It can be seen that the foldable screen phones, which have always been considered "niche," have shown a bright counter-cyclical growth curve in the overall downturn of the phone industry.

IDC data shows that the full-year shipment volume of foldable screen phones in China in 2023 is about 7.007 million units, a year-on-year increase of 114.5%, with the small folding products accounting for 31.9%, or 2.2352 million units. OPPO took the lead in the small folding market last year, with a shipment volume of about 811,000 units.

By the first quarter of this year, the shipment volume of foldable screen phones continued to grow rapidly. According to Counterpoint Research data, the shipment volume of foldable screen phones in China in the first quarter of this year increased by 48% year-on-year, while the overall smartphone market only grew by 2% during the same period.

Counterpoint points out that since early 2020, foldable screen phones have become an important strategic focus for Chinese phone manufacturers. These manufacturers hope that this novel form factor can stimulate the stagnant smartphone market and expand their brand's penetration rate in the high-end market Wirtug Market Search predicts that the global foldable phone market size may grow at a compound annual growth rate of 22.25% from 2024 to 2030, with the market size reaching $100.6 billion in 2030.

Despite the significant growth of the entire foldable phone market, small foldables face certain survival challenges compared to large foldables.

Counterpoint Research points out that in the first quarter of this year, shipments of large foldable models increased by 91% year-on-year, while shipments of vertical small foldable models decreased by 1% year-on-year.

The main reason for the relatively slow growth is that the usage scenarios for small foldable phones have not been fully discovered yet.

The original intention of foldable screens was to allow users to carry one less tablet and still enjoy a large screen immersive experience. Based on this, large foldable phones are more likely to be favored by consumers. Currently, although small foldable phones are relatively cheaper, apart from portability, consumers still lack essential usage scenarios.

IDC points out that the user experience of small foldables at the same price level is significantly different from traditional flat phones, and there is still much room for improvement in product quality. The importance of horizontal foldable products in the mobile office scenarios of high-end business users is continuously increasing. At the same time, high-end users are less price-sensitive and more willing to choose horizontally foldable products with fully loaded configurations.

With factors such as narrow product audience and lack of usage scenarios, in mid-February, Tianfeng Securities analyst Guo Mingchi stated in a report that OPPO and vivo had halted their plans to release new up-and-down folding models in 2024 due to low sales profits of these models.

However, OPPO's Chief Product Officer Liu Zuohu later stated publicly that the company is still proceeding with its plans at its own pace.

Obviously, against the backdrop of the overall slowdown in the smartphone market growth, no company is willing to easily give up a potentially promising track.

In order to expand market space, most smartphone manufacturers emphasize fashion and trend attributes when promoting small foldable phones, hoping to "break the circle" among a wider range of young users.

Furthermore, in order to capture more market share, some manufacturers have reduced the originally high prices of small foldable phones. For example, the starting price of Honor's Magic V Flip, launched last month, is 4999 yuan, which is 1000-3000 yuan lower than the latest similar products from other leading smartphone manufacturers.

Honor CEO Zhao Ming revealed that this pricing was "extremely difficult" for Honor, and the Magic V Flip needs to sell at least 1 million units to break even.

Counterpoint's Senior Analyst Ivan Lam told Wall Street News that small foldable products have gradually matured since their release, and the costs of key components have also decreased. For example, the recently released small foldable by Nubia is priced very affordably, starting at less than 3000 yuan.

CINNO Research predicts that foldable phone sales in the Chinese market this year may reach 9.2 million units, a 41% year-on-year increase, with small foldable sales expected to grow by 15% year-on-year, lower than the overall growth rate, and their market share will also shrink The reason why CINNO Research predicts that the market share of small foldable devices will shrink is explained by two factors. Firstly, due to their lower selling price, in the context of rising prices for SOC and storage, the profit margin is limited. If prices continue to decrease, it will lead to a loss-making situation. Secondly, Huawei's strong presence in the foldable device market puts pressure on OPPO and vivo.

Facing intense market competition and unclear market positioning, can Xiaomi inject a strong stimulant into the small foldable market and remove its "beautiful small waste" label? Time will provide the answer