Chapter 29: Entering the Red Sea Competition in the Mobile Phone Market

"Mobile phones are in the consumer goods industry, and they are relatively expensive consumer goods. Each person consumes at most one mobile phone per year. Generally speaking, the largest number of users replace their mobile phones every three years."

"And the domestic smartphone market is now close to saturation. This is a stock market. If someone else sells one, your sales will be one less."

"So in recent years, OV, Huawei and Rice have all gone overseas to compete for overseas markets, because the domestic incremental market has been exhausted."

"Consumer goods such as mobile phones are not like fast-moving consumer goods and food. It doesn't matter if I eat Golden Arches or Kaifeng cuisine after eating at Michelin-starred restaurants."

"Users who have used high-end phones will almost never go back to a lower-end phone."

"In other words, the only high-end mobile phone in China now is Apple. Users will not come back to Apple after using Apple."

"In the first ten years, Rice solved the problems that users need. In the next ten years, Rice will solve the problems that users want. How does the rice phone transform from a phone that customers need to a phone that customers want."

"This is what we have been working towards, but there has been no good solution over the years."

Low-end products that meet basic needs are needed products, while mid-range and high-end products are desired products.

All companies in the consumer goods industry do not want to make products that users want.

No matter what type of consumer enterprise it is, like liquor, an industry that has existed for thousands of years, the prices of each liquor company must be benchmarked against Moutai.

Moutai belongs to the category of want. The user may not be able to afford it and can only drink low-end need-based products, but he wants to drink Moutai.

What is better about liquor than the mobile phone industry is that a single customer will not only consume one bottle of liquor. His annual consumption is huge, so the valuation of the liquor industry is high. Rice can only enjoy a dynamic price-earnings ratio of more than ten times. Liquor companies generally can Enjoy a dynamic P/E ratio of more than fifty times.

Zheng Li thought to himself, isn't a mobile phone just like a smart brain? If you have money, you can buy a customized smart brain produced by Fashen. If you don't have money, you can only buy standard products produced on the assembly line.

Intelligent brain is different from magic brain. Intelligent brain is a tool to assist calculations, similar to a computer, and can be connected to the magic network for information transmission.

"Brother, do you think brain-computer connection can help rice phones solve the problem of transforming needs into wants?"

Lei Jun nodded: "Yes, with brain-computer connection technology, I am very confident to lead rice to occupy a position in the high-end mobile phone market."

Zheng Li corrected: "I'm sorry, even if I develop brain-computer connection technology, I can't only open technology authorization to rice phones. Rice is only one of the shareholders of Kechuang Biotech."

"Kechuang Biotechnology is not deeply tied to Rice. I will definitely open the brain-computer connection technology to all mobile phone manufacturers."

In Zheng Li's view, he didn't owe Lei Jun anything. The 50 million that early venture capital invested in Kechuang Biotechnology had already been multiplied several times. It was impossible for him to license the technology only to Daimi because of his senior relationship.

Lei Jun is also an industry veteran and knows that interests are above all else:

"I don't need Kechuang Biotech's brain-computer connection to be licensed only to rice. Just like endorphins, the brain-computer connection must have insufficient production capacity when it first came out."

"I only need to book the production capacity for the first half of the year and make a time difference."

"The brain-computer connection will only be placed on Rice's high-end brand mix, and we will restart mix."

“I only need to be half a year ahead of other manufacturers.”

Generally, the production capacity of new products is seriously insufficient when they first come out. Before the iPhone 8 was launched in the autumn, the price had to be increased two weeks after the launch to get the goods.

"With this time difference, rice can gain a firm foothold in the high-end market."

"In addition, in our cooperation, rice will be given at whatever price it is."

Lei Jun's reasons are not exaggerated, and since he and Lei Jun have a foundation of trust, the negotiation process for cooperation with Rice will be much shorter.

Zheng Li readily agreed: "Yes, if there is a practical application for brain-computer connection in the future, if Daimi is willing, we can authorize Daimi to do it through technology licensing."