/ Chen Wenqi / tr. by Phil Newell)

Source: deep sound (ID:deep-echo)

Ten years ago today, on August 16, 2011, Lei Jun held Xiaomi's first new product launch in Beijing and released Xiaomi M1.

At that time, Mi 1 made a lot of "extraordinary" decisions, such as performance-to-price ratio (Mi 1 was a dual-core 1.5G phone with a 4-inch screen and a 8 million-pixel camera, and products of the same level on the market sold for more than 4000 yuan at that time. Xiaomi directly cut the price in half, 1999 yuan), such as selling only through the Internet, directly facing consumers.

Xiaomi, who just turned one year old, almost failed to withstand the enthusiasm of rice noodles. From the beginning of accepting bookings, a large number of orders poured into the system, far exceeding Xiaomi's production capacity. In the end, the phone sold 184600 units, earning Xiaomi the first bucket of gold, 370 million yuan.

Ten years later, Lei Jun stood on the stage of the new product conference again and announced that he would return the 370 million yuan to the first batch of rice noodles and give 1999 yuan red envelopes to each Mi 1 user. "this represents the grateful heart of Xiaomi's 36000 employees, and we will always be grateful to all the rice noodle friends and partners who have helped us. "he said.

In this decade, Nokia's empire collapsed, Samsung lost China, domestic machines tore off the "shanzhai" label, "China Coollian" and "Huami OV" changed, and Jinli Meizu hammer was heroic. In the second quarter of this year, Xiaomi's global mobile phone shipments surpassed Apple Inc to become the second in the world.

Ten years ago, the launch time of Mi 1 was only 78 minutes; this year, the speech plus press conference took three hours, from mobile phone to TV, from speaker to robot dog. In this surging decade, Xiaomi has experienced too much "do not understand" and "do not understand", but it is these experiences that have made Xiaomi what it is today.

Ten years of hardship in the supply chain:

From "ignored" to "not to be ignored"

And today's Xiaomi, not only depends on Xiaomi. Mobile phones can't be made with money, and Xiaomi was not rich ten years ago. Behind the rise of Xiaomi, in addition to the product power and brand power on the table, but also inseparable from the maturity and changes of the supply chain. It is not easy to go from being ignored to being taken seriously.

Although it sounds like a long time point ten years ago, fake mobile phones were rampant in the Chinese market at that time, and the bad currency effect was huge. Fake phones are unable to guarantee sales, which in turn causes problems in the return of money in the supply chain, and many suppliers are "scared" by fake phones, so they are also full of resistance to the new mobile phone brands. On the other hand, the suppliers of components often start to cooperate with the purchasers in the research and development stage, investing money and personnel resources to run-in exclusive customized devices. The more top suppliers you are, the more careful you are in choosing partners.

The fledgling Xiaomi hit a brick wall everywhere and had no say in front of the supply chain.

In the preparatory phase of 2010, Lin Bin, co-founder of Xiaomi, studied the provisions of Qualcomm Inc's intellectual property agreement like a student for more than a month, but finally gave up the negotiations and signed the agreement without changing a word. Lei Jun's situation is not much better. The successful software entrepreneur walked into the conference room of the hardware supplier and introduced himself over and over again, but often did not live up to expectations.

After being rejected by TPK Quanhong Technology, a maker of touch technology, on the grounds of "insufficient production capacity," Lei Jun mobilized his resources and successfully lobbied through Goldman Sachs Group's Taiwan partner. Xiaomi targeted Sharp in the first place in order to carry a better mobile phone screen, but requests for an appointment have been refused. Lei Jun found various channels and finally made an appointment with the help of Japan's Mitsui Trading Company. The trip to Osaka was suddenly blocked by the 2011 Japanese earthquake, and the founders still chose to take risks, which finally moved Sharp.

After taking care of the supply chain, we also need to find the contract factory.

Xiaomi's team negotiated with Foxconn, Flextronics and other big global factories one by one, but to no avail. Liu de, Xiaomi's co-founder, was desperate and finally found Nanjing Yinhuada, which had not yet explicitly rejected it. Fortunately, Yinhuada is also looking for its own way of transformation, leaving only an empty production line with a large number of PHS orders in the past when the product was withdrawn from the market in 2011. Zhang Feng, general manager of Yinhuada, chose to try it with a company he had never heard of before.

It was only then that there was the press conference of Mi 1. But Xiaomi's story has only just begun.

After the introduction of Mi 1, the bigger problem is the lack of production capacity, shipments can not keep up with orders, Xiaomi back to the "hunger marketing" reputation. The problem of out-of-stock has not been solved until the release of the meter 5 in 2016.

Lei Jun released Xiaomi 1 in 2011.

The success of mobile phone brand requires the close combination of supply chain, delivery and sales system. But Xiaomi's supply chain management is just in its infancy, with internal and external troubles.

As soon as the startup problem has been solved, the problem of continuous management comes one after another. The mobile phone has been recognized by consumers, which is originally a good thing, but it worries Xiaomi, the accuracy of orders and market conditions often deviate, and the problems of out-of-stock and delayed delivery appear frequently.

Around 2016, the supply chain team had a bad relationship with Samsung and lost the supply of Samsung's AMOLED screens. The imperfection of the supply chain is directly reflected in the performance. In the first quarter of 2016, Xiaomi slipped out of the top five of global smartphone sales, according to IDC, and OV successfully occupied the position. The decline in performance will make suppliers lose confidence, which is a vicious circle. Questions from the outside world have arisen one after another.

Lei Jun once again came to the forefront of the wind and waves, personally took over the mobile phone business, and began to deal with the supply chain crisis.

He re-combed all aspects of Xiaomi's supply chain to examine the hardware cost, as small as a screw, a pin, to do system informatization. Zhang Feng, who used to work in Yinhuada, later took over Xiaomi's supply chain. He compared supply chain management to chefs: "A good company needs good cooks to keep people healthy and mentally happy." You can't have a food poisoning that paralyzes the whole company. "

The rest of the story is familiar to everyone. Xiaomi has gradually opened up the situation, and products, brands and supply chains go hand in hand. Under the interaction, Xiaomi has gradually become the core of the industrial chain. Xiaomi's order volume is guaranteed to give it more bargaining power, which also means that suppliers are willing to tilt more resources to R & D adaptation and invest more capacity.

With the continuous improvement of the shipments of Xiaomi mobile phones and other intelligent terminal products, the industrial chain is also making progress together, the process level of the industry and the manufacturing capacity of the factory are improved, and the technical level is also improved due to the need.

Together with terminal giants such as Huawei, Xiaomi has cultivated a strong local supply chain, gradually reducing the industry's dependence on foreign suppliers. For example, in the screen field, there are Beijing Oriental, Vicino, Shenzhen Tianma, Huaxing Optoelectronics and other enterprises; among other parts suppliers, there are optical under-screen fingerprint solution provider Huiding Technology, battery supplier Xin Wanda, ceramic material supplier Sanhuan Group and so on.

Just in March this year, Hunan Lance Science and Technology held an opening ceremony for its new Xiangtan Park. The company, which specializes in the assembly of hardware such as mobile phones, tablets, computers and computers, and the research and development of spare parts, is an important supply chain partner of Xiaomi. The cooperation between the two sides starts with glass and the back of mobile phones, and will extend to machine manufacturing and other products of Xiaomi. Xiaomi is an important customer on the road of Lance's development, and Lance's capacity expansion has further upgraded Xiaomi's order digestion capacity. Xiaomi and Lance also jointly set up a joint R & D center, which is conducive to the joint innovation of both sides in the R & D stage.

Photo source: Xiangtan online

Technology is the foundation of technology companies, and Xiaomi is also deeply involved in manufacturing and built its own intelligent factory. Last year, Lei Jun unveiled Xiaomi's "black light factory" in Yizhuang. It can automate the production of unmanned black lights throughout the plant's production management process, mechanical processing process and packaging storage and transportation process, and is expected to produce a smartphone as soon as 1 second.

In terms of self-developed chips, Xiaomi pinecone also handed over its first answer in 2017, releasing the first 28nm-based mobile phone chip, thepaper.S1. Xiaomi is among the mobile phone manufacturers Apple Inc, Samsung and Huawei that can make SOC on their own. At the end of March this year, Xiaomi released a self-developed independent chip for mobile phone image processing (ISP,Image Signal Processor). Although there is a long way to go to make the core, the young millet still has plenty of time.

Xiaomi's new breakthrough

New opportunities in the supply chain

From being despised by the supply chain to becoming an industrial weather vane and barometer, Xiaomi has cultivated a large number of "millet industrial chain" enterprises in just ten years. It is not satisfied with this, Xiaomi has been expanding its boundaries: horizontally, mobile phones are the original idea, and it is covering more categories, from AIoT (AI + Internet of Things Internet of things) to cars; vertically, into chip design and intelligent manufacturing.

Now, Xiaomi has set the goal of being "number one in the world in three years" and going deep into the upper reaches of manufacturing, which means a bigger breakthrough and a more difficult road. Coincidentally, Xiaomi's upgrade period just hit the shift period of the industry and the times, which gives everyone more room to play.

In 2013, Lei Jun saw the trend of the Internet of everything era and laid out smart hardware products ahead of schedule. At the strategic level, Lei Jun established the "AIoT X mobile phone" twin-engine strategy. Xiaomi's product matrix is connected into an Internet of everything from point to face, and the rich scenes correspond to a variety of opportunities, which is not only Xiaomi's alone, but also the common opportunity of Xiaomi's ecological chain.

It is understood that the current Xiaomi ecological chain has covered more than 300 enterprises: from mobile power supplies, headphones and other mobile phones, smart hardware and furniture products, such as vacuum cleaners, rice cookers, pet automatic feeders, and even daily necessities such as towels and toothbrushes. In the initial stage, the enterprise gets the support of Xiaomi's funds and experience in the product research and development stage, and borrows Xiaomi's powerful online and offline channels in the sales stage.

Its success stories include, but are not limited to, floor-sweeping robot manufacturer Stone Technology, ant camera, balanced car company No. 9 robot, and so on. More importantly, ecological chain enterprises have embarked on the fast track of the Internet of everything. The products, together with Xiaomi's IoT module, are controlled by Mijia App on the consumer side to achieve interconnection.

The platform effect of Xiaomi also appears at this time. As a traffic portal with a large user base, Eco-chain supports each subdivision scene of AIoT. China Merchants analyst said that for the enterprise IoT: "the future competition is not in the hardware, but in the value-added and management of data." "

By the end of March, the number of devices connected to Xiaomi's AIoT platform (excluding mobile phones and laptops) had reached 350 million, and the number of monthly active users of "Xiao Ai", an AI assistant, had reached 93 million, according to Xiaomi 2021Q1. Big data cluster has formed a huge advantage in the AI era, and the huge user accumulation has reduced the marginal cost for further drainage.

If millet is a piece of fertile soil, ecological chain enterprises are the trees that thrive, and their well-developed roots bind them together.

Xiaomi's in-depth pace in the industrial chain is also accelerating.

The localization process of the semiconductor industry has accelerated, and a number of high-tech enterprises have encountered a window of rapid development. Xiaomi is getting closer and closer to the companies in the chip industry chain. According to the statistics of the Shanghai Securities News, Xiaomi has more than 60 investment layouts in the semiconductor field, including Lexin Technology, Jingchen shares, Juchen shares, Chuangxin Laser, Core Microelectronics, Fangbang Electronics, Shanghai Nancy Semiconductor Technology, etc., covering different links such as semiconductor materials, design, components and so on. These companies can make better chip customization or related solutions for the products of Xiaomi and its ecological chain enterprises, and the cooperation with Xiaomi has accelerated their own process of bringing cutting-edge technology to the application market.

The future competition of the market is not the competition of hardware, but the competition of ecology and industrial chain. Xiaomi put forward the "1x" strategic plan, Huawei put forward the "1x" ecological layout, vivo's "one main body and three assistants", OPPO's smartwatch, AR glasses product release, although there are different views, but in essence, they are all IoT import disputes, ecological disputes, and industrial disputes.

Xiaomi has benefited from its advance deployment in the ecological chain and supply chain. One example is the newly explored car-building business. In March this year, Xiaomi officially announced the establishment of the electric vehicle project, with an initial investment of 10 billion yuan and an estimated investment of US $10 billion in the next 10 years. Lei Jun called this "the last venture in life".

As a cross-industry new car competitor, outsiders have doubts about this "late" enterprise. However, it is found that Xiaomi has brought about 35 automobile industry chain enterprises into the ecology, covering the whole vehicle, travel, automobile aftermarket and other areas, running through the upstream and downstream of the industry. Since the beginning of this year, Xiaomi investment institutions have injected funds into Mormon Tower, a developer of self-driving technology, Hosai Technology, a manufacturer of lidar, and Linding Optics, an optical ultra-precision manufacturing and measurement company. If Xiaomi can successfully apply its hardware experience in this field, the rice noodles will not be far away from their first millet car.

It is difficult to make a forest on its own. Numerous ups and downs in business history illustrate a truth: the rise of giants is often a matter of helping each other with ecological partners to achieve technological symbiosis and commercial win-win. Qualcomm Inc, Alphabet Inc-CL C, Microsoft Corp, Tencent and other giants are all successful without the achievements of their ecological partners. Behind the "number one in the world" targeted by Lei Jun is Xiaomi's ambition to attack the leading position of the industry, gaining a leading position on the basis of further establishment of local supply chain and industrial chain accumulation.

In retrospect, 300000 first-generation rice noodles ten years ago were actually particularly enviable. What I envy is not that I got 1999 yuan in return ten years later, but that the seeds of trust planted at the beginning have grown into big trees, and then they will become forests. The fun and pride of "nurturing" in this process are incomparable.

Almost every public appearance of Lei Jun will mention the millet route of "believing in rice noodles and relying on rice noodles." now, Xiaomi is once again standing on the starting line. Unlike in the past, the number of rice noodles is more and the extension of rice noodles is wider. Everyone, including users, partners, upstream and downstream, will become the strength for Xiaomi to start again.

Maybe in another ten years, when Lei Jun looks back on today, he will have more people to thank, and he will be happy to do so.