Revolutionizing User Experience with Long-term Technological Vision
In the midst of the smartphone industry’s winter, innovation has finally brought about a warming trend.
Looking back at 2023, the smartphone industry, which has undergone two cycles and three major reshufflings, has scripted a new narrative. Technological transformations led by satellite communication have stirred up innovation in the industry. Emerging technologies like in-car connectivity and image chips have continued to be the new battleground for smartphone manufacturers. The spotlight on AI triggering this technological revolution has brought edge computing models to center stage. The smartphone, the biggest terminal device that has led mobile internet for over a decade, is once again witnessing new possibilities.
Following operating systems and chips, this trend of striving for excellence continues. According to market research by Canalys in November last year, despite an overall market decline of 4.5%, high-end smartphone shipments in mainland China saw a 12.3% year-on-year increase in Q3 2023. Even amid the winter of the smartphone industry, downstream manufacturers have not ceased to narrate stories of technological innovation and the journey towards high-end advancements.
As this long-standing trend towards excellence transitions from mere slogans to reality, Chinese smartphone manufacturers, who have moved past the “Zhonghua Cool Links” era, are poised for a new era. According to Counterpoint’s monthly report on smartphone sales, in the fourth quarter of 2023, Chinese smartphone sales witnessed a 6.6% year-on-year increase, marking the first quarterly growth after a continuous decline in year-on-year comparisons for ten consecutive quarters.
Notably, in 2023, vivo secured the second position in the domestic market with a market share of 16.9%, leading among domestic brands. Another publicly available data from Canalys also confirms vivo’s position as the top domestic brand.
In an industry like smartphones with strong cyclical characteristics, only companies that can transcend these cycles are likely to emerge and even lead the way. It’s because only through the tumultuous waves of industry cycles can companies cultivate stronger internal capabilities. As we stand on the cusp of a new year, it’s crucial to review how vivo excelled in traversing cycles amidst the industry landscape stirred by AI.
Revolutionizing User Experience with Long-term Technological Vision
According to preliminary data from IDC’s “Global Quarterly Mobile Phone Tracking Report,” global smartphone shipments dropped by 3.2% in 2023, reaching 1.17 billion units, marking the lowest global shipment volume in a decade. While it may seem that macroeconomic conditions have impacted demand, with consumers showing diminishing motivations to upgrade and the replacement cycle extending to 51 months in 2023, the reality is that every revolutionary technological shift requires a certain investment and incubation period.
From the PC era of the 80s, 90s, to the internet era starting in 2000; from the mobile internet era initiated by the launch of the first iPhone in 2007, to the rise of cloud computing in 2012. AI, a topic discussed for years, was finally crowned the status of the “Fourth Industrial Revolution” in 2023.
Looking through a longer time frame, the development trajectory of each technology sees infrastructure companies benefitting first, followed by a slight lag in software layer development, and finally a surge in demand at the service layer. In a long-cycle market driven by supply, smartphone manufacturers need to be well-prepared for long-term technological investments. After all, companies that fail to bring about innovative changes will struggle to meet the high-end demands of consumers, let alone transcend through so-called industry cycles.
A smartphone terminal serves as a crucial nexus connecting infrastructure, software, and service values. For smartphone manufacturers striving for innovation, merely relying on a single product with high sales is insufficient to transcend through cycles. The key to a brand’s enduring success lies in seizing the opportunity for innovation amidst the technological changes brought by the second wave of AI.
According to vivo’s founder, president, and CEO Shen Wei, “Users serve as the yardstick for products. Understanding users’ pain points solidifies the baseline of product experience, their diverse needs shape the versatility of product experience, while their demanding requirements and scenario preferences ignite the vitality of continuous innovation.”
2023 was a year where vivo’s user-centric technological achievements blossomed comprehensively. # Innovation at the Heart of vivo’s Success in 2023
In November last year, vivo, prioritizing user-centric innovation, achieved several breakthroughs in long-distance technologies and officially introduced the “Blue-Tech” brand. This comprehensive technological matrix, which includes Blue Crystal Chip technology stack, Blue Ocean Battery Life System, Blue Core Large Model, Blue River Operating System, and imaging capabilities, has become a perfect answer for vivo in breaking through industry innovation barriers in 2023.
Since the advent of mobile internet, chips and operating systems have symbolized the high-end branding and underlying logic of the smartphone industry’s competitive strategies. With the launch of vivo’s “Blue-Tech” technology brand, the definition of high-end branding has now extended to include AI and battery life. In an era where self-developed large models are competing globally in the field of AI, vivo has not only independently developed the next generation intelligent operating system, “Blue River OS,” but has also integrated its self-developed Blue Core Large Model into the system’s underlying design, enabling a comprehensive breakthrough from applications to toolchains.
By turning AI into a fundamental capability and even a product design concept, vivo has dispelled the conventional misconception that “large models on the device side are just for installing a smart assistant.” As pointed out by vivo’s Vice President and Head of OS Product and vivo AI Global Research Institute Zhou Wei, “Providing a product like ChatGPT on a mobile phone is a significant mistake; the best way to incorporate large models into smartphones is by aligning with the needs of the device.”
Battery life has always been a major pain point for consumers. By taking a user-centric approach, vivo’s solution goes beyond merely increasing battery capacity to enhancing the overall battery life experience through a combination of software and hardware.
On one hand, according to official sources from vivo, with the industry’s first “Carbon Element Reorganization Technology,” “Laser Etching Technology,” and “Extreme Sheet Remodeling Technology,” the Blue Ocean battery has been made to have a large capacity, fast charging, and a slim design. On the other hand, by developing the Blue Ocean Battery Life System, new battery storage technologies have been developed, the underlying operating system has been optimized, and advanced features such as reduced power consumption, extended battery life, and fast charging have been achieved.
Since the launch of the self-developed imaging chip V series in 2021, vivo has now introduced its first 6nm process technology self-developed imaging chip, the V3. By combining this chip with the Dimensity 9300 flagship chip jointly launched with MediaTek, vivo has delved into the core technology with its Blue Crystal Chip technology stack, achieving a synergistic effect between these two chips symbolizing high-end logic, and offering users a truly integrated software and hardware experience.
With multi-camera setups and computational photography becoming industry standards, the foreseeable experience ceiling is driving smartphone manufacturers to deepen their collaborations throughout the industry chain. In April 2023, Jorg Schmitz, CEO of ZEISS Consumer Optics, and his core technology team visited vivo’s global headquarters. Starting from their global strategic partnership with ZEISS in 2020, deepening the self-developed imaging chip V series over the past three years, vivo, with its continuous user-oriented innovation, has never stopped enhancing the user experience.
It can be observed that vivo’s foldable flagship X Fold and X Flip series, imaging flagship X series, portrait flagship S series, and performance flagship iQOO, have established a stable pace of updates and sales volume, blossoming comprehensively across the four major long races they focused on: design, imaging, system, and performance since 2019.
These investments in fundamental technologies and user-driven innovations have brought new vitality to vivo’s products and have also become an integral part of vivo’s long-term vision. From their emphasis on the four major long races in 2019 to establishing a Central Research Institute in 2021, vivo, successfully “reaching new highs,” has provided its answer under the industry consensus of enduring cycles: ultimate products and innovative technology are the keys for brands to ascend towards high-end positioning.
Navigating External Cycles Requires Internal Scientific Governance
The inevitable cycles in the smartphone industry stem from its nature as a consumer product. As early as 2014, in an interview, Shen Wei revealed, “The smartphone industry appears to be in manufacturing, but in essence, it is in consumer products. I understand only consumer products, so I won’t do anything else.” Even Warren Buffett, known as the stock market guru who hesitates even about technology companies, only views Apple as a stock of a consumer product company.
In reality, since the advent of mobile internet, the survival and competition of the smartphone industry, spanning high-end manufacturing and retail consumption, have become intricately linked to external fluctuations—be it the matured supply chain leading to manufacturing efficiency improvements, the breakthroughs brought about by hardware-software integration, fluctuations in consumer confidence and replacement demand, and consumers’ perception of brandization of smartphone manufacturers.
Although these external macro factors are inevitable, the true key to whether a smartphone manufacturer can weather the cycles always lies within the internal organization of the enterprise. In other words, to withstand the cycles of consumer electronics, a flexible organizational management system and long-standing cultural values adapted to it are necessary.
Concerning organizational management, vivo has adopted an ECR management method. # The Essence of “Localism”: A Philosophy that Guides vivo’s Success
The concept of “ECR,” consisting of Experience, Commercial, and Recognition, is like a prism reflecting the overall health of a company. It is comparable to vivo using a stethoscope to constantly assess its commercial well-being and evaluate the correctness of its current strategic actions.
“We aim to achieve Recognition loop. With Experience and Commercial loops in place, the ultimate goal is to leave a lasting impression of the brand in the minds of users, thus becoming a healthier and long-standing world-class enterprise,” summarized Mr. Hu Baishan, Executive Vice President and Chief Operating Officer of vivo. This business approach, rooted in vivo’s past two decades of corporate journey, breaks through theoretical constraints, laying the foundation for a set of cultural values regarding integrity within the organization.
vivo’s value of “integrity” not only inherits the unique Eastern philosophy of being a Chinese company but also incorporates a scientific approach from Western modern strategic management. This blend of Eastern and Western business practices has shaped vivo into a company that acts from its essence, focusing on fundamentals, and has successfully navigated through cycles.
The cultural values known as “integrity” represent a mindset of simplicity, urging individuals to look at things from a pure perspective. In the context of today’s smartphone industry, returning to the essence of high-end products means continuously investing in innovative underlying technologies, from imaging chips to operating systems, and now into AI models. Currently, this set of cultural values has permeated all aspects of vivo, from products and organization to operations and strategies. With this mindset, the team can better focus on products, address challenges, trust management, and achieve efficient collaboration.
At the annual meeting held on January 30, 2024, Shen Wei offered a glimpse into the future: “vivo’s mission is simple – to embrace users, collaborate with partners in mutual trust for mutual success, venture into the depths of innovation; when fully prepared, take two steps forward; when the market booms, leap forward; when the industry is stable, stay grounded, move forward steadily and tirelessly.” For vivo, like-mindedness knows no physical distances; sharing the same path knows no temporal boundaries. Seeking collective joy is the key to the steady progress of this mobile phone manufacturer.
Embracing the Essence of “Integrity,” vivo Continues to Lead the Next Phase
Although the Chinese smartphone shipments hit a 10-year low of 271 million in 2023, viewing the market from a broader perspective indicates the beginning of a rebound after hitting the bottom. Looking back at the smartphone industry in 2023, the intense level of competition remains palpable.
Behind this lies multiple rounds of innovative technologies that drive consumer demand for upgrades: on one hand, the expected rise of generative artificial intelligence as the focal point of smartphones in 2024. On the other hand, as more smartphone manufacturers introduce their satellite communication technologies, the advent of the era of mass satellite communication will inject a new vitality into the smartphone industry.
The concept of the second half may not be applicable to an industry like smartphones with a strong cyclic nature. For smartphone manufacturers who constantly break through experiential boundaries based on user demands, technological innovation will always be a field worth long-term investment and exploration.
In this ever-evolving competition, vivo’s report card for 2023 demonstrates that only enterprises that confront cycles have a greater chance of transcending them. As put forth by Hu Baishan of vivo, “Good industries possess a natural ability to navigate cycles.” The smartphone, as the ultimate endpoint connecting people and everything, represents the best in the technology industry.
If technological advancements continuously drive the wheels of technological development forward, the answer to steering steadily in a macro cycle spanning ten to twenty years has long been revealed in vivo’s philosophy of integrity and simplicity. Together with the scientific management system represented by ECR and the long-term commitment of the four major long races, they collectively form the answer to the proposition of “vivo’s code for crossing cycles.”
From coping with cycles, to transcending them, and then leading them, vivo has provided its unique philosophical paradigm.