Regarding hardware free, Jia Yueting still has unspoken words

In 2011, China Unicom took the lead in launching the “0-yuan purchase”. The subtext was that “calls are always paid, and it is better to advance one or two years in advance. I will send you a mobile phone again.” This move strongly stimulated consumers, so 3G The arrival of the era is more ferocious than it was supposed.
Soon, China Mobile and China Telecom also unified the front, so if the whole nation accepts this model, China has already achieved "hardware free." And if the operator and the mobile phone manufacturer are on the opposite side, I think the operator will definitely say: "I am not targeting who, but that everyone present is junk."

The other side of LeTV

A few days ago, Jia Yueting sent an open letter, eloquent 3,000 words, the content of the expression is very simple: "In the face of ecology, everything is a cloud."

Regarding LeTV's "ecological theory", the industry is mixed. However, it is worth noting that LeTV did make a lot of investments in this huge ecosystem. An Internet TV friend has revealed to Lei reporters: "In terms of broadcasting, LeTV is indeed a big deal. Especially, it is costly. In the event, other people give up, we choose to buy, and LeTV is packaged directly."

In addition, LeTV's super TV, super mobile phone, also did not play tickets. The sales volume of the former exceeded 4.5 million units within two years. According to data provided by Yikang, LeTV's online market share in 2015 reached 10%, only 14% after Skyworth.

The latter's shipments were about 3 million units. Although the comparison was somewhat mixed, senior industry sources told Lei Fengwang (search for "Lei Feng Network" public number concerned) reporter: "This figure is only an order of magnitude away from the first tier. Gap, music as a year to do this level is very powerful.” The industry's well-known broke people Sun Changxu also revealed on the microblogging: "Music phone this year's forecast has increased to 25 million to 30 million, most of the core team members are already Lenovo genes ."

In summary, whether LeTV's ecology is flickering or fragile, at least while LeTV believes itself, it is indeed perfecting its own logic.

Proven operators

On the other hand, the same "hardware free" operators, their "ecology" is far simpler than LeTV. Operators will invest a lot of R&D and construction costs in the early stage. The purpose is to allow more consumers to use more services. Because the industry itself is just needed, and at the same time there is a monopoly background, operators do not have to consider whether consumers pay or not, and the outcome depends only on the timing of each other. This is reflected in the financial reports from 2013 to 2014:

In 2014, China Mobile’s net profit decreased by 10.2% year-on-year;
In 2014, China Telecom’s net profit growth was only 0.8%; in 2013, it was 17.4%;
In 2014, China Unicom’s net profit increased by 15.7% compared to 46.7% in 2013.
——Data Source: Financial Reports of Three Major Operators

The reason for this situation is simple: When China Mobile is ready to make a comeback in 4G services, China Unicom and China Telecom have already completed the transition from voice traffic to data traffic.
According to the data of the Ministry of Industry and Information Technology, the proportion of non-voice revenue in the domestic telecommunications industry exceeded 40% for the first time in 2010. In 2011, China Unicom’s revenue share in non-voice services has reached 48.7%; in 2012 it reached 53.1%, and the average monthly data traffic of 3G users has exceeded 200M; in 2014, it reached 61.9%.

In contrast, China Mobile’s voice revenue still exceeded 50% until 2014. In this regard, Tsang industry senior analyst Zeng Hao said: "China Mobile from the revenue composition, user size and ARPU value point of view are still in the 2G era. China Mobile is still in the pain of voice to data business transformation."

It can be seen that once the contestants form a clear enough judgment for the future, whether it is "consumption upgrades" or "model changes," a large amount of investment will always create barriers for competitors. The final result is only two: either eliminate friends or make most of the profits in the time difference.

Does this mean that LeTV will sooner or later suffer? Objectively speaking, it is not known. Although operators have verified the logic itself, "redefining core values" is only a means, and there is no causal relationship with the final market structure. In addition, there is a "can not be too fine" reason to believe that LeTV itself is also clear that the broader market's impact on it is far stronger than China's three major operators.

What Jia Yueting did not say

In Jia Yueting's open letter, there is such a sentence - "a theory that low prices do not have good products does not apply to the era of Internet ecology." Without careful look, this sentence almost overturned the foundation of the entire economics. As the boss of a listed company, I believe that Jia Yueting certainly knows that businessmen are profit-oriented; at the same time, “profit maximization” is also the eternal pursuit of businessmen.

Unless you decompose it, you will find that the "low price" in Jia Yueting's mouth is only a narrow sense of "low-cost hardware," because if this is the reasoning, negative television and super mobile phones with negative profits and even no money will certainly be garbage. This is what Jia Yueting said would not accept anything. In fact, his idea is: brand premiums, channel premiums, hardware premiums, and even hardware costs are all obstacles to changes in consumer models, and consumers do not have to pay for them. This is reminiscent of a Japanese brand in 1980:

At the time, world economic growth was in a downturn and Japan experienced a serious energy crisis. A Japanese man named Masaru Masaru realized that at this time people may need better quality and better products than ever, so he simply launched a grocery brand called “Good Products Without Brand Logos,” and the message was very good. Clear - consumers do not need to pay for the brand. And this brand transliteration comes from muji.

In contrast, channels and hardware are more realistic. They do not pitch like the air or the sun. Therefore, in the definition of economics, they are all goods, which are the means to satisfy human desires. So unless there is a complete disappearance of demand, they always have reason to exist, and you need to use other things (usually money) to trade.

Of course, those who took part in the LeTV 414 Hardware Free Day may say: "It turns out that we really did not pay a penny for the hardware." Then send you an old saying from Ming Tang Shunzhi's public transfer card - "Slightly On the loan day, the landlord will be returned to the landlord. The so-called 'wool is on the sheep'."

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