By Li Panpan
Chinese automobile makers are starting to build mobile phones, entering the red ocean market, to improve car user experience, while mobile phone brands also want to compete for market share in the next trillion-dollar market of automobiles, reported JW Insights.
Chinese automaker Geely acquired Meizu, an established mobile phone brand, to enter the mobile phone field one month ago. The EV startup NIO recently said to release its first flagship mobile phone model next year.
Mobile phones are regarded as the best entrance into the Internet of Everything and possibly the key to unlocking the future world of smart cars. Although the pandemic and macroeconomic environment have further slowed down the already-sluggish mobile phone market, Chinese car companies want to combine mobile phones and vehicles to improve user experience and boost car sales.
Li Bin, the founder of NIO, said, “NIO’s second-generation platform vehicles are equipped with standard UWB, but Apple has not opened up interfaces. We must also study mobile phones and smart devices centered on vehicles to ensure user interests and experience.”
“Mobile phones have become the preferred device for connecting with cars. Once you have your mobile phone, you will be exempt from the restrictions of other mobile phone manufacturers to build the ecosystem of cars and mobile phones with more say,” said an automobile industry insider.
The downturn in the mobile phone market also provides opportunities for companies interested in entering this field to hunt for bargains, said the JW Insights report. Geely acquired Meizu to complete its layout in connecting users and cars, just as Tesla is doing now.
Cui Dongshu, Secretary General of the China Passenger Car Association, said automobiles would inevitably be connected with mobile phones in the future. Although the competition in the mobile phone market is fierce, car manufacturers will encounter bottlenecks if they do not enter the market now.”
But it’s tough for them to profit by selling mobile phones directly. A mobile phone industry insider said, “In the past few years, China’s mobile phone manufacturers have been working on high-end products but failed in general. With the rising average market price, they have not made much profit. Car manufacturers can’t make a profitable mobile phone.”
Therefore, the possible business model for car companies is to combine a mobile phone with car sales, such as buying a car with a free mobile phone or free packages and encourage consumers to use its embedded software and services.
However, industry insiders are very cautious about car manufacturers’ efforts in the mobile phone market. Sun Kai, an analyst at Red Sandalwood Data, said it would take at least two to three years to connect the car system with current mobile phones, and users won’t use it even if it’s free, and it might have a lousy user experience.
Cui Dongshu also said that car companies’ investment would be insufficient if the limited production scale of mobile phones results in higher costs.
Mobile phone manufacturers are also accelerating their efforts in the automobile business. Their experience in operating systems, system integration, and debugging over the years can be reused in the automotive field, taking the lead in the market with a vast user base, said the JW Insights report.
Unlike the mobile phone industry, where one iPhone eats up more than half of the market, the market share of brands in the automotive market is relatively scattered, bringing a broad market space for new mobile phone companies in the automotive industry. But they face a significant challenge in OEM production.
A car is a long-life product with strict requirements for reliability and safety. There are huge differences between different models, making it difficult to achieve a highly standardized design like a mobile phone, and the requirements for manufacturers are also higher.
However, smartphone manufacturers have been benefiting from the trillion-dollar market with the rapid development of the mobile Internet in the past ten years. And they won’t give in on the next trillion-dollar market of smart cars.
Several mobile phone brands, including Huawei, Xiaomi, and Apple, have all laid out in the automotive business.
Huawei said it wouldn’t manufacture cars, but it provides a complete solution with an MDC computing platform, in-vehicle system, and autonomous driving. Seres’s car embedded with Huawei’s Harmony OS has been mass-produced.
Xiaomi has a 500-person research team with a soft-mode car to enter off-line in September.
Apple’s new CarPlay system will be mass produced in 2023, with 98% of cars in the U.S. supporting its CarPlay currently.
Facing those aggressive efforts, it is not surprising that car companies have begun to take action centered on autonomous driving.
However, neither mobile phone nor car manufacturers have explored operating modes that can satisfy consumers, especially in in-vehicle systems, although many companies have made their systems, such as BYD DiLink, Geely Galaxy OS, and NIO OS.
Fifteen years ago, Steve Jobs launched the first generation of the iPhone, triggering a smartphone revolution. Now, it’s time to see whether the battle between auto and mobile phone manufacturers will bring about a new round of changes in smart cars, said the JW Insights report.
