Why Vsmart suddenly “revived” ambition to develop high-end smartphones?

High-end Vsmart is not a new story. In the event of launching the first smartphones (Joy and Active), VinGroup announced the “Vsmart Lux” in the high-end segment and “Vsmart Super Lux” in the super-premium segment. Bearing the same name as the high-class sedans and SUVs manufactured by VinFast, these smartphones then … became unreliable. Vsmart continuously creates buzz on the market, from the discount campaign for the first generation Live to the groundbreaking ceremony of a factory with a capacity equal to 1/8 of global smartphone production.

However, Vsmart will not always be a cheap name. In a statement to the press, Mr. Tran Minh Trung, Deputy General Director of VinSmart affirmed:

” Currently, we are hiring Pininfarina – the world famous Italian designer to design phone cover for Vsmart’s high-end line, the mechanical and software part will be designed by Vsmart engineers. By the end of next year, this product will be launched to the market “.

In the future, there will be high-end Vsmart.

Mr. Trung’s recent announcement about high-end Vsmart phones is therefore somewhat unexpected. All the steps of Vsmart in the past year are not in the shadow of the high price segment. As the Lunar New Year holidays are near, mentioning Vsmart is still referring to cheap smartphones. Its latest product, Active 3, fell sharply after being released for just a few weeks. The repercussion of the 100,000 Vsmart donation to VinHomes residents is still quite clear, and this will probably be the story that continues on Tet. Even the direction of focusing on cheap price and universalizing the current market is the right direction for Vsmart: with the vision of building a digital ecosystem, loss-making smartphones will be an effective tool. for Vsmart to collect data and popularize the service.

So, why is Vsmart rushing towards such a low price segment? The first reason to think about is global ambition. By February 2020, the capacity of the VinSmart super factory in Hoa Lac will officially reach 125 million units, equivalent to one-eighth of global smartphone production per year. At the same time, the Vietnamese market consumes approximately 15 million units each year. Although the number of 125 million units / year will include both Vsmart and processed products, Vsmart will clearly not be able to limit its ambition in the domestic market.

When producing 125 million units / year, Vsmart will have to encroach into new price segments.

This also means that Vsmart is forced to gradually move towards higher price segments. The global smartphone market has leveled off during the past 3 years, buying or standing still or declining. At the same time, the price of smartphones to consumers continues to rise , especially in markets that have just “begun to saturate” like China. In other words, users no longer buy new phones, but the money they spend on the second or third phone will increase day by day.

Nearly any international phone carrier has moved to catch the trend. In addition to high-end “regular” smartphones, Apple and Samsung last year launched affordable high-end products such as Galaxy S10e or iPhone XR, iPhone 11 to welcome the group of mid-range upgrade users. Brands that are inherently cheap, such as Xiaomi or OPPO, also increase the number of expensive options, while OPPO even launched a new product line (Reno) to attack the hot segment. .

As a latecomer, Vsmart must also have weapons to confront soon: users who buy Joy + or Bee 3 will also have an upgrade date, and if Vsmart does not have Lux or Super Lux, they will switch to buy Samsung or OPPO to replace.

To be profitable, Vsmart must move to the high-end segment.

The shift from cheap smartphones to high-end smartphones has also brought another change: from losses / breakeven to profits. Because component costs and assembly costs from low-end smartphones to high-end smartphones do not change too much, switching from cheap smartphones to high-end smartphones will help Vsmart bring VinGroup higher profits today. VinGroup’s “fast, compact, for-profit” business philosophy has always been clearly shown in the business history of this group, and perhaps at some point Vsmart will have to become a profitable tool instead. for the role of ” money-burning tool of the future ” as it is now. The only direction that Vsmart can pursue is to shift to a more expensive, more luxurious smartphone.

Finally and perhaps equally important, high-end smartphones are the last piece in the pride of Vietnam that VinGroup has always mentioned. In the first two production segments involved since changing into a technology company, VinGroup’s car segment has achieved initial success when reaching over 17,000 orders, of which Lux orders show that the cars of Vietnamese people have been able to stand somewhat on a par with foreign cars. But the “smartphone” of the current Vietnamese people have not been able to close to the Galaxy or mid-range iPhone. It is only when there is Vsmart Lux that the pride of VinGroup is truly accomplished.

This pride will not only mean spiritual. Take a look at Samsung and HTC: the same names emerging in the “early” era of Android, HTC failed because the strategy was so chaotic in the years 2010 to 2012. At the same time, when Galaxy S created As the iPhone’s only rival, the entire Galaxy “home” was also fragrant, allowing Samsung to quickly take Nokia’s throne. Until now, even on lower-end products, the Samsung brand still has a more positive meaning than Chinese brands like OPPO, Xiaomi and Huawei.

Vsmart will have to work very hard to change segment images.

Anyway, the road ahead is still very long. Over 13 years of development, the “modern smartphone” is going to the limit of creativity as companies struggle to find differences compared to competitors. Sometimes, this mysterious situation makes them create meaningless or annoying features for users, such as Apple’s 3D Touch, Samsung’s Bixby button or the screen surrounding Xiaomi’s body.

Want to join the high-end segment, Vsmart will also have to answer that question: what is the difference that Vsmart can create in a forest of expensive smartphones but experience each other? The answer will probably be given by the largest corporation in Vietnam later this year, and it is probably the smartphone that is worth the most Vietnamese people waiting for in the first year of the new decade.