50: The price of ointment suddenly increased

"To borrow a quote from Red Star's CEO Lu, technology shouldn't be high and mighty; it should serve everyone. In this era of rapid smartphone development, our China still has many low-income groups and many young people who have just left school."

"They urgently need a phone that is cheap yet powerful in performance. This was my original intention when I created the Hongmi phone. So, for such an excellent phone, what is its price?"

"You may have already seen the news of the price cut for the Red Star shining 2. As for why the price was cut, I believe everyone knows a bit about the reason. I won't go into detail here, but it definitely has nothing to do with our Hongmi series."

"Hahahaha..."

The audience all showed knowing smiles. Chen Chen looked at Lei Jun on the stage, who was also smiling, and had an ominous feeling in his heart. In his previous life, the hongmi 1 was 799, but he had already lowered his price to 699 in advance. Moreover, with the same configuration, his own shining 2 had certain advantages in charging and screen quality. Lei Jun wouldn't have much of an advantage even if he priced it at 699.

But for some reason, Chen Chen’s heart kept drumming. Lei Jun couldn't be learning from Boss Jia, could he?

Selling phones at a loss?

Taiwan Novel Website is good for boredom, super smooth.

"Last night, after an overnight discussion with our Xiaomi executives, they were finally persuaded by me. The price of our hongmi 1 is—699 yuan!"

Before the audience below could cheer at this price, Lei Jun continued:

"Our Xiaomi was founded three years ago today. This company embodies the dreams of us seven old men. We dream of letting all consumers in China use high-quality, low-priced, and good technological products. Therefore, the price of 699 is far from enough."

"We are offering another 50 yuan discount for the initial launch! It only costs 649 yuan. This powerful, sturdy, and durable 1st generation hongmi 1 only costs 649 yuan."

"Of course, this is a limited-time offer. Any user who participates in the pre-order in April can enjoy this price."

Looking at the price of 649 on the big screen, Chen Chen was a bit dumbfounded. Not just Chen Chen, but many heads of manufacturers watching the live broadcast were also a bit stunned.

You can even play it like this?

No, your Xiaomi pricing at 699 was already on the verge of losing money. Setting it at 649 is definitely going to be a loss. Everyone relies on domestic suppliers; one can tell the approximate cost of this configuration at a glance.

"Um, Mr. Huang, are we still going to make the hundred-yuan phone?"

Bai Yongxiang, who was watching the live broadcast with Old Huang, swallowed hard. This price was even more lethal than Red Star's 799 shining 2.

"We'll do it. Why wouldn't we? Now that we have Alibaba's capital coming in, the hundred-yuan phone market is huge. Red Star and Xiaomi definitely can't eat it all. It's the perfect opportunity for our Meizu to show its strength."

"Then this price..."

"If we can't out-compete them on price, then don't. Our Meilan's configuration is higher than theirs, and with the design I personally handled, it's okay to be a bit more expensive than them."

Old Huang's thinking was actually the same as Yu Chengbei's. Since we can't beat you on price alone, we'll start from other aspects to compete, such as aesthetics and design, and then tell a good story. With China's market, there's definitely no worry about sales; it's just that our sales volume will be a bit lower than theirs.

Your Red Star and Xiaomi's first generation is 600-plus; can you still achieve this price for the second generation?

With the announcement of the 649 price, Lei Jun also directly released a big move: immediate stock!

"This time, our hongmi 1 reservation channel will open after the press conference. The initial launch will be on the Social Media Platform. I hope everyone pays close attention."

After the press conference, Chen Chen returned to his car, thinking about the company's next step. No one expected Lei Jun to have such great courage to sell at a loss just to counter Red Star.

Just then, Shen Rou sent him a message: "CEO Chen, Qualcomm has sent us a notice. Starting from next quarter, they are raising the post-patent fees."

Seeing this news, Chen Chen stopped thinking about Xiaomi and immediately drove back to the company.

Qualcomm holds many patents in 3G and 4G, which are their source of income. Although Red Star now uses self-developed chips for processors, it still needs to use some of Qualcomm's patents for radio frequency, communication, and some supporting technologies.

Qualcomm's patent fee collection has not changed yet; it is still collected based on the factory price of the phone. This is extremely frustrating. In other words, for every phone you sell, you have to pay a certain percentage of the patent fee based on the factory price.

This doesn't even include the patent fees already paid. Qualcomm calls these pre-patent fees and post-patent fees.

According to the factory price of the Kunpeng mobile phone, for every Kunpeng mobile phone sold, a patent fee of 9 USD must be paid to Qualcomm, and for every red star 2 sold, there is a patent fee of 6 USD.

Looking at this fee alone, it's not much. But when the 4G era arrives, Qualcomm's patent fees will begin to increase significantly. By then, the patent fees paid will probably start at double-digit USD.

Of course, every overlord has its own era. Qualcomm holds the position of overlord in the 4G era. When the 5G era arrives, the position of communication overlord will be replaced by other companies.

Chen Chen also wanted to learn from Huawei before his rebirth, to seize opportunities and gain a certain initiative in the future 5G and 6G eras of this timeline, thereby obtaining a higher status.

Otherwise, like now, it's too uncomfortable when Qualcomm raises prices whenever they say so.

After Chen Chen returned to the company, Lu Weibing, Lu Weiqi, and several others were already waiting for him in his office. Seeing their grim expressions, Chen Chen asked what was going on and why Qualcomm suddenly raised prices.

"CEO Chen, let me explain."

"After I received the notice from Qualcomm, I asked some of my former colleagues and friends. Gionee, Tianyu, and Transsion have not received any notice of price increases. I suspect this is Qualcomm targeting us."

Lu Weiqi's network in the mobile phone circle was wider than Chen Chen's. He immediately called to ask if the price hike was an isolated case or if everyone's prices had been raised.

But the news he received made his heart sink halfway. No other company had received a notice of price increase except for Red Star.

"F*ck Qualcomm."

Lu Weibing, who was always a kind and refined man, directly swore.

This price increase doesn't look like much. Take the Kunpeng mobile phone for example: the original patent fee was 9 USD, and based on the ratio after the price increase, it's just a little over 10 USD.

But this is definitely a very bad start.

If you, Red Star, accept a 1 USD increase, what if I raise it by 5 USD next time?

What if it's 10 USD? Will you accept it or not?