Brands set their sights on multibillion dollar market

Visitors view introductions to technologies related to the IoT during an expo in Xiamen, Fujian province. (YANG FUSHAN / CHINA NEWS SERVICE)

With advances in 5G and artificial intelligence technologies, Chinese smartphone vendors are doubling their bets on the next battlefield, the internet of things, or IoT.

They aim to avoid relying too much on smartphone and hardware business, instead creating new revenue streams in the era of 5G and consumer IoT, where everything from refrigerators to automobiles and lamps can be connected to the internet.

Sixteen percent is a threshold for an operating system’s ecosystem to develop prosperously. It is a threshold that Huawei must attain

Wang Chenglu, president of the software department at Huawei’s consumer business group

According to experts and company executives, consumer IoT not only adds convenience to consumers' homes and daily tasks, it helps them stay connected on the move, offering companies an opportunity to better tap a multibillion dollar market.

The global consumer IoT market is forecast to grow from $97.5 billion last year to an estimated $168.34 billion by 2025, registering a compound annual growth rate of 17.48 percent during this period, according to market research company Market Data Forecast.

Sensing the prospects, Chinese companies are moving quickly to establish a beachhead in the sector by using their smartphone user bases and experience in integrating hardware and software.

For example, Xiaomi Corp, which outperformed Apple Inc to become the second-largest smartphone vendor by shipments in the second quarter of this year, is stepping up development of its AIoT ecosystem.

The company, which is based in Beijing, said last month it had officially registered its electric vehicle, or EV, business with a registered capital of 10 billion yuan ($1.55 billion). This move is part of Xiaomi's broader plan to spend up to $10 billion over the next decade on the EV business.

Varun Mishra, an analyst at market research company Counterpoint Research, said that at first glance, the automobile sector may seem an unlikely business for Xiaomi to enter. However, this is not the case thanks to two broad trends in this sector－electrification and digitization.

Cars of the future will be more connected, generate a wealth of data for analysis, and have greater processing power and more engagement with the user, similar to smartphones and other connected devices. This is what Xiaomi will focus on, Mishra said.

The Alibaba Cloud IoT booth during an industry expo in Xiamen, Fujian province. (YANG FUSHAN / CHINA NEWS SERVICE)

Over the years, Xiaomi has built an ecosystem with smart devices, smart homes and smart white goods. It is also looking to provide this digital ecosystem experience through cars, Mishra added.

He said Xiaomi aims to have control of the software－and thus streams of user data－on which it can build revenue models.

"Thanks to its smartphone and IoT business, Xiaomi has strong know-how on integrating software with hardware, building revenue models on top of this. It has a strong brand name with a large user base, which also gives it an advantage," Mishra said.

Xiaomi said more than 374 million IoT devices, excluding the company's smartphones and personal computers, have been connected to its AIoT platform by the end of June. More important, over 7.4 million users have five or more IoT devices connected to Xiaomi's platform, and its smart home app now has 56.5 million monthly active users.

In the second quarter of this year, Xiaomi also overtook Apple to become the top-shipping wearable band vendor, according to market research company Canalys.

Xiaomi's domestic rivals Huawei Technologies Co, Oppo, Vivo and Realme are also moving in the same direction.

Chen Mingyong, CEO of Oppo, said the company has been working hard to enrich its IoT product portfolio with smart televisions, smartwatches, earbuds and other products.

"Oppo will continue forging ahead and strive to become the explorer and leader in the era of integration of all things … We will win the battle of transforming from a pure mobile phone company into an ecological technology company," Chen said.

Oppo has shared its vision of building an IoT ecosystem covering the key categories of smart devices and four specific scenarios－personal, family, travel and office.

Vivo announced its IoT strategy in 2018 with the launch of its first connected platform, Jovi IoT, aiming to take on the smart home market by enabling users to control their devices with its voice assistant.

Realme, a fast-growing Chinese smartphone vendor, unveiled its first laptop in August after it had sold more than 100 million smartphones worldwide. The launch was part of the company's latest push to build a robust IoT ecosystem.

HarmonyOS is promoted at a Huawei store in Shanghai. (PHOTO PROVIDED TO CHINA DAILY)

Xu Qi, vice-president of Realme, said: "The company has accumulated a sizable fan base in the past three years, which has provided us with a turning point from making a quantitative change to a qualitative change. We are now accelerating work on building an artificial intelligence-enabled IoT ecosystem, with notebooks being an important part of that."

Xiang Ligang, director-general of the Information Consumption Alliance, a telecom industry association, said consumer IoT is the next battlefield for smartphone giants.

Laptops, as productivity tools, will play an extremely important part in people's daily work, making such devices essential for companies' growth strategies, where they will seek to exploit the opportunities presented by various types of connected devices, Xiang said.

In addition, smartphone brands are aware of the rising demand for personal computers during the COVID-19 pandemic, which has produced a new working-from-home, or remote operations, culture, Xiang said.

Huawei Technologies Co, whose smartphone business was temporarily hampered by restrictions imposed by the United States government, is also stepping up development of its IoT business, which includes smartwatches, PCs, TVs, earbuds and other consumer electronic devices.

The company's self-developed operating system, HarmonyOS, is designed for the IoT era, and can deliver a "smooth experience "across different devices. In the middle of last month, Huawei announced that more than 100 million users had upgraded their smartphones' operating system to HarmonyOS 2.

Huawei said more than 300 partners, including home appliance maker Midea, artificial intelligence company iFlytek and cookware company Supor, have embraced HarmonyOS.

Xiang Jiangxu, vice-president and chief technology officer of Midea IoT, said earlier, "HarmonyOS will cover almost all categories of our products－some 200 varieties－within this year."

HarmonyOS will help build an efficient link between Midea's products and the smart IoT system, Xiang said, adding that more home appliances equipped with HarmonyOS will soon be available.

Huawei expects that this year more than 40 mainstream brands will become new partners of HarmonyOS.

This can help Huawei achieve its goal of 300 million devices being powered by HarmonyOS by the end of December, including more than 200 million of its own, with the remainder being third-party company equipment.

Wang Chenglu, president of the software department at Huawei's consumer business group, said the short-term market share goal for HarmonyOS' ecosystem is 16 percent.

"Sixteen percent is a threshold for an operating system's ecosystem to develop prosperously. It is a threshold that Huawei must attain," Wang said.

Fu Liang, an independent technology observer, said Huawei is taking a more fundamental step in building the software foundation for the IoT era.

The road ahead is very tough, but if Huawei can make it, this will give it a big advantage in the IoT battlefield, Fu said.

masi@chinadaily.com.cn