Good evening, ladies and gentlemen. Welcome to the Investor Conference Call hosted by Xiaomi Corporation regarding the company's 2019 Q3 results. I am Steve Lin, the Director of Corporate Finance and Joint Company Sector. Before we start the call, we would like to remind you that this call may include forward looking statements, which are underlined by a number of risks and uncertainties and may not be realized in the future for various reasons. Information about general market conditions is coming from a variety of sources outside of Xiaomi.
This presentation also contains some unaudited non IFRS financial measures that should be considered in addition to, but not as a substitute for company's financial prepared in accordance with IFRS. Joining us on the call today are our Founder, Chairman and CEO, Mr. Lei Jun our Senior Vice President and CFO, Mr. Shou Tzu Cho.
To start with, Mr. Zhou will review
the business and financial performance in the Q3 of 2019. Following that, we will move on to the Q and A session. I will now turn the call over to Mr. Qiu.
Hi. Good evening, everybody, and thank you for your continued support of Xiaomi. This is Shao here. I'm the CFO of the company. And I will begin by giving everybody a brief overview of our Q3 2019 results.
Now before we go into the detailed numbers, I would like to share some good news first. The first is Xiaomi was ranked number 7 on Fortune's Future 50 list, And this is an indication that at least the media believes that we have a lot of room to grow for our smartphone and AIoT business in the future. We will also rank number 57th in Forbes Top 100 Digital Companies in 2019. Now a very important thing in Q3 this year was that we have officially entered the new 5 gs era. We released our first 5 gs smartphone in China in September 2019 called Xiaomi 9 Pro and this phone has been very well received by the market.
We believe that 5 gs will in the next couple of years will bring new growth opportunities to Chinese smartphones and in the future will also capitalize a global smartphone shipment change. Apart from investing in 5 gs, we have also continued to invest in other innovative technologies. For example, in the Q3 of this year, we launched the futuristic Mi Mix Alpha. This phone is the world's 1st surround screen display phone with a 180% screen to body ratio. We believe that this is a breakthrough in screen technology for smartphones.
On top of that, we also launched Xiaomi CC9 Pro, also known as Mi Note 10 globally and this is the 1st smartphone in the world to support a 108 megapixel penta camera. This is again a breakthrough in the camera technology for smartphone. As a result of this, we were ranked by VXOMark as type number 1 for overall camera performance for CC9 Pro Premium Edition. And in terms of video, zoom and texture, we were ranked number 1. The reason why we can continue to deliver such innovative technologies is because we have continued to invest in R and D.
Our cumulative R and D expense from 2016 to Q3 2019 has reached RMB16.3 billion. And in the Q3 of 2019, our R and D expenses has increased almost 33% year on year. In terms of AIoT, we have maintained our leading position as a consumer global consumer IoT platform. As of the end of Q3 2019, we have 213,000,000 non smartphone, non laptop connected devices on our IoT platform. This number has grown 62% year on year.
The number of users with 5 or more connected Xiaomi devices has also grown to 3,500,000 people and this number has grown 78.7% year on year. As a result of this, we were listed on China's national open innovation platforms for next generation AI and we believe that this is a significant recognition of our contributions to the new IoT era. In terms of our financials, if we want to summarize our Q3 performance, it will be that we have chosen to operate prudently. And the reason we have done this is because we are preparing in advance to capture the 5 gs opportunities that are coming in the future. Our total revenue was RMB53.7 billion in Q3.
This is a quarterly historic high for the company with a year on year growth of 5.5%. Our adjusted net profit is RMB3.5 billion with a year on year growth of 20%. Now if we were to dive into each of the individual business lines, we'll first talk about smartphones. Our smartphone revenue reached RMB32,200,000,000 in Q3 2019. We sold 32,100,000 units of smartphones in Q3 2019.
Now the most important subject in our industry today for smartphones, in particular in China, is the upcoming 5 gs opportunity. It is true that from 2017 to 2019, the Chinese overall smartphone market has declined year on year. And this is especially true in the 1st 3 quarters of 2019, where the overall Chinese smartphone market has witnessed a challenging environment. We believe there are many reasons to make up for this and one of the important ones is that consumers are waiting for the 5 gs era to come, in particular after the commercial license of the commercial use of 5 gs licenses was issued in June this year. We have prepared our R and D resources for 5 gs for a number of years already.
In particular, in February 2019, we launched our first 5 gs phone, Mi Mix 5 gs in Barcelona. In September this year, we launched our first 5 gs phone in China called the Xiaomi 9 Pro 5 gs and of course the Mi Mix Alpha. In 2020, we have planned more than 10 5 gs devices to be launched into the market. Now in particular, on the 10th December, which is not very which is a few weeks from now, we will be launching the launch event of Redmi K30, which will be the 1st 5 gs phone under the Redmi brand. This is a phone that supports both SA and NSA.
We believe that this is a significant moment for 5 gs technology to be brought to the mass market and we do hope that everybody can give us their support during that day. Now over the course of our 9 years, Xiaomi's mission has always been to relentlessly build amazing products with honest prices to let everybody in the world enjoy a better life through technology. There are many examples of us doing this over the course of our 9 years. I will pick a few. The first is our Xiaomi 1st generation phone, where we launched a flagship phone at a RMB 2,000 price range, bringing flagship smartphone technology to the mass market.
In 2016, we launched the Redmi Note 3, which was the first fingerprint technology phone that we launched in the market under RMB 1,000. In February 2019, we launched the first 48 megapixel camera smartphone at under RMB1000 to the market and this Redmi Note 7 was very, very well received. Recently, we launched our 1st 5 gs smartphone in China at a price starting at RMB3700. Now the reason why I raised these examples is to display that Xiaomi is very, very good at making use of our industry leading operating efficiency to bring the best technology to the mass market as quickly as possible. We believe that at the beginning of the 5 gs era, the cost of producing 5 gs phones will initially be high.
Now because the cost of producing 5 gs phones will be high, we believe that this will enable us enable our superior operating efficiency to shine even better as we bring 5 gs phones quicker to the mass market. Now in preparation for this, in the Q3 of 2019, our focus was on healthy operations. This has led to continued margin expansion as our gross margin for smartphones increased from 6% in Q3 2018 to 9% in Q3 2019. Our net income margin has also increased as a result. Also very importantly, our inventory turnover days has gone down to 52 days, reflecting a very healthy inventory level as we prepare to capture the 5 gs opportunities, especially in the Chinese market in the few quarters ahead.
Now on top of this, we have continued to execute our smartphone multi brand strategy with Xiaomi establishing itself in the mid to high end and diversified user market and Redmi continuing to offer products at the ultimate price to performance ratio across a lot of major price points. Moving on to our AIoT business. We have maintained our leadership in the global consumer IoT market. Our IoT and Lifestyle product revenue stream reached RMB 15,600,000,000 in Q3 2019. This represents a year on year growth of 44%, maintaining a high growth rate.
Now in particular, our smart TV shipments reached 3,100,000 units in Q3 2019 with a year on year growth of 59.8%. This is a high growth rate on a large base. We've also ranked number 1 by shipments in Mainland China and number 5 globally last quarter. We launched the Mi TV 5 series on November 5, 2019, which is an all around upgrade at better price points for the future home. Now outside of televisions, we have also further expanded in the home appliances.
We launched our Mi refrigerator on the 11th October this year, completing our white goods offering of refrigerator, air conditioning and washing machines. We also launched a very important device on the 5th November, which is our Mi smartphone. If I were to summarize what this product does, it is basically a small smartphone that you can wear on your wrist. Because it supports eSIM, it is extremely convenient to use and it has received a very strong fanfare from our MiFam. Our AI assistant monthly active users also reached 57,900,000, representing a year on year growth of 68.6% in the Q3 of this year.
Our AI touch screen speaker won the 2019 Red Dot Design Award, the U. S. Industrial Design Award, the U. S. IDEA Award and the Good Design Award.
Next, our Internet services business. Our Internet services revenue reached RMB5.3 billion in Q3 2019, representing a year on year growth of 12%. Our advertising revenue excluding pre installations achieved a positive growth of 6.9%, reflecting a few trends. 1, the shift in preference for a lot of advertisers to more advanced advertising platforms outside of pre installation, which we have diversified and captured and also the overall challenging advertising market in China today. Despite this, our advertising revenue has increased quarter by quarter in 2019 from RMB2.3 billion in Q1 to RMB2.5 billion in Q2 to 2,900,000,000 in Q3 2019.
We believe that this is the result of our increased efforts to diversify our advertising base and to strengthen our overall advertising offering. On top of this, we launched MIUI 11 recently. MIUI 11 focuses on a few things, including minimalistic design, efficiency and connectivity, especially with IoT devices and also smart travel. As a result of all these work, we have experienced a strong monthly active user growth on our handsets. Our global MIUI MAU has reached 291,600,000 globally, while our Mainland China MIUI MAU has remained flat year on year at RMB112.8 million.
Our Internet service revenue stream is also increasingly getting more diversified. Today, 37.2% of our Internet service revenue is from Internet services outside of advertising and gaming from Mainland China smartphones. This, if you recall from last quarter, includes Yopine, our FinTech business, our overseas Internet services revenue and also Internet services revenue from our IoT products, including television. This increasing diversification is also experiencing fast growth. These revenue streams that I just mentioned experienced a year on year growth of 87 0.8% in Q3 2019.
In particular, we have continued to strengthen our overseas Internet services. Just as an example, our major Internet services in India, including our app store, our browser, our security center, video and music are ranked number 1 or number 2 on our smartphones in India today. We believe this serves as a very strong base for future monetization opportunities. Now speaking of overseas, our overseas revenues continue to grow year on year with a growth rate of 17.2% in Q3 2019. Today, our overseas revenue represents 48.7% of our total revenue.
For example, in India, we have maintained our leading smartphone position for 9 consecutive quarters. Q3 2019 market share in India for smartphone remained at a very high 27.1%. Another big highlight for us is our growth in the Western European markets. We are ranked number 4 by smartphone shipments in Western Europe in Q3 2019 with a year on year growth according to Canada of 91%. Our Spain smartphone market share has increased to number 2 in the country with a market share of 22.9 percent experiencing a 64% growth.
Now if we look outside carriers and only look at the open market, we are now ranked number 1 in the open market in Spain. Moving on to a few key financial highlights. First, we'll start with gross margin. As mentioned just now, due to our focus on healthy operations in Q3, while we are waiting for the new 5 gs opportunities ahead, we have increased our smartphone gross margin from 8.1% in Q2 to 9% in Q3 2019. Our IoT and Lifestyle Products gross margin has also gone up from 11.2% last quarter to 12.8% in Q3.
Our Internet service gross margin is at a strong 62.9%. The reason why it marginally declined from Q2 2019 is because of the greater proportion of FinTech business as a total as a percentage of our total Internet services revenue and the FinTech business has a slightly lower gross margin profile than the advertising business. The second is we are pilot testing and advertising network business And at the initial stages of this pilot test, the margin profile is not as high as our traditional advertising business. We believe that this gross margin will continue to be stable for the foreseeable future. In terms of our operating expense, as mentioned just now, our R and D expenses has increased 32.5% year on year in Q3.
And as a percentage of our total operating expenses, it has gone up to 3.8% versus 3% in Q2, twenty nineteen. Now despite this, we are still at a very efficient operating expense ratio of about 10%. We believe that the R and D efforts will pay off as we capture future 5 gs growth opportunities and we believe that we will continue to have industry leading operating expense ratios. In terms of inventory management as mentioned just now, our inventory turnover days has gone down from 65 days in Q1 to 52 days in Q3 2019. This is again due to our focus on healthy operations before the new 5 gs era.
We believe this puts us in a very favorable position as we have very healthy inventory levels today. Our operating cash flow has also performed strongly in Q3. Our adjusted operating cash flow adjusted for Internet Finance is a positive RMB3.6 billion in Q3 2019. As a result of this, our cash resources has increased to RMB56.6 billion by the end of the Q3. If you include the book value of our investments, the book value of our office and other real estate and deduct our financial debt, our total cash assets is now at RMB 80,700,000,000 and this has increased RMB 5,100,000,000 this has increased by RMB 5,100,000,000 in just one quarter.
This number was at about RMB75 1,000,000,000 in Q2 2019. This concludes my very short presentation before we go into questions. In summary, the focus in Q3 for Chinese smartphones was on healthy operations as we prepare ourselves for the new 5 gs opportunities ahead. Our AIoT operations continue to grow strongly. Our overseas business continues to expand at a rapid pace.
Thank you for your attention, and this concludes my short presentation. We will now move on to Q and A.
Thank you. Ladies and gentlemen, we will now call for questions. Thank you. Our first question comes from Grace Chen with Morgan Stanley in Hong Kong. Please go ahead.
Thank you.
Yes. Thank you for taking my question. My question is about the 5 gs smartphone replacement cycle. Can the management share with us about what's the status now and how much do you expect the 5 gs smartphone will be by end of next year actually? And what are the key successful factors to contribute to the replacement cycle?
And what's Xiaomi's competitive edge in this 5 gs upgrade? Thank you.
Thank you, Grace. Let me translate for management here. Next year is the 1st year of proliferation of 5 gs smartphones and we will be launching more than 10 models of 5 gs smartphones next year. We believe that the 5 gs total penetration for the market in China could be between 40% to 50% next year. Once we enter the 5 gs era, the 5 gs cost of production is higher than 4 gs phones.
Because of our superior industry leading operating efficiency, we are very well positioned to launch 5 gs phones at a very, very attractive price. We believe that this will be very attractive for a lot of users. Within the next 3 to 4 years, almost everybody's smartphone should become a 5 gs smartphone. This is a very massive market demand. Also, very importantly, over the last few quarters, we have emphasized some healthy operations.
This means a few things. It means that our cash reserves are very, very adequate. It means that our inventory levels are very healthy. Both inventory levels on our balance sheet and also within our channels. This will give us a very big advantage in capturing the opportunities when the 5 gs era begins very, very shortly.
Our next question comes from Leiping Huang with CICC in Hong Kong. Please go ahead. Thank you.
Thank you for taking my question. So the question is also about 5 gs. So where we will see your RMB 1,000,000
Let me translate the question first. The question is when will 5 gs phones be at RMB 1,000 price point? In order for smartphones to reach RMB 1,000 retail price and for this to be pushed to the mass market, this could be something that will happen in 2021.
The second question is about your overseas development on the smartphone. So what's the progress of since we see a lot of opportunities, I think, especially in the overseas operated market. So when we can see what's the latest progress in Xiaomi sector?
We have only been in the Western Europe market for roughly 2 years. And today, we are already number 4 in the market, experiencing very high growth at 70 plus percent year on year. For example, in particular in Spain, we are now number 2 in the overall market with about 22.9% market share and number 1 in the open market. Now this is a relatively incredible achievement to have been done achieved in only 2 years. Now regarding the carrier market, this is a to be business and we will need a bit of time to expand and scale.
We'll take the next question please.
Thank you. Our next question comes from Donnie Tan with Nomura in Taiwan. Please go ahead. Thank
you. Good evening management. My first question is regarding to smartphone gross margin in Q3. So the gross margin in Q3 improved from 8.1% to 9%. Could you quantify how much percentage is from like foreign exchange or product mix, they empower to overseas market?
And my second question is regarding to our smartphone gross margin next year. If we, at the same time, want to regain some market share in China with more 5 gs smartphone shipment, what kind of reasonable gross margin for smartphone business would be? And my third question is regarding to Internet business. So if we assume like the Internet sales from China smartphone related business to be flat? And what kind of sales percentage would be from non China smartphone business going forward.
So in Q3, we have already around close to 40% is from non China smartphone related Internet business. So what kind of percentage we should expect going forward? Thank you.
So for your first question on gross margin, we believe that the 9% gross margin that we have in this quarter is actually reflection of normal operations. And this is a normal gross margin for us to have. In normal conditions, our gross margin should be at around 8% to 9%, We believe that this should be stable over time, including for next year. So your question on how much of it is ForEx, how much of it is overseas market, how much of it is product mix, we think it's just this is just a this number just reflects a normal gross margin profile that we should have. So that's the first question.
And the second question? Regarding your Internet question, so your question was what percentage of in the future, what percentage of our Internet services revenue will be from smartphones outside of China? Now today, our Internet services revenue from FinTech, from Yopine, from overseas phones and from TV is increasing at 88% year on year and is already at 37.2% of our total revenue. Although this is quite some distance from the majority, the growth rate is very fast. The work we are doing right now in certain geographies, for example, in India and Indonesia, is to make sure that we are building very strong Internet services for our users.
For example, our app store, our browser, our video, our music apps in India are already at the number 1 or number 2 position in terms of DAU on our smartphone platform. Now once you have the users using all these services, you create the inventory and the opportunity to monetize. So I think we're on the right track. Now we won't give a forward looking statement on exactly what percentage it is, but I think you can look forward to a bigger percentage of our Internet services revenue coming from the overseas market in the future.
We'll now take the next question.
Thank you.
Our next question comes from Kino Wang with Credit Suisse in Hong Kong. Please go ahead. Thank you for taking my questions. I would like to ask about the R and D investment or the Tapas investment for 5 gs in the future because we see that in terms of R and D spending, it actually went up in Q3. And this kind of level will be sustainable or not.
Should we like also consider like more R and D effort in the next year in preparation for like 5 gs or like even like sub 1,000 price points of 5 gs phones in 2021. So and also the CapEx because we also like know that some factory in Beijing that is for like some testing or like some self I mean, preparations for the 5 gs. So wanted to see if there's any further CapEx investment for 5 gs phone as well. This is first question. The second is about the Internet business.
In terms of the Fintech business, we see as high growth, but is this sustainable? What should we expect in the future? Is this because there's some kind of uncertainty in the market, maybe related to regulations and all things. So should we like also expect this would be one of the key driver in 2020 Internet business?
Okay. Gina, give me a second, please.
Yes.
Okay. For the first question, our R and D expense for Q3 this year was had a year on year growth of more than 30%. And Lizun expects that by the end of this year, our total R and D expense for the year should be at around RMB7 1,000,000,000. Now he believes that for 2020, it will be at a reasonable level. And our R and D today is appropriate for our current business plan.
And of course, we will plan and adjust our R and D cycle according to our business needs. This is something that he believes is appropriate at this level and we will increase appropriately over time. So that's the first question. Now in terms of the second question on 5 gs, we began our R and D in 5 gs starting from 2017. And he thinks that we are well prepared to take on all the opportunities that the 5 gs smartphone business will bring for the future.
Just to clarify, this R and D expense is in our P and L. It is not a capital expenditure. Now in terms of the factory news that you heard just a few days ago, this is a pilot test where we are trying to push the industry to innovate in efficiency and automation. It will be a pilot test at a scale where we can continue to push the industry forward. And for the foreseeable future, we intend to continue to maintain very strong working relationships for the manufacturers who perform assembly for us at this point in time.
Now for your second question on the FinTech business, our FinTech business is generally speaking, you can understand it as 2 pillars. The first is consumer finance business, which mainly revolves around our smartphone users. We provided as an additional Internet service to our smartphone users and we have the appropriate license and comply with all the rules and regulations in terms of this business. Now the future growth of this business is still something that we can foresee even after complying with all the rules and regulations locally and this is because we have the resources to get all the licenses in place. But the second part of the business which is very exciting for us is the supply chain financing business, where we are making use of our strength in the manufacturing space and also our deep relationships with our partners to build a fintech business for our supply chain.
Now sometime in the future when it is the right time, we may further break down these two businesses to disclose appropriately. But I just wanted to give you a sense of what it actually is.
Okay, we'll now take the next question.
Our next question comes from Piyush Mubur with Goldman Sachs in Hong Kong. Please go ahead.
Thank you for taking us through your 3 your 5 gs opportunity. If you dig deeper through that, could you give us a sense of what you think your strength is as you roll out 5 gs smartphones in the country, 1st? And second, could you look at what the potential market share could be for you in the 5 gs smartphone business in China? And finally, what it implies for our user number for China, which has been flat year on year at 112,000,000 dollars so we can get a better assessment of what it means for profitability for the overall business. Thank you.
Okay. Give me a second, Piyush, let me translate these 2 first. The first advantage in the 5 gs era is comes back to our operating efficiency. Our 9% gross margin means that we only need to add roughly 9% to the price for us to break even here, whereas some of our competitors need to add a lot more in order to breakeven. So we believe that our operating efficiency will allow us to very quickly bring 5 gs devices to the mass market because of our operating efficiency and the model that we have employed.
Now the second advantage is we have prepared very early for this 5 gs transition and actually we talked about it in quite a bit of detail last quarter as well. Our inventory levels now are very healthy. And Lei Jun gave an example for the single day sale that happened recently where we were very conservative. And some people didn't understand why we were so conservative. It is because we don't have unhealthy levels of 4 gs inventory and there was no need for us to take massive losses for this.
So because we are prepared earlier for this 5 gs transition, what we see internally is that, and I quote, this is we have basically cleared out our warehouses so that we can take off during the 5 gs era, loosely translated. Okay. The third is we have a very innovative culture and a very sustained R and D investment and efforts. This has led to a lot of technology breakthroughs for us. Now RMB 7,000,000,000 is actually a very large number for R and D expense in China.
Now of course you may be comparing us to 1 company, which claims to have a very big R and D expense. But what is also important is not just a mere numbers, but you need to have a very innovative culture. Now he gave 2 examples. 1 is the SAID competitor has always been very proud of their camera technology, and they found a very authoritative third party called DxOMark. And within 2 years of us innovating in this field, we are now tied number 1 in terms of camera technology according to DXO market.
It only took us 2 years to get there. In terms of wireless charging technology, we are now leading globally. So this continued R and D investment and innovative culture is a very significant advantage that we have.
We'll now take the next question.
Our next question comes from Gokul Hariharan with JPMorgan in Hong Kong. Please go ahead. Thank you.
Thanks for taking my question. So first of all, on the service business, could you talk a little bit about margin trends across the different businesses, ads versus Internet Finance versus Value Added Services? And secondly, what is your outlook for advertising given even X pre installed is growing at single digit? What does the current building of your own ad network business, etcetera, do to recapitalize the market or recapitalize Xiaomi's advertising growth in internal services?
Gokul, I'll answer this question. So it's broken down into a few parts. Your first question on margin trend, I think the overall answer is that this current margin level of 62 point something percent, we believe is a very sustainable number for the foreseeable future. Now the breakdown of advertising, Internet, finance and value added services can get very complicated, but you can think about it this way. Overall blended and based on what we can see for future growth, we believe that this kind of 60% plus margin profile is sustainable for the foreseeable future.
Now in terms of the advertising outlook, I think it's fair to say that it has been soft for since the beginning of this year for the Chinese market. Now because it is soft, I think it has compelled us to start building sort of more sophisticated recommendation engines and deliver better ROI for advertisers starting from very early this year and the back end of last year. And what you're seeing now with the growth of our ex pre installation advertising revenue, especially the growth for 2 consecutive quarters on a quarterly basis is the initial results of us strengthening these parts. So it is about building stronger recommendation engine. It is better use of the big data subject to all the privacy compliance that we need to adhere to.
And it is also about expanding our advertising base from Internet companies only in the past, which is about a year ago, to more sort of traditional advertisers such as the traditional finance industry, such as small to medium enterprises, such as education, so on and so forth. Now we believe that diversified strategy is the best way to make the business more robust. And because if you compare our advertising revenue to the entire advertising industry in China, the fraction the proportion and penetration is still very small. So as we diversify our base, this will allow us to continue a very sustained path of growth. And then as the advertising market turns, as the economy sort of picks up in the future, we believe this puts us in a good position for even more accelerated growth.
Okay. Thank you.
And our next question comes from Johnny Tan with Nomura in Taipei. Please go ahead.
Thank you, management, for taking my question again. I just have one follow-up question regarding to Chairman's smartphone gross margin target of 8% to 9% next year. Originally, I was thinking that Xiaomi's priority is to regain some smartphone market share in China. So to do that, Xiaomi may need to have a more aggressive pricing strategy when entering into the 5 gs era next year. And also considering that the bond cost of 5 gs smartphone may be like RMB300 to RMB500 higher than 4 gs smartphone.
So I would be surprised if Xiaomi can regain market share in China and at the same time to maintain the gross margin at 8% to 9% next year. So could you elaborate more how could we do that by is there any specific strategy or reason behind? Thank you.
Okay. Give me a second, please. So our price to performance ratio is a relative metric. It means it is always relative to the pricing of our competitors. Now precisely because the BOM of 5 gs phones will increase, our competitors have a higher operating expense and they basically have no choice but to increase their prices.
So it is a relative relative measure in terms of us having better prices in the market and this is a reflection of our superior operating expense. Now 8% to 9% gross margins is actually already not high. It is a low number and because our business model focuses on more efficient channels like e commerce, so at the end of the day, the consumers can still get a phone at a very good price even if we sell our phones at 8% to 9% gross margin. So there is no contradiction in the way we look at it.
We will now take the last question.
Thank you. Our final question comes from Robert Cow with Exact Research in Shanghai. Please go ahead. Thank you.
Hi, management. Thanks for taking my question. I also want to ask about 5 gs, but I'm interested in the implications that the transition to 5 gs is going to have on your IoT business. How are you thinking about IoT in the context of 5 gs era? Thank you.
Okay. Give me a second. So Linjun believes that the 5 gs new 5 gs era will actually have very profound impact on the IoT sort of experience for users. And of course, initially, 5 gs will initially sort of benefit smartphones first. But because the whole 5 gs technology is actually designed for the Internet of Things.
So maybe in 2021, 2022, you can see how this technology will be brought to more and more IoT devices. And because we already have such a leading advantage in our IoT consumer IoT platform today, we're very well positioned to capture these opportunities in the future.
Okay. Thank you all. This concludes the call today. Thanks again
for joining us. Good night. Thank you.