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HomeBiz TechXiaomi Says It's Not Making Money From Selling Smartphones, So What Is Its Strategy?

Xiaomi Says It's Not Making Money From Selling Smartphones, So What Is Its Strategy?

Chinese electronics company Xiaomi witnessed a clear decline in its smartphone profit lately. The company, however, is not afraid of the drop, as it announced it derives its profits from other products aside from smartphones.

Furthermore, company executives believe that the regression in its smartphone trade would have no significant negative impact to the company.

Despite experiencing a fallback in terms of revenue as of late, Xiaomi remained unfazed as it claimed that its profit does not revolve around smartphones alone. Revenue growth would be boosted by profits from smart home gadgets on top of the sales from its software network.

Humble Beginnings

Xiaomi had a market value of $46 billion during its 2014 fund-raising, which made it the world’s most expensive start-up company at that time. During this period, it was also China’s top-selling smartphone manufacturer.

Because of this, expectations began surfacing that Xiaomi would grow worldwide after finding out its growth statistics.

Unfortunately, 2015 was not good to the Chinese company, as it failed its worldwide smartphone goals by around 12 percent. Research firm IDC also mentioned that its smartphone sales actually dropped by a whopping 45 percent in the third quarter of 2015.

The Fall Of The Titan

Xiaomi was founded six years ago, and China is its biggest market, accounting for 70 million phones sold in 2015. This figure was way below its 100 million target set two years ago when an investment worth $1.1 billion helped value the company at $45 billion.

Furthermore, Xiaomi missed its renewed 80 million target, and it also missed the profits target in 2015. Despite this, the company was positive that it did not matter.

“Basically we’re giving [handsets] to you without making any money … we care about the recurring revenue streams over many years. We could sell 10 billion smartphones and we wouldn’t make a single dime in profits,” Global Vice President Hugo Barra stated.

How Is The Brand Surviving

Xiaomi has not at all been too eager on disclosing figures for its revenues after witnessing a decline in smartphone sales, but it has emphasized that its lineup of smart home appliances including rice cookers and water and air purifiers were key income drivers.

In fact, last April, VP Liu De stated that they were expecting double the sales of their smart home products to $1.5 billion by the end of the year.

Xiaomi has already invested in Southeast Asian countries and India and could soon be launching its first lineup of devices that are capable of 4G network connectivity in the United States before 2016 ends.

The company plans on initially targeting Chinese customers who would be traveling or living in the United States. Xiaomi also planned to make its debut at the 2017 Consumer Electronics Show in Las Vegas with a brand-new product for the market.


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(Via TechTimes)