Report: Xiaomi Revenue Struggled In 2015, Up Only 5%

Chinese Internet business and handset manufacturer, Xiaomi, has reported a 5% increase in 2015 revenue compared with 2014. According to a report out of Fortune, the business reported 78 billion yuan (around $12.5 billion) revenue stream compared with 74.3 billion yuan for 2014, however Xiaomi are keeping quiet about their figures. A spokewoman told the source that this data is not from the company and refused to comment other than explaining how the business has sold over 70 million smartphones despite slowing handset sales. In U.S. dollar terms, and because the Chinese currency has devalued during the period, this represents a 3% rise in revenue over the duration. A slowdown which follows dazzling performance over the last few years.

Although Xiaomi are careful to explain that they are more than a smartphone manufacturer, the industry has taken a keen interest in their smartphone sales. After a very successful 2014, which saw sales growth of around 135%, the company initially predicted it would sell 100 million smartphones in 2015. This figure was later revised to be 80 to 100 million, but the business fell short of this with a sales figure of 71 million. A year ago, Xiaomi's founder, Lei Jun, explained how the Xiaomi Mi Note was better than the Apple iPhone, but the device was not the hoped-for sales success. Xiaomi's devices have struggled in the face of slowing sales growth and stiff competition from other manufacturers, such as Huawei: regardless of this, the company increased device shipments by 2.5% year-on-year. Unfortunately, for 2016 the business appears to be suffering: we've already seen Xiaomi ejected from the top five global smartphone sales thanks to a decline of 5%. Part of Xiaomi's problem appears to be that the business is struggling to sell devices outside of mainland China.

As regards the stockmarket, Xiaomi has a valuation figure of some $45 billion, which represents a price to earnings ratio of approximately 75. The price earnings ratios - or PER - is a metric used to value investors, with the higher the PER the higher the expected growth from the business. Xiaomi's PER reflects how the business is more than a smartphone manufacturer, but the Internet side of the business missed the $1 billion sales target and by a long way too: in 2015, these businesses sold just $560 million (according to one investor). We are seeing Xiaomi invest in alternative products as far ranging as air purifiers, action cameras, drones and media streaming boxes, plus the Internet of Things, but so far the new products amount to under 5% of total sales. Even strong growth in these new products is unlikely to make up slowing smartphone sales.

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About the Author

David Steele

Senior Staff Writer
I grew up with 8-bit computers and moved into PDAs in my professional life, using a number of devices from early Windows CE clamshells and later. Today, my main devices are a Nexus 5X, a Sony Xperia Z Tablet and a coffee cup.
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