Tech Talk: Xiaomi Needs To Increase Revenue, But How?

Xiaomi is, first and foremost, a smartphone manufacturer. This company doesn’t like to be categorized in such a manner though, mainly because they manufacture all sorts of tech gadgets, and some software as well, not to mention that Xiaomi became an MVNO last year. Xiaomi has managed to sell 70 million smartphones in China, and even though they missed their sales goal, they still managed to remain at the very top of the food chain in China, despite the fact Huawei was right behind Xiaomi back then. Now, on a global scale, Xiaomi can’t go head-to-head with Huawei just yet considering their sales are quite focused mainly on Asia, primarily China and India.

That being said, Xiaomi has introduced quite a few devices this year, including their Mi 5 flagship smartphone, the Mi Max phablet, the Redmi Note 3 smartphone, and a number of other gadgets, like the Mi Drone. The Mi Drone is Xiaomi’s first take on a drone, and a direct competitor to DJI’s drones. The Mi Drone is a sleek-looking drone capable of shooting 1080p or 4K video (depending on the variant you opt to purchase), which you control via a remote controller which comes with a stand for your smartphone. All of this works through Xiaomi’s Mi Home application, and the Mi Drone comes equipped with all sorts of interesting features. This Drone can follow you around automatically, it can land and take off on its own, etc. The Mi Drone basically has all the features that you’ll find in much more expensive products, but it costs way less.

The 1080p Mi Drone model costs $380, while you’ll need to part with 2,999 Yuan ($456) in order to grab the 4K variant. Now, in comparison, DJI’s Phantom 3 drone costs $800, so even the higher-end variant of the Mi Drone is almost half its price. Now, this drone might be interesting, and there’s no doubt many people will purchase it, but considering its limited availability, it’s hard to expect it will impact the company’s profits all that much. Xiaomi’s revenue was almost flat last year when the company failed to meet their sales target and sell at least 80 million smartphones (100 million was their initial goal). Now, in addition to 70 million sold smartphones, Xiaomi also managed to earn $564 million in ‘services’ revenue last year, and that includes software, media and ads. It is also worth mentioning that the Xiaomi Mi Band fitness tracker (which is made in cooperating with Huawei), is yet another one Xiaomi-branded device which turned out to be a success. It took Mi Band only four months in order to become the second highest selling wearable during Q1 2015.

Having that in mind, Xiaomi was valued at $45 billion a while back, and in order to justify that valuation, they really need to step up their game. The Mi Drone might end up being a great product which is incredibly cheap (compared to the competition), but Xiaomi really needs to step up their game in two ways. First, the company needs to expand their production capacity, fast. Let me give you an example, Xiaomi is currently able to manufacture 700,000 Mi 5 units per month (they have reportedly increased that to 1,2 million recently), while Oppo currently pushes out 2 million Oppo R9 units. Oppo has managed to outsell Xiaomi in China in the first quarter of this year, and so did Huawei.

This actually brings us to the second point here, Xiaomi really, really needs to expand the availability of their products. Xiaomi is currently most active in China and India, and even though they sell their products in a number of countries outside of Asia (like Brazil for example), very few of their devices are available in such countries, and they’re not making enough of an impact, especially compared to Huawei which is active in a ton of countries all over the world. So, Xiaomi is basically forced to host flash sales in their home country due to high demand, which is a reason they need to increase production capacity. On top of all this, Chinese smartphone market has slowed down considerably, which is why Chinese companies have started expanding their reach, and Xiaomi needs to do that fast. Devices like the Mi Drone are great to have in your lineup, but that’s not a way to considerably increase revenue, that’s for sure.

Quite a few companies invested in Xiaomi thus far, and in order for the company to justify those investments and their valuation, they really need to step out of their comfort zone. Xiaomi definitely can do it, and pretty much everyone knows that they’re only being careful, but it will sure going to be interesting to see if they can succeed in other markets, like Europe and the U.S.

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About the Author
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Kristijan has been writing for Android Headlines since 2014 and is an editor for the site. He has worked as a writer for several outlets before joining Android Headlines, and has a background in writing about Android and technology in general. He is a smartphone enthusiast that specializes in Android applications, and that platform in general. Contact him at Kristijan. [email protected]
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