Once the world’s most valuable startup, Xiaomi is showing signs of decline.
Last year, there seemed to be no stopping Xiaomi from dominating the headlines on its way to becoming the most valuable privately held startup in the world. It was not only competing with global companies in the smartphone space, but was also quickly expanding its IoT ecosystem. But the raging juggernaut seems to be finally showing signs of slowing, and there’s also a belief that Xiaomi won’t be able to live up to its own hype.
Xiaomi shipped only 10.9 million smartphones in the first quarter of this year, which represents a 26 percent year-on-year decline. The trend is being seen since the end of last year, when analysts revealed that Xiaomi had shipped only 71 million smartphones, well below its target of 100 million. In terms of revenues too, Xiaomi was able to generate only $12.5 billion in sales last year, well below the $16 billion that CEO Lei Jun had predicted.
With the smartphone space seeing a slowdown though, you would expect Xiaomi’s ecosystem to make up for it to an extent. But the truth is its IoT ecosystem hasn’t lived up to expectations either, Fortune reports. Of the $12.5 billion revenue last year, Xiaomi’s ecosystem only contributed around $750 million. In other words, Xiaomi’s smartphones still made up for 90 percent of the revenues. Analysts believe that at the current run rate, it would take Xiaomi’s IoT products over five years to get close to smartphone sales.
One way to grow quickly is to expand to newer markets, but amid stalling growth even that plan seems to have been put on a hold. Patent issues is among the big reasons why Xiaomi hasn’t expanded to countries as fast as it would have hoped for. It is the same issue why the company’s low cost IoT products haven’t been launched outside China. In India for example, Xiaomi is embroiled in a patent infringement battle against Ericsson. A recent partnership with Microsoft though is a clear hint at how Xiaomi plans on tackling this issue.
Amid growing competition the company has had to rework its strategy as well. For a company that only sold via e-commerce sites and depended upon users’ word of mouth, it is now spending on TV ads and offline retail presence. Despite the current blip in Xiaomi’s otherwise mercurial rise, many see it as temporary phase.
Source: bgr.in
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