Xiaomi's sales collapse as other small, medium / large producers grow slowly. Behind there are fairly questionable market choices of which we have often talked about in the our facebook group: too many devices, little attention to the top of the range and above all little innovation!
Topics of this article:
Forgive me for the "strong" and rather explanatory title, but these are the exact words of Steven Millward, finance expert, also quoted in an interesting article from ibtimes.co.uk which I wanted to transpose for you.
Ethe 2014 Christmas when Xiaomi announced a recapitalization of $ 1.1 billion to the front of the XNUMX an evaluation of the company of well 45 billions of dollars . Only 18 months after the same rating fell to $ 4 billion! What happened to what was the world's most virtuous start-up company of the moment?
Among those who bet on Xiaomi was Yuri Milner, an expert on equity markets, who had even predicted growth of up to $ 100 billion! At the time, Milner told Bloomberg "Such rapid growth is unprecedented."
And Miller is one who understands these things: His billion dollar fortune is the result of a forward-looking Facebook investment in 2009 when the social networking giant was worth (only) $ 10 billion. He was also the one who invested in 2011 in Alibaba, the mega-ecommerce, three years before its listing on the stock exchange. But even the best can make mistakes.
Since then, however, Xiaomi has seen its market share dropped on smartphones and devices - which now include a bit of everything, even umbrellas - miserably failing to generate revenue for the company.
Secondo the latest IDC surveys (International Data Corporation), in the second quarter of 2016 compared with that of 2015, Xiaomi lost almost the 40% of the market. A downward trend with the Chinese smartphone market, which in the same period recorded a growth of 4.6%. Indeed, all of its other competitors (Huawei, Oppo and Vivo) have grown up.
In the last 12 months Xiaomi has missed its objectives twice, both in sales and in revenues. According to analyst Richard Windsor, the revenues of 2016 are even set to drop by a further 10-20% bringing the company's value to $ 3.6 billion.
Why is it all wrong in the company once considered "Apple of the East"?
What Xiaomi did wrong
The reason for Xiaomi's past success is very simple: has been able to produce quality phones, with excellent hardware and software at an 1 / 4 price of Apple and Samsung.
However, this advantage was soon burned by other competitors who followed the same path, offering phones with remarkable specifications at competitive prices. But unlike Xiaomi, the "others" have been able to offer some innovations in advance: Oppo and OnePlus Rapid Recharge, Exclusive Content LeEco, Live Curved Display, Huawei Dual Camera and Impression Sensor.
Neil Shah, another famous CounterPoint Research analyst, said "Xiaomi's growth has stalled, competitors have a better R&D department, better manufacturing skills, wider distribution and better geographic presence. "…. “The inability to innovate independently is still the main cause”.
Another serious mistake of Xiaomi was that of wanting to focus strongly on ultra-cheap devices, such as the RedMi series, when instead the Chinese market suggested that people were willing to spend more on their smartphone. The choice at the beginning of the year to delay the release of the Mi Note 2 in favor of the RedMi Note 3 confirmed Xiaomi's inability to grasp this market trend.
The dream of entering the global market
Returning to December of 2014, the reason for which Milner was sure to doubled the value of Xiaomi, was due to the simple consideration that those incredible sales results had been achieved by staying in the Asian market and with the huge European and US markets still to be exploited.
However, the “global” step is by no means easy and obvious because in fact Xiaomi does not hold much of the patents needed to access these markets. Long accused of copying the aesthetics and functionality of Samsung and Apple, Xiaomi is completely unprepared to land on a market that is much mature and the avalanche of legal cases that it would receive would endanger any chance of success.
Already in India, the second largest market, has had to face serious problems for Ericsson patents and despite the agreements signed with Qualcomm and Microsoft, there are currently no conditions to take advantage of extra-Asian markets.
Also outside of China, Xiaomi could not count on the base of fans of the company that guarantees him a good percentage of sales at home.
The lack of loyalty
In general, however, the Chinese are not only very attached to brands but rather to savings. According to a 2014 study by research firm Bain & Company, manufacturers in China are constantly forced to fight over new customers precisely because of this "brand loyalty", a race to which Xiaomi is now forced to participate unlike the past.
Xiaomi has always considered itself an "internet company" rather than a phone manufacturer and in fact in the last 2 years it has invested in a wide range of start-ups to create its own technological ecosystem, the Mi Ecosystem.
Jan Dawson, analyst at Jackdaw Research, explains "Even if smartphones have always been the flagship product for Xiaomi, the company has always aimed at a future in a broader sense, an e-commerce able to offer a wide range of products. ".
"Xiaomi is in the shit"
Xiaomi is not a public company so it is not possible to draw on official data, but the analysis of CounterPoint Research suggests that about 85% of the company's revenue comes from the sale of smartphones to which are added those of the software and services division , also predominant. It follows that big investments such as Ninebot, the Chinese company that owns the Segway, they are not at all fruitful and maybe they will never.
Steve Millward, financial blogger wrote "Xiaomi is in shit" and will hardly come out. He also adds "I don't see a good chance of recovery for the future"
Also Neil Shah suggests that the company's plans are rather confusing "Xiaomi's future is at risk - its entire business is based on smartphone-managed content, applications and services at the heart of this ecosystem." But if the sale of phones collapses, even the service division suffers heavily.
At the moment Xiaomi looks more like the "Blackberry of the East" than the "Apple of the East"
Apple of the East, if anything, Huawei, right ?!
Secondly, the mistakes are these.
1. not that inexpensive guarantee
2. Al lanco software does not have the stable version.
3. who wants xiaomi, must know how to tinker. (so above 45 people want finished product without doing the dance with drums).
If you are Chinese / English you do not have to sleep. Xiaomi only refers to the Chinese market or max the US if I do not.
You are absolutely right, those are problems of "our" market where Xiaomi shouldn't even arrive. As long as we don't talk about official exports, those considerations are useless and unjust
Certain. And the analysts are definitely the ones who can talk, given the endless bullshit they have foisted on the whole market in the past years …. But please, come on, let's believe the facts and less the astrological predictions!.
The facts and not only analysts say that according to the latest surveys of IDC (International Data Corporation), in the second quarter of 2016 compared to that of 2015, Xiaomi has lost almost 40% of the market.