What happened to Xiaomi?

[Achtung!]

Remember Xiaomi? The Chinese smartphone maker that stole the news headlines last year as they gripped the Chinese smartphone market and was ranked No.1 there for nearly the entire year.

Well, their smartphone sales growth is flat quarter-on-quarter (QoQ). YoY, the growth is 33%, an impressive feat, however that's just YoY.

With China's smartphone market saturated, it's increasingly difficult to register sales growth there.

The next big markets are in India and Southeast Asia.

The following graphs are from this article: http://qz.com/443475/xiaomis-smartphone-sales-growth-has-ground-to-a-halt/

Q4 2014 to Q1 2015, there was no growth for Xiaomi. In fact, growth declined slightly.

https://qzprod.files.wordpress.com/2015/07/atlas_4yzd42td2x.png?w=640&h=277

You can see Apple, Xiaomi and Huawei are neck and neck during Q1 2015. Apple's #1 position is most likely due to the iPhone 6. Expect Q2 and Q3 figures to show Xiaomi and Huawei take the lead again. But all that will change by Q4 2015 when Apple releases the iPhone 6S.

The Chinese smartphone market is at saturation point, just like the US smartphone market is right now.

There is huge potential growth in India. Apple needs to focus on the Indian market now.

Same with SE Asia.

 

[kpkp]

They also just entered Brazil another big market, where it's hard to compete because the local law basically forces companies to manufacture locally therefore they (foxconn) are manufacturing phones (for now just the redmi 2) in Brazil.

Also I wouldn't be alarmed, their growth was insane, it had to slow down specially considering the limited markets they are present.

 

[zebrax2]

Looking at their local websites it looks like the their flagship device, mi4, is only available in China and India. Their low end phones also looks like it lagging behind the competition in terms of specs.

 

[poofyhairguy]

Everyone is excited about them because they provide good hardware value. They probably have one of the all-time worst Android skins though. Maybe if they made a Nexus it would be interesting.

 

[Ancalagon44]

My next phone is a Xiaomi Mi4i. I've already bought and paid for it. My brother has received it (he lives in the UK) and I'll get it from him when I travel there soon.

 

[Commodus]

Xiaomi's still nothing to be sneezed at, but I think its trouble underscores the dangers of focusing on market share and price above all else. Those strategies only work so long as high volume is possible, and buyers are cost-conscious enough that price is their biggest concern. When Apple can outsell Xiaomi despite much higher prices, you know Xiaomi's model isn't all that sustainable.

That's why I'm perpetually amused by the Anything But Apple camp's obsessions with market share and price. It's a woefully short-sighted view that ignores the likely fall from grace when the market gets saturated or sees fresh competition. Microsoft saw no problems with the "race to the bottom" in the Windows PC market... up until smartphones and tablets arrived, and customers either delayed their PC upgrades or bought higher-end Macs.

 

[kpkp]

When Apple can outsell Xiaomi despite much higher prices, you know Xiaomi's model isn't all that sustainable.

Apple is a glitch in the matrix, trying to be Apple gets you bankrupt. I do not know of anyone else doing anything like that. It's just insane.

Xiaomi is trying to provide quality phones near at cost so they can make money on services/software, accessories and other hardware while the phone is the hub/controller of the system.
The phone is used as a "bate" or a way of entry in their ecosystem. Their business model is a mix between Apples (quality hardware and hardware ecosystem integration) and Googles making little money from a lot of users of their services.

 

[Commodus]

Apple is a glitch in the matrix, trying to be Apple gets you bankrupt. I do not know of anyone else doing anything like that. It's just insane.

Xiaomi is trying to provide quality phones near at cost so they can make money on services/software, accessories and other hardware while the phone is the hub/controller of the system.
The phone is used as a "bate" or a way of entry in their ecosystem. Their business model is a mix between Apples (quality hardware and hardware ecosystem integration) and Googles making little money from a lot of users of their services.

I'm not sure if I'd call Apple a glitch. It's more that the company has spent a long time building up to the point where it can do what it does: sell high-end gear at relatively high profit margins that keep it healthy, while designing as much as possible so that it has a genuinely unique, desirable product. I think a lot of companies either don't 'get' this or fell off the quality bandwagon as the temptation of chasing market share became too great (remember how Dell used to be a high-end brand?).

I've heard of Xiaomi's business model... I'm just not convinced that it's working. The company barely makes a profit despite its sales, which suggests that people don't put much stock in its services. It's ultimately competing on price -- the difference is that it's making a little extra money on top.

 

[sm625]

It's not that its saturated, its that there has been a fullblown bubble over there as everyone and their granny thinks they can get rich off the stock market like a bunch of lunatic circa 2000 Americans. As soon as their margined and leveraged up accounts show the tiniest bit of gain, they rush out and buy smartphones and all sorts of other crap. But because of all the margin debt, the money used to buy all that crap never really existed, which spells bad baaaaad news for the year-over-year sales numbers.

Actually, the current US bubble is almost as bad as the 2000 tech bubble. But what's happening in China is pure madness. It is hard to believe (yet so easy to say) that people can actually be that stupid.

 

[poofyhairguy]

I'm not sure if I'd call Apple a glitch.

I would. NO tech company consistently puts out the same level of polish and production in their products and presentations. Other tech companies that try to follow the "Apple Model" never get their products to that point of excellence. They often fail because they can never hit the quality level that justifies the margins. Only Nintendo back in their glory days cranked out such a high quality product consistently.

The few tech companies today that have the competence to do what Apple does (like say Google or Microsoft) often have their own priorities that keep them from delivering easy to use products for the most average common consumer without a lot of confusing choices. Microsoft is too corporate focused to every really connect with the end users again (outside of gaming). Google has too much disdain for regular consumers and the kinds of extra work you have to do (backwards compatibility, brick and mortar stores, idiot proof options, etc.) to allow them to use their products. Google would rather make beta gee-wiz products for nerds who are willing to deal with bugs and rough edges (hello Nexus!).

Samsung has tried the hardest to emulate Apple's model, and Touchwiz is SO far away from iOS in the polish department its not even funny. To me if Apple didn't exist there simply wouldn't be anything like Apple's stuff on the market as only they can keep hitting their own high water mark for quality. Over time this has given them huge brand loyalty from consumers who feel empowered by their products, which no one can copy. There can be only one Apple.