Jun 24, 2016
Xiaomi
CEO Lei Jun promotes his company’s smartphones at a product-release
event in Beijing. Smartphones account for more than 90% of Xiaomi’s
revenue. Zhang Jin Xinhua—Eyevine/Redux
At
the beginning of 2015, Chinese smartphone maker Xiaomi looked like a
juggernaut in the making. The company's cheap, stylish handsets were
selling fast and earning rave reviews. Its executives had launched their
plan to compete globally with the likes of Apple, Google
and Samsung by rolling out an "ecosystem" of music, apps and
Internet-of-Things products. And Xiaomi had just finished a fundraising
round that valued the company at $45 billion--making it, at the time,
the world's most valuable privately held "unicorn."
Less than 18 months later, as Fortune reports in a feature story this week,
Xiaomi euphoria has screeched to a halt. A company official recently
said the company had generated only $12.5 billion in sales last year,
well below the $16 billion that CEO Lei Jun had predicted. Skeptics
increasingly doubt that Xiaomi will live up to its hype--and plummeting
smartphone sales are a big reason why.
Back
at the beginning of 2015, Xiaomi's Lei announced a smartphone sales
goal of 100 million units for the year. The company ultimately shipped
only 71 million, according to IDC. Xiaomi isn't alone in its
predicament, because global smartphone sales have stalled. (That phenomenon has hurt Apple, too.)
But Xiaomi's sales have fallen farther and faster than those of many
rivals: In the first quarter of 2016, Xiaomi shipped only 10.9 million
phones, a 26% year-over-year decline.
Quality
problems may be contributing to the steep drop-off. Some Mi phone users
have been lamenting publicly about cracked screens and static from
earphone slots. And Xiaomi’s newest flagship phone, the Mi 5, has
attracted complaints since its release in March, with buyers reporting
that new handsets often reached a scorching 120˚ F. Xiaomi says the
handset problems involve “isolated cases” and says, “We do investigate
all reasonable complaints.” But the phones’ perceived unreliability has
had an impact. Clark, the Internet consultant, recently surveyed phone
owners in China. Only 37% of Xiaomi owners said they would buy another
Xiaomi phone, while 74% of Apple users said they would get another
iPhone.
The
company's falling smartphone sales have only drawn more attention to
the fact that Xiaomi's ecosystem hasn't gotten very far off the ground.
Company officials say they think sales of everything from Xiaomi fitness
bands to Xiaomi rice cookers could equal their smartphone sales five
years from now. But as Fortune explains in "Can Xiaomi Live Up to Its $45 Billion Hype?" that may be even more of a long shot than catching Apple would be.
Ref:http://fortune.com/2016/06/24/xiaomi-trouble-one-chart/
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