Xiaomi: Shrink­ing smart­phone sales will be off­set


Sharp drops in smart­phone sales for China’s Xiaomi Inc will not have a ma­jor im­pact on the com­pany as profit growth will be driven by sales from smart home de­vices as well as rev­enue from its soft­ware ecosys­tem, a se­nior ex­ec­u­tive said.

Xiaomi was val­ued at $46 bil­lion in its last fundrais­ing in 2014 — mak­ing it briefly the world’s most valu­able startup at a time when it was China’s best-selling smart­phone maker and looked set to make a splash world­wide.

But last year it missed its global smart­phone tar­gets by 12 per­cent, while its thirdquar­ter China smart­phone sales have tum­bled 45 per­cent, ac­cord­ing to re­search firm IDC — rais­ing doubts that the valu­a­tion is still war­ranted.

Xiaomi’s Global Vice-Pres­i­dent Hugo Barra said that the com­pany’s busi­ness model was not based on money from hand­set sales per se and that it did not need to raise more funds or see any point in do­ing so at a valu­a­tion of less than $46 bil­lion.

“Ba­si­cally we’re giv­ing [hand­sets] to you with­out mak­ing any money … we care about the re­cur­ring rev­enue streams over many years,” he told Reuters in an in­ter­view.

“We could sell 10 bil­lion smart­phones and we wouldn’t make a sin­gle dime in prof­its,” he added.

Xiaomi, which dis­closes lit­tle of its profit and rev­enue fig­ures, has in­creas­ingly em­pha­sized its range of home ap­pli­ances such as air and wa­ter pu­ri­fiers, and rice cook­ers as key earnings-driv­ers.

In April, Xiaomi Vice-Pres­i­dent Liu De said the firm ex­pects sales of smart home de­vices to dou­ble to 10 bil­lion yuan ($1.5 bil­lion) this year.

The com­pany has in­vested heav­ily in In­dia and South­east Asia and is mak­ing its first for­ays into the US mar­ket. Next month it will launch its first de­vice ca­pa­ble of roam­ing on the coun­try’s 4G net­works.

Barra said they are first tar­get­ing Chi­nese users trav­el­ing in the US, but are lay­ing the ground­work for direct sales to US con­sumers.

In Jan­uary, Xiaomi will also make its de­but at the Con­sumer Elec­tron­ics Show in Las Ve­gas, launch­ing a new prod­uct dur­ing the event, he said.

Xiaomi’s ten­ta­tive first steps in the US smart­phone mar­ket come as cash-strapped ri­val LeEco faces a crip­pling short­age of funds, which were re­vealed in a public let­ter by CEO Jia Yuet­ing months af­ter the com­pany launched its first flag­ship phones in the United States.

“There’s no press­ing need to do an IPO or even a pri­vate round,” said Barra, brush­ing off con­cerns that Xiaomi could face a sim­i­lar fund­ing short­age. “We are not a flash in some­one’s PR pan.

$1.5 bil­lion Value of smart home de­vices that Xiaomi ex­pects to sell in 2016

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