- Title: Xiaomi says shrinking smartphone sales won't hit the company
- Date: 25th November 2016
- Summary: BEIJING, CHINA (FILE - JANUARY 15, 2015) (REUTERS) PEOPLE LOOKING AT XIAOMI PRODUCTS MAN LOOKING AT XIAOMI NOTE MAN HOLDING XIAOMI NOTE VARIOUS OF XIAOMI NOTE ON DISPLAY
- Embargoed: 10th December 2016 11:05
- Keywords: China Xiaomi smartphone users drop sales
- Location: BEIJING, CHINA
- City: BEIJING, CHINA
- Country: China
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA00259XZ05P
- Aspect Ratio: 16:9
- Story Text: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 eco-system, a senior executive said on Friday (November 25).
Xiaomi was valued at $46 billion in its last fund-raising in 2014 - making it briefly the world's most valuable start-up 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 and its third-quarter 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 the company's business model was not based on money made 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.
"We sell smartphones at cost. We could sell ten billion smartphones and we wouldn't make a single dime in profits out of those smartphones, so of course, that's not our focus. Our focus is on acquiring and retaining users, obviously through smartphone sales, of our platform of our services. It means we want to acquire users, we to retain users are internet savvy," he said.
Xiaomi, which discloses little of its profit and revenue figures, has increasingly emphasised its range of home appliances such as air and water purifiers, and rice cookers as key earnings drivers.
In April this year, 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 U.S. market - launching next month its first device capable of roaming on the country's 4G networks.
Barra said they are first targeting Chinese users travelling in the U.S., but are laying the groundwork for direct sales to U.S. 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 U.S. 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.
"We are not a flash on someone's PR pan. We are a real company with a business model, with a real operational foundation. Our business model is not the press release-our business model is the product. It's the user, it's the recurring revenue base, right? Real things in the real world," said Barra, brushing off concerns that Xiaomi could face a similar funding shortage.
Barra also brushed off concerns over the new U.S. administration's protectionist stance.
"No, it definitely hasn't. I don't think that anything that's likely to happen, as the result of the new administration is going influence our strategy. You know in many ways I think that the U.S. and China are so intertwined in their relationships, particularly when it comes to consumer technology that it's very unlikely that something drastic will happen that will cause us to change how we think about that market," he said.
Trump campaigned for the U.S. presidency on a promise to pull out of the 12-nation Trans-Pacific Partnership (TPP) trade deal, and also threatened to impose steep tariffs against China and Mexico.
- Copyright Holder: FILE REUTERS (CAN SELL)
- Copyright Notice: (c) Copyright Thomson Reuters 2016. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None