China's smartphone boom may be over, as even Apple Inc grapples with a slowing economy and investor darling Xiaomi Inc struggles to stand out amid intense competition in low-margin handsets.
According to an internal document seen by Reuters, the company, China's most valuable start-up at $45 billion, missed the target, putting its valuation under increasing threat. The missed target is despite internet services revenue actually surging 150 per cent to CNY3.71 billion ($563.94 million), from CNY1.48 billion a year earlier, the document showed.
As China's economy grows at its slowest pace in a quarter of a century, the country's once booming smartphone market has become saturated. For vendors whose products have become commoditised and make little to no profit, that doesn't just mean the years of easy growth are in the past, but that it could be a struggle to keep their heads above water.
The fear is that as the Chinese market slows (IDC estimated the smartphone market in China grew just 2% last year, as oppose to doubling each year from 2011 to 2013) Xiaomi will struggle to keep bringing in similar revenue figures. Over the past few years, they've built up the Mi branding to offer much more than that however, and with online services joining their revenue, it would appear Xiaomi will be able to survive just fine as the Chinese market levels out. Let's not forget that Xiaomi has also become a major player in India, and is set to expand further throughout 2016.
Xiaomi is planning to hold its annual Spring Conference on Feb. 24 in Beijing where it will launch its Xiaomi Mi 5 flagship smartphone for 2016. It is also expected to release a number of other products and give an indication of where the focus for the company lies.
Source: http://www.xiaomidevice.com/blog/can-xiaomi-mi5-save-the-plight-of-xiaomi-phone/
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