(Update: 70M phones sold) Xiaomi misses expectations, makes investors wonder and worry

by: Matthew BensonJanuary 15, 2016
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xiaomi-logo

Update: 01/15/2016: Following reports about Xiaomi’s sales figures, the company has officially revealed that it sold “over 70 million” smartphones in 2015. This announcement confirms that Xiaomi missed its yearly sales goal of 80 million handsets, which was already downgraded from a lofty 100 million units earlier in the year.

Despite missing its targets, Xiaomi’s yearly sales grew by 15 percent compared with the 61 million phones that it shifted in 2014. Xiaomi declined to provide an exact sales number and doesn’t typically release any yearly sales figures. The rough guideline issued today seems to be an exception designed to calm nerves about the company’s recent performance. This is especially potent after Huawei reportedly overtook Xiaomi to become China’s largest smartphone manufacturer in Q3 2015.

Clearly, Xiaomi cannot always be one step ahead of the fast paced mobile industry and missing these targets is probably a much needed reality check. However, the company is still growing at a faster rate than the global smartphone market and 2015 still looks to have been a good year for the Chinese brand overall.

The original article (published 01/11/2015) and further analysis follows.

Xiaomi’s rise to the top of China’s tech market has been explosive, though new data suggests remaining there might be a more ephemeral affair. The tech titan/sterling startup/device darling was – at one point – the world’s most valuable venture. A new report by The Wall Street Journal, however, indicates that after failing to meet investor expectations for 2015, confidence in the OEM’s future has been sizable shaken.

Xiaomi had originally set its 2015 sales targets at an ambitious 80 million smartphones, something that was apparently downplayed as last year drew its curtain call. The reason for this, apparently, was due to the failure to achieve the lofty goal, according to “people familiar with the company.” Likewise, the company’s $46 billion valuation has been called into question as well, a figure which, according to The WSJ, “was based on yet unrealized plans to generate substantial revenue from Internet services.”

This increased speculation and scrutiny among investors comes as a result of China’s ongoing fiscal turmoil:

 

China’s economic slowdown, coupled with turbulence in the country’s stock market, is prompting investors to take a second look at China’s high startup valuations. Companies such as Xiaomi, which raised vast sums on China’s mobile-Internet boom, now are facing growing pressure to live up to expectations.

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Xiaomi’s business model has been incredibly successful, with the company eschewing more traditional forms of retail to ship substantial sums of smartphones. In addition, it has famously held “flash sales” for new products that have been met with incredibly sell-out rates the likes of which have arguably not been seen since Spice Girls concert tickets were in vogue during the British group’s hay-day, or perhaps even Beyonce rates.

The Wall Street Journal asserts that,

“Xiaomi’s smartphones, which once sold out in minutes in limited batches via online flash sales, are now easily available—a shift that analysts say signals slowing demand.”

However it is worth pointing out that several Xiaomi devices sold out in incredible speed during 2015 as well, including this one, this one, and even this tablet. Still, things have changed perhaps, since the very early days of Xiaomi four years ago.

According to a Xiaomi spokeswoman, “the competition in China’s smartphone market has intensified tremendously this year” yet failed to comment on issues relating to the aforementioned valuation or failure to meet sales forecasts. Instead, she simply responded that Xiaomi device sales were “within expectations” and specified that the flash sales her company is so famous for, are basically reserved for new phones after mass-scale production has begun in earnest.

Xiaomi Redmi 3 teaser

Problems asserted against Xiaomi’s continued success include (1) increased competition from Huawei and other domestic Chinese OEMs, (2) a lack of an in-house SoC such as Samsung’s Exynos or Huawei’s Kirin, (3) average smartphone prices falling from $160 in Q3 2014 to $122 in Q3 2015 and (4) a market that consists of a “Chinese demographic ghetto of mainly males 18 to 30” years old, according to Peter Fuhrman, chairman of China First Capital.

Mr. Fhurman offered additional commentary, that:

“Mobile services, e-commerce, branded consumer products—these still are largely just a figment rather than a huge and growing source of profits that could validate last year’s sky-high valuation.”

Many will undoubtedly be looking towards the future and just how 2016 will fare for Xiaomi. There is certainly ample opportunity for the company to get it’s proverbial “game” back in full swing. Given that the organization has achieved such a tremendous success in such a short amount of time, it clearly knows how to work mobile magic. The real question however, is if the Chinese market as a whole has moved forward at an even faster speed entirely.

  • Mohammad Hussain

    Let’s see what happens after the mi5 comes out.

  • Mohammad Hussain

    And also don’t forget the fact that Xiaomi was basically a software company and currently in its early success stages and you guys already want an in-house processor. GUYS Calm Down.

    • balcobomber25

      Xiaomi developed their software (MIUI) first, but they always planned on being a smartphone Manufacturer, they never intended to be a software company only. They have already been working on an in house processor with Leadcore.

  • Zaki Islami

    In Indonesia, Xiaomi has been very successful in sales, however since their policy to officially release only few selection of handhelds outside China, they could not maximize the opportunity to get better sales. But their devices are the best value for money rather than other manufacturers such as Huawei and Oppo who are still a bit expensive compared to Xiaomi

  • Robert Johnson

    Huawei has sales all over the world and they had very good smartphones sales amounts in 2015, but Xiaomi doesn’t sell directly to the west yet. Unless they become more global I don’t see any massive sales increase.

  • Ivan Budiutama

    (4) a market that consists of a “Chinese demographic ghetto of mainly males 18 to 30”

    WTF is that even mean?

    • SharkGaming

      I think in mainly means lower working class people from 18 to 30 are the biggest buyers, but I really don’t know…

  • aaloo

    biggest cheaters with no credibility or sense of dignity.

    • balcobomber25

      Or one of the best smartphone companies that actually cares about their customers and continues to support their products. But hey either way.

  • barangulo

    Don’t forget xiaomi didn’t ship a flagship this year

    • Robert Johnson

      Without a global market Xiaomi is shooting themselves in the foot. If I were the CEO of Xiaomi I would be talking right now to Nokia because Nokia wants to re-enter the smartphone market and they need a partner. This could help to widen their market base.

      • May Czos

        Now they’re locking themselves to the global market by locking the bootloader.

        • gg

          Bootloader… lolz. You really have a lack of knowledge… Anyway, Robert is actually right. Xiaomi is aiming for the rising markets like India and China and slowly expanding to other countries. There’s a reason for that: they literally can’t hold up to the demand. Xiaomi isn’t and OEM like Samsung.

          • May Czos

            They can’t keep up with the demand? Are you kidding me? They expected to sell much more phones in 2015 and they were definitely ready for it. They are already very popular in China and India and they can’t sell more phones ther. If they want to grow they need to expand to other markets. And don’t tell me that they don’t know how many devices were sold outside Asia by third party retailers. That’s a lot of phones and a lot of money they won’t make in 2016. Good luck with increasing your sales without expanding.

  • Monday

    Why accept the fact that there is no really mi5 in the works. The company just let us believe all this time that they’re going to release the flagship since august 2015 yet the shadows of it never really appear every time they (xiaomi) they had press release of other product they intend to present.

    • balcobomber25

      The company never once said they would release it in August. In fact the first time they said anything about the Mi5 was this year. It was quite obvious they didn’t want their flagship device to have the terrible SD810, and were waiting for the SD820.

    • Dennis James

      How could they release the Mi 5 when Snapdragon 820 was just launched a few days ago ? An Mi 5 with Snapdragon 810 or lower or any other chip would have been a flop.

  • Dennis James

    I think that other global, established brands would kill to achieve such sales numbers. 70 million up 15% from 61 million is quite good, I would say.

    • balcobomber25

      Not to mention they are only officially sold in about 10 countries.

  • balcobomber25

    It’s not surprising given they failed to launch a flagship device this year, instead there were two downgraded versions of last years flagship, the Mi4i and Mi4c, for current Mi4 owners they really weren’t worth the upgrade. There is the 10 million missing phones.

  • Frankd

    Yeah, but how many Privs did BlackBerry sell?

  • May Czos

    Demand is going to slow down even more because Xiaomi plans to lock the bootloader. I don’t think they know how many costomers they have outside Asia and most of them have local MIUI (unofficial translation).

    • AbbyZFresh

      This isn’t Huawei where they sell just as many smartphones outside Asia as they do within. You’re looking through their perspective.

      In Xiaomi’s case, most of their sales come from within China with only a minority coming from India and Southeast Asia. And because of that fact alone, Chinsese buyers actually like the MIUI design.

      • May Czos

        Actually third party retailers sell a few million devices outside Asia each year and this source is going to dry out in 2016. There are huge fanbase communities with a lot of resources that build local, well translated and optimized MIUI ROMs, they have trusted sellers, service etc. Good luck meeting 2016 goals without them.

  • Falenone

    I don’t like their devices simply because the CEO thinks all sd cards in the entire world are Chinese fakes and that’s why there’s no slot in Xiaomi’s flagships