Some insiders believe that Huawei has a considerable chance to squeeze Xiaomi into the China mobile phone market in 2016, and the gap between the two parties’ mobile phone shipments will gradually widen.
■ Our reporter Ma Yan
"Three or two years of leading the way" and "the flag of the king is changing at the head of the city" may be the portrayal of the rapidly changing mobile phone market.
According to Fortune magazine, the revenue of Xiaomi, the second largest startup in the world, showed little growth in 2015.
Failed to meet the shipment target
Revenue in 2015 was almost flat.
According to reports, a staff member in charge of publicity and communication of Xiaomi said last weekend that the company’s revenue in 2015 reached 78 billion yuan (about 12.5 billion US dollars), an increase of 5% compared with 74.3 billion yuan in 2014. Coupled with the depreciation of the renminbi, if converted into dollars, the revenue will only increase by 3%.
Since Xiaomi’s founder Lei Jun announced in March last year that the revenue target for 2015 was set at 100 billion yuan, the company kept its mouth shut about the total revenue figures last year. A staff member in charge of publicity and liaison of Xiaomi revealed the above figures in an interview with the media last weekend, which was recorded and released by several Chinese media.
However, a Xiaomi spokesperson said: "We have never shared revenue data, and we can’t comment on the data you provided. The data we can provide is that despite the shrinking smartphone market, our sales last year exceeded 70 million units. "
The revenue is almost flat, reflecting the great changes in the fate curve during the development of Xiaomi. Xiaomi’s revenue increased by 135% in 2014. Lei Jun, the founder of the company, said in early 2015 that Xiaomi’s new smartphone was even better than Apple’s iPhone.
However, after the launch of Xiaomi Note, which was highly praised by Lei Jun, it attracted the spit of early adopters. The main problem was that the fuselage was seriously heated, so this mobile phone did not appear as the company expected. Later, Xiaomi encountered a sharp decline in the development of the smart phone market in China, with a growth rate of only 2.5% last year.
Xiaomi has said that its smartphone sales in 2015 were lower than the previous target. The company’s initial sales target for 2015 was 100 million units, and later it was lowered to 80 million to 100 million units.
But Xiaomi still failed to achieve this goal. According to market research firm IDC, Xiaomi sold 71 million smartphones last year.
However, Xiaomi’s disappointing last year was not only the sales of mobile phones.
According to an investor of Xiaomi, the company’s Internet service revenue from application software and games failed to reach the sales target of $1 billion, which was $560 million in 2015.
Xiaomi is currently valued at $45 billion, second only to Uber, the originator of taxi application. Xiaomi’s valuation means that its price-earnings ratio is about 75 times, which is suitable for a fast-growing Internet company, but not for a smartphone manufacturer with slow sales growth.
In order to diversify its development, Xiaomi has expanded its business to Internet services and products other than smart phones, such as air purifiers and electric skateboards. However, these sideline businesses only account for a small part of the company’s revenue, accounting for about 5% of the total, and the growth rate cannot offset the negative impact caused by the decline in smartphone sales.
Moreover, if the industry status of Xiaomi mobile phone is no longer, these peripheral industries will become rootless trees.
Market ranking falls
It is difficult to return to the top spot.
In fact, Xiaomi, who once had a beautiful scenery and opened the era of Internet mobile phones, gradually showed its decline from last year.
According to IDC statistics, in 2015, the sales ranking of smart phones in China was still ranked first by Xiaomi with a shipment of 64.9 million units, and the market share was nearly 15.0%.
However, compared with Huawei’s shipment of nearly 108 million smartphones in 2015, Xiaomi’s total shipment of Xiaomi’s mobile phones was only over 70 million units due to its weak expansion outside China, and there was a sales gap of over 20 million units between them.
With the increase of the penetration rate of the mobile phone market in China, the shipment gap between Huawei and Xiaomi has widened, which will make it more difficult for Xiaomi to maintain its leading position in China.
When communicating with the Securities Daily reporter, some insiders believe that Huawei has a considerable chance to overtake Xiaomi as the king in the mobile phone market in China in 2016, and the gap between the two parties’ mobile phone shipments will gradually widen.
This trend has been revealed by the data of institutions in the first quarter of 2016.
According to IDC data, in the first quarter of this year, Xiaomi’s smartphone sales shrank by 5%, falling out of the top five in the global smartphone market share ranking.
In the China market, Xiaomi’s performance is not satisfactory. According to IDC statistics, Xiaomi Q1 shipped 9.2 million units, ranking fifth in China market, which should be the first time that Xiaomi shipped less than 10 million units in a single quarter in recent three years. According to public information, in 2015, the shipment of Xiaomi Q1 was around 14 million units. Based on this calculation, the shipment of Xiaomi shrank by nearly 33%.
Although Xiaomi still ranks second in China market according to the data of another market research organization IHS, Wang Yang, research director of IHS China, also said that Xiaomi has no hope of returning to the top spot when communicating with the reporter of Securities Daily.
Wang Yang said, "The competition in e-commerce channels is too fierce this year. Glory, LeTV and Meizu are all grabbing the market. Moreover, the market increment comes from offline channels, where OPPO and vivo are the strongest, while Xiaomi’s offline channels are weak. "
In addition, some analysts pointed out that in the past, the main reason for the rapid volume of Xiaomi mobile phone shipments in the China market was not only related to factors such as hunger marketing and ecological circle building, but also related to Xiaomi mobile phone’s demand for low price and high cost performance. However, when the gap between Huawei and Xiaomi’s mobile phone shipments widens, Huawei will have better advantages in purchasing and manufacturing costs to cope with horizontal competition, and Xiaomi’s low-price strategy will face more severe pressure.
Lei Jun said that in 2016, Xiaomi will set up a "special force" to strongly promote Xiaomi 5 mobile phone, and at the same time set up a Xiaomi exploration laboratory to invest in virtual reality (VR) and robotics. In addition, after the balance car, Xiaomi will also launch the first drone product.
Compared with the development of Xiaomi’s diversified products, Huawei seems to be more focused on its own industry, and through the one-stop operation mode of telecom equipment and mobile phones, with the deepening of technology and brand power, it will make it easier for Huawei to win the confidence and reputation of consumers in the mobile phone market, and become an important key for Huawei to squeeze Xiaomi in the China market.
However, Xiaomi did not sit still. For Xiaomi’s failure to complete the goal of selling 80 million smartphones last year, Lei Jun said that they will readjust, forget KPI, return to their original heart, and re-make products with extreme fever.
Xiaomi launched a new flagship model at the Mobile World Congress (MWC) held in Barcelona, Spain in February this year, which may boost the company’s smartphone sales this year.
Wang Yang believes that it is possible for Xiaomi to maintain the top five ranking in China market.
