After Triple-Digit Growth, Could Xiaomi Pull More Rabbits From Its Hat?



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Jan 05 2015
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China’s Xiaomi Technology had a spectacular year in 2014, judging by its achievements last year. After the Chinese smartphone maker raised US$1.1 billion last month, the company wasted no time this month by boasting some fantastic numbers. Xiaomi CEO Lei Jun has just revealed the company had sold 61.12 million phone last year, bringing home a mind boggling US$11.97 billion (RMB 74.3 billion) in revenue.

Xiaomi 2014 Sales 61 Million

Essentially, that’s a whopping 135% increase in annual pre-tax revenue, and a sexy 227% jump in smartphones sold from the previous year, 2013. Considering it had only sold 7.2 million and 18.7 million units of smartphones in 2012 and 2013 respectively, the US$45 billion company is indeed the biggest winner in the smartphone market. And there’s little to complain how this 4-year-old company is now the world’s third largest smartphone maker.

 

Taking advantage of the magnificent sales figures, Xiaomi also unveiled its newest entry-level phone – Redmi 2. The flagship product, which accounted for roughly one-third of total sales, is the company’s biggest seller. The Redmi 2 will have much of the original model’s specifications, 4.7-inch, 1280×720 display, but with an upgraded 64-bit Qualcomm 410 quad-core processor. Other improvements include an 8-megapixel rear camera, and 2-megapixel front camera.

Xiaomi Redmi 2 - New Colours

The gadget comes with 1GB RAM and 8GB on-device storage. There is now dual 4G SIM support too. Costing just US$112 (RMB 699; £73; RM398) when it goes on sale on January 9 in China, Redmi 2 will have additional colours for youngsters – lime green and powder yellow. In case you’re wondering, this is just a beginning and you can bet your last penny there’ll be more new models to be released this year.

 

This brings another question – will Xiaomi be able to sell 100,000,000 (that’s 100 million, dude) devices in 2015, as boasted by CEO Lei Jun? The company is already selling its products in seven countries in Asia. It is expected to cover the rest of Southeast Asia countries that it hasn’t been selling yet, plus new entries into Mexico, Brazil, Turkey and of course, the country’s close buddy Russia.

Man Walking Passed Xiaomi Advertisement

Majority of analysts do not think Xiaomi could pull the same 135% growth from the hat, and it’s not hard to see why. The company has been growing too fast, too soon. As much as CEO Lei Jun shamelessly copies Steve Jobs’ clothing and clones every single Apple products, unfortunately, he couldn’t copy Samsung profit margin, let alone Apple’s. Xiaomi’s operating margin is at a pathetic 1.8% in 2013, as compared to Samsung’s 18.7% and Apple’s 28.7%.

 

If that was not enough to throw the doubt that Xiaomi could repeat its 2014 success growth story, two comrades from China – Lenovo and Huawei – have plans to copycat its low-cost business model, including selling via online. With both competitors set to play low-margin high-volume game, there’s almost no room for Xiaomi to improve its bottomline. Since 94% of its revenue came from handset sales, Xiaomi ecosystem is still miles away from Apple’s.

Xiaomi CEO Lei Jun at Presentation

Sensing that it couldn’t rely on handphone sales alone, the company has even unveiled its new product – air purifier that can be controlled via mobile phone. Don’t be surprise if it has started testing on automated toilet flushing system via smartphone (*grin*). Perhaps Lei Jun can fulfils his promise of selling 100 million gadgets this year after all. After all, that would constitute about 67% sales improvement from the year 2014.

 

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