May 1, 2015 by ...
My last post spoke of Xiaomi’s China sales holding steady but not increasing. I claimed that this presents problems for Lei Jun’s firm as it proves they are losing their edge. Absent game-breaking new products, they are the technological equivalent to Walmart- a big company that sells discounted products.
For further proof, check out how they’ve even cribbed Walmart store fronts as templates for new product designs
Tell me That I’m wrong. The new Xiaomi home controller, aka ‘wtf is that monstrosity?’ seems to mime the Wally-world storefront pretty well doesn’t it?
Ok, back to the analysis. So Xiaomi sales have peaked at home and dropping abroad. In China, Xiaomi is being attacked by the local competition and cannot out-create them. Actually, no one in China is out-creating anyone but they’ve slipped into a pirating homeostasis which has metastitized throughout ‘electronics body China’ leaving it home to unhealthy lumps of infected tissue surrounded by few healthy cells (pun intended).
As far as India goes, it was a great if not run for Xiaomi, who after 6 months there has found that sales are not increasing. Of course Xiaomi is responsible for this due to its failure to produce fresh products as Samsung, the market leader does. But on that note I’m beating a dead horse. Lei Jun’s business model is also to blame. Flash sales look great but do so at the price of massive volume. They are quick hits which read well in the press and create buzz, but don’t extend sales reach as they could. By opening up sales channels Xiaomi will achieve the latter while sacrificing the former.
India’s number two Micromax produces good kit and probably benefits from the ‘buy India’ push. Xiaomi can relieve some of this stress by producing locally and investment from Tata can’t hurt.
All of this is well and good but the Xiaomi trendline is not looking good. They came out of nowhere to take the number one spot in China but can’t nudge sales volumes north. Their biggest foreign market is India and the same thing is happening there.
The bottom line is that Xiaomi gear is decent but not a game changer. It’s great for Chinese posers for whom face is everything. A quick glance at the phone in their hands and one thinks the Xiaomi holder had over $1,000 disposable income to put down on one.
The other group is the ‘diaosi’ or ‘angry loser’ one-child policy guys, 30 million of whom will never find a wife. They represent a substantial portion of Xiaomi loyalists who while away free time posting pro-Lei Jun screeds online.
If these people are less than enamored with Xiaomi after a few years, then what’s the long term prognosis?
Chart of India’s cell market from the link below;