Bottom line: CEO Lei Jun’s decision to directly oversee Xiaomi’s product development could help to revive the company by addressing a key problem area, but its new set-top box is unlikely to gain much traction in the US due to stiff competition.
Xiaomi unveils set-top box for US
Amid growing signs of stagnating sales for its core smartphones, the stumbling Xiaomi is taking a couple of big new steps to try and reinvigorate its business, led by a shuffle that will see charismatic CEO Lei Jun take direct control of product development. In a separate but also significant move, the company has just announced a highly-anticipated first big step into the lucrative but ultra-competitive US market, with plans to launch a local version of its online video service.
Among these 2 big new moves, the management shuffle is the most significant and also most reflects Xiaomi’s problems. The company rose to prominence on an extremely successful marketing campaign that used online buzz, artificial product shortages and strategically leaked information. But Xiaomi’s actual smartphones couldn’t meet the high expectations created by Lei’s brilliant marketing campaigns, and instead are seen as largely the same as many of the other many models now on the market. Read Full Post…
Bottom line: Xiaomi is likely to need new funds around a year from now, at which time its valuation will stagnate or even come down up to 10 percent as its growth continues to slow.
Xiaomi’s Lei meets reporters at NPC
Struggling smartphone maker Xiaomi is making headlines today for what it’s NOT doing, namely planning to raise cash anytime soon. Xiaomi’s lack of cash raising plans are coming from talkative chief Lei Jun, responding to questions about whether his company has lost value since its last mega funding at the height of its meteoric rise about a year ago.
Most of the reports are focusing on Lei’s comments that Xiaomi has no plans for an IPO in the next 5 years, and also that his company has plenty of cash — more than 10 billion yuan ($1.5 billion) to be precise. Both remarks look aimed a deflecting speculation that Xiaomi might have to return to investors soon for more money, an exercise that would force it to put a new value on the company. Read Full Post…
Bottom line: Xiaomi’s new Mi 5 model is likely to get a tepid reception due to its lateness to market and a fading corporate image, and the company’s valuation is likely to shrink when it returns to market later this year for new funding.
Xiaomi rolls out Mi 5
If faltering smartphone sensation Xiaomi is still in business a decade from now, 2015 could well go down as a “lost year” when the company’s sales slowed sharply as its image for making cool, affordable products took a beating. A major factor behind the sudden stall was Xiaomi’s failure last year to release a new fifth generation of smartphones, which were supposed to power sales in the second half. (previous post)
Now Xiaomi is trying to play catch-up with the unveiling of its Mi 5 more than half a year after its originally intended launch date. (English article; Chinese article) It’s probably far too early to say if the Mi 5, along with another new model called the 4S, will be enough to revive Xiaomi’s fading fortunes. But I suspect the damage has already been done, and this new model will ultimately fail to find a big audience due to its late arrival to a fast-moving smartphone market where half a year is really equal to an eternity. Read Full Post…
Bottom line: A subdued mood at Chinese high-tech firms’ New Years parties reflects a growing realism that the days of breakneck growth may be over for many, due to stiff competition and a slowing domestic economy.
Subdued mood at Year of the Monkey parties
The Year of the Monkey is still more than a week away, but already online gaming giant NetEase (NYSE: NTES) is taking the prize for most unusual New Year’s party for including sex toys among its cache of prizes during the lottery at its annual bash. Meantime, stumbling smartphone sensation Xiaomi ushered in the New Year with an unusual dose of new realism from chief Lei Jun, who also added a bit of historical revisionism in a bid to cheer up staff at his annual party.
Theses yearly parties are a good indicator of how companies feel about their performance in the previous year, and also offer some insight into their mood going into the year ahead. A media report sums up highlights from some of this year’s biggest parties, which typically bring together hundreds and sometimes thousands of employees at a single event to celebrate the New Year as a corporate “family”. Read Full Post…
Bottom line: China’s global Internet conference this week was mostly empty pageantry, but it did reveal that Baidu might like to privatize from New York one day, and attracted a handful of China-friendly global executives.
Wuzhen Internet pow-wow mostly empty talk
China’s big Internet pow-wow this week in the picturesque town of Wuzhen hasn’t produced much news despite its big aspirations, reflecting Beijing’s tight control over cyberspace and companies that do business there. But the globally-minded event did produce at least one interesting tidbit on the recent privatization wave by US-listed Chinese companies, and also an entertaining photo of 2 top executives that went viral online.
The news item came from Robin Li, founder of leading Chinese search engine Baidu (Nasdaq: BIDU), who hinted that he hopes to someday join the recent wave of Chinese companies now privatizing from New York due to undervaluation. The photo that went viral captured a humorous moment involving a catnap during the conference by Zhou Hongyi, the controversial and more often outspoken CEO of security software specialist Qihoo 360 (NYSE: QIHU). Read Full Post…
Bottom line: Xiaomi will lower its profile after a recent spate of negative publicity and intensifying competition, but could still stand a 50-50 chance of becoming a major smartphone brand if it executes well in its globalization strategy.
Xiaomi in new switcharoo scandal
Former smartphone high-flyer Xiaomi is quickly learning that a high profile is a double-edged sword, with word that it’s landed in the middle of a fresh new false advertising scandal. Xiaomi certainly isn’t the only company learning this lesson, as its recent downfall tracks a much louder crash at former e-commerce high-flyer Alibaba (NYSE: BABA).
No one is predicting Xiaomi’s demise just yet, and I’ve often said that co-founder Lei Jun is largely to blame for the recent fall due to the huge expectations he set for his company. But this latest news involving false claims for one of the newest models from Xiaomi’s low-end Redmi smartphone line will certainly bring the company down yet another notch in the eyes of investors and consumers. Read Full Post…
Bottom line: Xiaomi’s rapidly falling sales growth is the result of many factors that reflect its youth and inexperience, and the company should pause and return to its early strategy or risk seeing its slowdown accelerate.
Xiaomi sales growth slows further
Media are swarming to the latest sales figures from sputtering smartphone sensation Xiaomi, which has just announced first-half data that looks mediocre to downright bad, depending on how you look at it. The company is trying to put a positive spin on the data, saying its first-half sales rose 33 percent from a year earlier. But one media report points out the latest 6-month sales were actually down from the second half of 2014, marking the first-ever sequential decline for this rapidly sputtering smartphone superstar.
This latest data shouldn’t come as a huge surprise, but instead marks a continuation of a steady stream of signals that point to a rapid reversal of fortune for Xioami. I’ve previously said the company and its charismatic CEO Lei Jun are at least partly to blame for the negative publicity they are now receiving, since they built up huge expectations over the last 2 years through a non-stop series of lofty announcements and other high-profile publicity stunts. Read Full Post…
Bottom line: Xiaomi’s hiring of a new CFO and entry to Brazil are its latest steps in a gradual transformation to a more western-style global company, in preparation for an IPO that is at least 2 years away.
Xiaomi to launch next week in Brazil
Stumbling smartphone sensation Xiaomi is back to doing what it knows best, namely making headlines with the latest moves in its global expansion and by hiring executives from other high-profile companies. In this case the smartphone high-flyer has just announced its formal plan to enter Brazil, putting it squarely in 3 of the 5 BRICS countries after India and China. The other move looks a bit scripted, and will see a top China executive from Russian high-tech investor Digital Sky Technologies (DST) join Xiaomi as CFO.
The latter piece of news looks slightly strange because DST is one of Xiaomi’s investors, and it would be unusual to do something hostile like stealing a top executive from one of your big backers. Instead, this looks more like a planned move that is relatively common in this kind of situation, which sees big investors supply executives to the companies they back in preparation for eventual IPOs. Read Full Post…
Bottom line: Xiaomi’s newest technology headache, if true, could delay the launch of its fifth-generation phone, further sapping its momentum and making it difficult to reach its 2015 sales target.
Xiaomi reportedly hits technology glitch
The once invincible Xiaomi is starting to look increasingly mortal, with reports that the smartphone high-flyer may have to delay the launch of its newest model due to technical reasons. I’m not too knowledgeable on the technical issues in this instance, but the potential new delays for the release of the Xiaomi 5 appear to be related to fingerprint recognition technology that the company plans to build into the new models.
If these latest reports are true, the delays could put a big crimp in the Xiaomi’s ambitious sales plans this year as it attempts to maintain its breakneck growth. Maintaining that kind of growth looks increasingly difficult due to all the technical issues, combined with intensifying competition in Xiaomi’s core China market. That competition is causing the company to abandon the online-only sales model that helps it keep costs down, which will ultimately undermine its profit margins. Read Full Post…
Bottom line: Xiaomi’s latest moves and remarks reflect attempts to rekindle its fading momentum, as its growth slows and it faces a rising challenge from LeTV and a resurgent Apple.
Xiaomi battles slowing momentum
Sputtering smartphone sensation Xiaomi is in a flurry of headlines as we go into the weekend, spotlighting the recent challenges it is facing as it tries to maintain its breakneck growth and live up to huge expectations it created for itself. The most revealing of those portrays Xiaomi’s charismatic chief Lei Jun in a rare defensive posture, at a company event where he took aim at the increasingly threatening LeTV (Shenzhen: 300104).
The second headline comes from the same event, and boasts of Xiaomi’s heavy spending on content for its online services over the last 2 years, again taking aim at LeTV. Lastly there’s the news that US chip giant Qualcomm’s (Nasdaq: QCOM) China chief has jumped ship to take up an executive position at Xiaomi. Again, this looks like Xiaomi’s attempts to portray itself as a hot company that can still attract top talent away from leading western companies. Read Full Post…
Bottom line: Xiaomi’s release of a new model and addition of a high-profile investor in India reflect the market’s key role in its global expansion this year, with a likely target of 4 million or more unit sales.
Xiaomi in new India launch
Smartphone sensation Xiaomi is working hard to repair its position in India, following a setback late last year that saw some of its higher end products locked out of the market over a patent dispute. Now the company is making a big new push at the lower end of the market, choosing India for its first product launch outside of China. At the same time, the company announced it has sold a stake in itself to one of India’s best known tech tycoons, a patriarch at the renowned Tata Group conglomerate.
Both of these news bits come from an event late last week in India, and underscore the growing importance that Xiaomi is placing on the market this year to keep its meteoric growth alive. Xiaomi is banking heavily on global markets to fuel its growth story, now that it is already king of the smartphone hill in its home China market. Read Full Post…
