We all know how Xiaomi has changed the Smartphone market and bringing the highest specs and great quality at affordable pricing and honest pricing. But due to fierce competition and more brands into the budget segment and mainly the Xiaomi earnings come from the budget segment and now due to some reasons and competition from Realme, Oppo, and Vivo. We will discuss in brief in this blog.
* Why Xiaomi will face problems in the future and chances it can fail. "
Xiaomi is said to be one of the best company i loved because of innovations and great specs that it brings at affordable prices. Xiaomi first also bring the change in China by providing the Great specs at low cost with the good build quality and then the Chinese Smartphone market gradually changed and then Xiaomi set his entry to India and then the whole Indian Smartphone market changed.
Xiaomi or Mi full form is a Mobile Internet company not a Mobile manufacturer company and this is also written in his IPO and their earnings are from Internet services and not from smartphones. When Xiaomi entered India they understand what to bring that lacks in the Indian Smartphone market that is low specs at a high price and only you can purchase only offline. Now Xiaomi realized that to gain more market share in India they have to bring great specs at low cost and Xiaomi did something great by introducing the concept of Flash sales and by selling phone by online rather than by offline which means that no more cost and Smartphone can be sold at low prices.
Xiaomi earning from the Indian market is in the form like 70% from Mobiles and 21% from selling accessories which includes Mobile covers, power banks, Mi Band and various other and the remaining 9% of their earning is from Internet things. You may be aware that the gross profit on smartphones is roughly around 9% which is very less and that is the reason why they can sell their product at low cost and make earning by Internet Services. Xiaomi Business model is like to sell smartphones at low cost and later make revenue from it.
Main problem with Xiaomi is that they are not making enough profit from Internet services in India or Globally and there is some problem in China also because of the market is changed a lot now people don't want to buy a low cost mobile enough it is good and they are preferring Premium one and the Xiaomi is ranked No 4 in China after Huawei, Oppo and Vivo. The great way to find out that the Company is making a profit or not by looking at the price of its stock, When first Xiaomi comes to Stock the price was around 28 Hongkong Dollar and after 3 Quarters it is around 8Hongkong Dollar a 15% dip in it.
The problem is not big in China it can be recovered by providing more of its services and the problem Globally is a lot larger because other companies who adopted Xiaomi model like Oppo, Vivo, OnePlus and in every manner the same company we are talking about Realme and these companies are giving a serious competition to Xiaomi and now people want to buy Xiaomi phones but don't want to use their services because there is better service provider like Google and Amazon and news is that other companies are also entering in this business like Apple and Microsoft.
Now Xiaomi needs to take series of steps because, in the long run, it will not help it in making a profit because to run companies it needs profit and after sometimes you are going to see a price hike in Xiaomi phones to make it profitable. But now there is no chance of an increase in price because of its Smartphone sales will drop. I am sure that Xiaomi is working on some other business strategy and chances are there it can boost or fail but chances are there it will boost.
What do you think about Xiaomi, tell me in the comments below?