Business

From $45bn valuation to $4bn - What's wrong with Xiaomi?

22 Aug 2016 | Written by Ramya ; Edited by Supriya

Only 18 months after Xiaomi's last round of funding in Dec'14, the Chinese smartphone company's valuation came down to $4 billion, according to business analysts.

International Data Corporation's report shows the company's smartphone sales in China saw a decline of over 40% in 2016's Q2, compared to 2015's Q2.

After the Dec'14 funding round of $1.1 billion, Xiaomi's valuation was over $45 billion.

In context: Is the "Apple" of the East rotting?

IntroductionAbout Xiaomi Inc.

Xiaomi Inc. is a privately-owned Chinese electronics company founded by Lei Jun on 6 April 2010.

The company designs, manufactures and sells smartphones, laptops, mobile apps, and other related consumer electronics.

Xiaomi's employee strength is 8000; its headquarters are located in Beijing.

Xiaomi's first smartphone was released in Aug'11; it gained immense popularity and became the world's fourth-largest smartphone maker (as of 2015).

MarketXiaomi's primary markets

Primary markets of Xiaomi include China, India, Malaysia, and Singapore; the company earlier announced that it was expanding to other countries like Indonesia, Philippines, and Brazil.

In 2014, Xiaomi became China's largest smartphone vendor overtaking rival Samsung.

The company entered the Indian market in Jul'14 and expanded rapidly since.

With Foxconn's partnership, Xiaomi started its first factory in Andhra Pradesh's SriCity in Aug'15.

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World's most valuable technology start-up

By the end of Dec'14, Xiaomi Inc. had become the most valuable technology start-up in the world as it had received $1.1 billion funding from the investors. After the investment, the company's valuation had reportedly reached $46 billion.

22 Aug 2016From $45bn valuation to $4bn - What's wrong with Xiaomi?

Lack of LoyaltyXiaomi's long accused of copying established players

Xiaomi's global expansion dream also catered to the market decline as it didn't have a patent portfolio to enter the Western market.

It is accused of copying features and hardware of other players like Apple.

Even in its second-largest market (India), Xiaomi faced bans for infringement of Ericsson's patents.

Also, studies show Xiaomi's customers - especially Chinese - being quite tech-savvy aren't brand loyal.

26 Nov 2016Xiaomi unruffled with plummeting smartphone sales

Xiaomi won't be impacted by sharply dropping smartphone sales as its key profit-drivers are smart-home devices and software eco-system, according to officials.

Despite smartphone sales tumbling, Xiaomi's VP, Hugo Barra, refutes suggestions that it could impact valuation.

Barra explains Xiaomi is essentially giving away smartphones "without making any money."

Xiaomi has been increasingly focusing on its home-appliances and expects sales to double this year.

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27 Jan 2017Hugo Barra will now lead Facebook's VR efforts

Days after Hugo Barra quit Xiaomi as its Global Vice President, he was hired by Facebook to lead its virtual reality efforts.

As the Vice President of Virtual Reality group, Barra will need to maneuver through today's competitive and young market.

In a Facebook post, Mark Zuckerberg wrote, "Hugo shares my belief that virtual and augmented reality will be the next major computing platform."

28 Mar 2017Xiaomi to create 20,000 jobs in India

Chinese tech manufacturer Xiaomi has stated that it intends to create 20,000 jobs in India, as it is one of the most important markets for the country.

Company CEO Lei Jun said he seeks to improve the company's offline presence in India by increasing its market share to 50% of Xiaomi's total sales.

Currently over 90% of Xiaomi's sales in India is online.