Xiaomi must redefine its smartphone strategy to stay the course, Telecom News, ET Telecom

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Beijing: Chinese brand Xiaomi’s third quarter figures show the impact of ongoing global component shortages on its balance sheet, putting its smartphone strategy under the scanner, according to a new report.

Revenue grew only 0.5% (yoy) and fell 19% (qoq), while quarterly sales growth was the slowest in more than a year.
“All of this has made many people question Xiaomi’s business strategies. But Xiaomi is already at work, choosing areas for improvement and finding ways to combat external factors,” according to Counterpoint Research.

Globally, Xiaomi has experienced the continued shortage of SoCs, as mentioned in its latest quarterly earnings call.

“The main contributors to Xiaomi’s shipments are 4G compatible smartphones, especially those under $ 300. 4G SoCs are also the ones facing the biggest smartphone shortage,” said Ivan Lam, senior research analyst at Counterpoint.

Xiaomi, with its excellent value for money and mainly under $ 300 product portfolio, has captured a huge market share globally, especially in the past three years.

This is due to two main reasons. First, Xiaomi managed to take a significant share of local brands, which mainly sourced from Chinese ODMs and, as a result, lacked price advantage and core software competence.

“Second, local OEMs are unable to compete with Xiaomi’s marketing power. Therefore, with the right kind of penetration strategy, it can be a very powerful alternative for the mass market,” Lam noted.

But today other gamers are also playing the same ‘internet brand’ game as Xiaomi and are following closely.

In Xiaomi’s home country of China, it continued to struggle in the offline market. OPPO and Vivo held over 65% of the offline market share, while Honor’s strong comeback has had a huge impact on Xiaomi.

“In the second quarter of 2021, with the big e-commerce festival of ‘618’, Xiaomi exceeded expectations. But in the third quarter of 2021, there had been no such festival, which led to the underperformance from Xiaomi, ”the report notes.

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