14 DAY TRIAL // Chinese company Xiaomi has been trying to enter the U.S. market for quite some time now, but every statement coming from its officials confirmed the handset maker was not yet ready for the move.
Unfortunately, one of the reasons Xiaomi hasn't yet entered other markets except for China and India is probably its reluctance to adopt the Western business model.
Now Reuters reports that Xiaomi's Q3 smartphone sales in China dropped by 45%, which is huge for a company that was once the number one handset maker in the world's largest market.
However, Xiaomi claims that the low sales throughout the year will not have any major impact on its overall profit growth, which is driven by sales from smart home devices and software eco-system.
And that's completely accurate considering the fact that Xiaomi sells very cheap smartphones with even lower profit margin.
The information has been confirmed by Xiaomi's VP: “Basically we're giving [handsets] to you without making any money. We care about the recurring revenue streams over many years.”
Even selling billions of phones won't bring Xiaomi too much profit
According to Hugo Barra, his company could sell 10 billion smartphones and it wouldn't make “a single dime in profits.”
Based on these statements, it's pretty clear that Xiaomi's business does not rely on smartphone sales, so when the company's officials claim low sales won't hurt their profit, that's not far from the truth.
Xiaomi was valued at $46 billion about two years ago, and sales of the company's smart home devices are expected to double to $1.5 billion by the end of this year.
The Chinese company has been focusing on the Indian and other markets in Southeast Asia, but plans to start launching smartphones in the United States in the coming months.
In fact, Xiaomi has already released the first device that can roam on the 4G networks in the United States, which is aimed at Chinese business people who are traveling in the U.S.
There's one more device that Xiaomi plans to launch next year at CES 2017 trade fair, a device that will be available worldwide, though we're not sure it will be a smartphone.