Xiaomi Corp (小米) sold more than 70 million smartphones last year, falling well short of its target and prompting founder Lei Jun (雷軍) to tell employees he was refocusing research efforts into “cool stuff” like robotics and virtual reality.
The Chinese startup had a stated goal of selling 80 million devices. Xiaomi originally predicted selling 100 million units, but then changed that after China set its lowest growth target in 15 years and copycat vendors started taking away market share. The miss was a blow to company morale, Lei said in an e-mail to employees.
“We set a target of 80 million and, before we knew it, it became an obligation,” Lei said on Friday. “We changed under this pressure, and everyone’s faces gradually lost all traces of humor.”
The smartphone maker thrived through online sales of budget-priced devices with advanced components, overtaking domestic competitors and challenging Apple Inc and Samsung Electronics Co for supremacy in the world’s largest market.
Its meteoric ascent helped it secure US$1.1 billion in 2014 from investors including GIC Pte, All-Stars Investment Ltd and Russia’s DST. Xiaomi even drew comparisons to Alibaba Group Holding Ltd (阿里巴巴) and other more established technology powerhouses.
Xiaomi’s market share has been pinched by competitors including Huawei Technologies Co (華為) and Meizu Technology Co (魅族), Yuanta Securities Co (元大證券) analyst Jeff Pu (蒲得宇) said in Taipei.
Huawei and Meizu are among the Chinese vendors that have flooded the Internet with ultra-thin phones offering similar features and prices to Xiaomi’s Mi 4i and Redmi Note 2.
Huawei said it shipped more than 100 million smartphones last year as it expanded in the US and Europe, defying an industry slowdown.
Pu expects Xiaomi’s sales growth to slow to 10 percent this year.
“With sales growth slowing, Xiaomi’s valuation will be hurt,” Pu said. “It could even face a down round, as investors are less willing to pay.”
In his address to more than 8,000 employees, Lei said he would bring back the “fun times” by starting research into “cool stuff” like robotics and virtual reality.
“Even as we labor on our core business, we must never forget to gaze toward the stars, the future,” he said. “We’ve decided to hive off a small team to begin building a research lab, initially to focus on virtual reality, robots and other new directions. This will help us lay the foundation for Xiaomi’s next phase.”
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