Xiaomi Corp (小米), the Chinese smartphone maker that challenged Apple Inc with sleek designs and low prices, is planning to introduce its first drone at a price more than 20 percent below a comparable product from market leader SZ DJI Technology Co (大疆創新), according to a person with direct knowledge of the matter.
The drone, made by FIMI Technology Co (飛米電子科技), is to record high-resolution 4K video and cost about 4,000 yuan (US$610), the person said, asking not to be identified as the details are private.
That compares with US$799 for the 4K-capable Phantom 3 on DJI’s Web site.
Xiaomi rocketed to the top of China’s smartphone market by offering inexpensive devices packed with premium components, undercutting established rivals including Apple and Samsung Electronics Co.
The price of its first entry into the nascent drone market suggests a similar strategy will be used to win customers for autonomous flying vehicles as smartphone growth slows.
“While making good-quality products, the price point has to be competitive as well,” Xiaomi marketing director Li Zhuoqi said, without disclosing a price or sales estimates. “We have set a very thin margin for drones, but the product line is set to be profitable.”
Xiaomi is joining the crowd of upstarts in the drone market, hoping to take share from Shenzhen-based DJI, the leading seller of consumer devices.
Drones are still largely novelty items, with sales expected to reach almost 4 million this year and forecast to rise to 16 million by 2020.
Newer players are targeting the lower-tiered part of the market, such as Syma Toys Co Ltd (司馬玩具) and Shenzhen Hubsan Intelligent Co Ltd (深圳哈博森知能). Xiaomi is betting that it can capture a part of the consumer drone market that Grand View Research Inc expects will reach US$4.19 billion by 2024.
Beijing-based Xiaomi last week said it would unveil its first drone today, without detailing an expected price or specifications.
Xiaomi has already begun to expect slowing growth in the Chinese smartphone market as it matures.
“The natural ceiling for the market is about 500 million phones,” Xiaomi chief financial officer Chew Shouzi (周受資) said in an interview with Bloomberg Television earlier this month.
Smartphone shipments in China reached a record 438 million units last year, according to Strategy Analytics.
After capturing smartphone customers with its online flash sales model that sold inexpensive smartphones directly to consumers, bypassing retail outlets and wireless carriers, Xiaomi has struggled as others copied the model.
Xiaomi missed its target of selling 100 million devices last year and was overtaken by Huawei Technologies Co (華為).
Xiaomi, which was valued at US$45 billion after a 2014 funding round, has no plans for an initial public offering and does not need to raise money, Chew said.
DJI’s valuation hit US$10 billion last year, according to CB Insights.
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