The Chinese smartphone vendor Xiaomi on Friday reported a record drop in Q4 revenue. It cited the impact of the COVID-19 curbs on China as well as global component shortages.
The company said that it expected the economic slowdown in China to recover slowly. However, it warned that the coronavirus outbreak could also affect overseas demand.
Smartphone
Among smartphone vendors, Xiaomi is experiencing a record drop in Q4 revenue. This has caused it to report a 20% year-on-year decline in profits.
The global smartphone market also experienced a record drop in shipments for the fourth quarter, with a 18.3% annualized decline, according to IDC. This is the biggest drop in sales for one quarter since 2013.
IDC believes the coronavirus pandemic will have a negative impact on overseas demand. However, it expects the holiday season and year-end sales to increase demand.
Chinese smartphone makers Oppo, Vivo and Xiaomi saw their shipments decrease by 9%, 1.4% and 19.8%, respectively, in 2022. Compared to the same period last year, the three brands’ share decreased by 1 point.
Internet of Things
The Internet of Things (IoT) refers to an ecosystem of connected devices that use embedded sensors and wireless communication to collect and exchange data. These connected devices range from the fluffy (smart lights) to the serious (connected cars).
The IoT is becoming increasingly common in consumer products, such as smart thermostats and lights, but it also enables organizations within industries like energy, agriculture and infrastructure to automate processes, improve productivity and efficiency and boost safety. These IoT applications may include sensor-based tracking of assets or employees in hazardous environments, such as oil and gas fields or chemical plants.
However, despite the potential for these IoT devices to make our lives easier, there is also a concern over security. US intelligence agencies warn that hackers could exploit IoT devices to spy on citizens or cause disruptions if they are compromised.
Financial Services
Xiaomi has made a big name for itself as a Chinese smartphone manufacturer in the past couple of years, and now it’s on a mission to break out into global markets. However, it’s going to have its work cut out for it, as the smartphone industry in the West is dominated by subsidy-driven devices and carrier relationships.
The company has a long way to go before it can become a major player in the global smartphone market, but it’s making progress. As long as it continues to improve its average selling price, Xiaomi’s future looks bright.
While the latest revenue report from Xiaomi shows a record drop in financial services sales, it also points to strong growth in its internet services segment. This is mainly thanks to strong overseas sales and a robust gaming business. That helped to offset a decline in advertising and fintech revenues. In addition, smartphone shipments also rose. But overall, the company’s Q4 revenue is down a whopping 40% year-on-year.
Other
Despite its high-profile position in the smartphone industry, Xiaomi faces many challenges. These include counterfeiting and piracy, data-mining issues, and product quality issues.
Nevertheless, the company manages to deliver a steady stream of smartphones with innovative features. These are complemented by its smart home gadgets and other devices that offer affordable options for consumers.
The company makes smartphones, tablets, laptops, wearable devices, TVs, and routers. These are sold through its web store and third-party stores.
In addition to its hardware, the company offers a customized version of Android called MIUI. Its interface looks like iOS and drives users to cloud messaging, device security, and backup features.
The Chinese firm also manufactures internet-connected appliances, including televisions, flashlights, unmanned aerial vehicles, and air purifiers. These products are offered through its Mi and Redmi brands. The company’s online business has been growing rapidly. Its revenue from Internet services in the second quarter of 2021 grew 1100% year-over-year. It expects to expand its overseas business.