Together with the fast pace of product releasing and the time ticking of stock market listing, Lei Jun will face the problem of inventory. The uncertainty lays inside Xiaomi itself: its supply chain system, the healthiness of its capital chain, inside control in high-speed expansion.
Xiaomi is four years old now. Its founder, Lei Jun, has changed the landscape of the whole Chinese mobile phone market by the means of Internet selling and marketing.
Concealed by its halo is the query of “hunger marketing” that will follow Xiaomi and Lei Jun wherever they go. What are the real sale numbers of each version of Xiaomi phone? What will Lei Jun plot in 2014? With these questions, we explored the main mobile phone supply chains in mainland. By interviewing more than 20 employees and former employees of Xiaomi, we obtained some reliable information:
Exactly how many is the sales number?
1. Sorted by type:
Xiaomi mobile phone 1(including 1S):
released in August, 2011;
on sale in October, 2011;
total sales number: 7,900,000
Xiaomi mobile phone 2 (including 2S, 2A):
released in August, 2012;
on sale in October, 2012;
total sales number: 15,130,000 (by the end of February, 2014)
Xiaomi mobile phone 3:
released in September, 2013.
NVIDIA chip version of Xiaomi 3 on sale in October, 2013;
Qualcomm chip version of Xiaomi 3 on sale on December 31.
total sales number: 3,710,000 (by the end of February, 2014)
Hongmi mobile phone:
released in July, 2013;
on sale in August, 2013;
total sales number: 5,570,000 (by the end of February, 2014)
Interpretation: In the past three years, Xiaomi has a total sale number of 32,310,000. Xiaomi 2 is currently the most successful version so far. The sales number of Xiaomi 3 is not so good. Hongmi succeeded in a short time, it will become the main strength of sales in 2014.
2. Sorted by sales number per year
By the resources from inside Xiaomi, the sales number of Xiaomi mobile phone in 2011 is only 300,000. The sales amount is 0.55 billion RMB.
In 2012, the sales number is 7,190,000, increasing by a rate of 2400%. The sales amount is 12.65 billion, increasing by a rate of 2300%;
In 2013, the sales number of Xiaomi is 18,700,000, increasing by a rate of 260%. The sales amount is 31.6 billion, increasing by a rate of 250%;
In 2014, Lei Jun claims that the target of Xiaomi this year is 60,000,000. Actually, the pass line set by the company is 50,000,000. The sales amount target is 75-80 billion yuan. At first quarter this year, the estimated sales number is 11,000,000.
In the plan published by Lei Jun only in the company, the target of Xiaomi in 2015 is 0.1-0.12 billion, the sales amount will exceed 100 billion; The target sales number for 2016 is 0.15-0.2 billion.
Interpretation: Interestingly, a lot of companies, including Huawei, Kupai, Lenovo and TCL, all set 60 million as their goal in 2014. That’s because 15 milllion a quarter will guarantee a rank of 3 to 5 in the global market. This year, who will hit the line first will be a major highlight. HTC and LG, however, will drop off the race.
Lei Jun’s Planning for Mobile Phone Industry in 2014
According to insider information, Xiaomi will release a updated version of Xiaomi 3 mobile phone at the end of April or the beginning of May. The device is upgraded from 8274AB/8674AB to 8974AB. The new version also supports TDD/FDD 4G standard. RAM is upgraded from 2 GB to 3 GB, while UI is upgraded from MIUI V5 to MIUI V6.
The OEM of Xiaomi 3S is a Foxconn factory in Langfang. What’s worth attention is that Xiaomi is experimenting on metalwork for the appearance design. The 3S mobile phone will have a metal frame, in order to ameliorate its widely reviled plastic appearance design and workmanship.
Since Lei Jun is not very fond of the name “Xiaomi 4”, the blockbuster launching in September still doesn’t have a definite name. It will adopt Qualcomm 805 platform, reaching a highest frequency of 2.5 GHz. It also has a newest Adreno 420 GPU. According to Qualcomm, its image dealing ability will raise by 40% in compare to Adreno 330 GPU.
Interpretation: Revealed by an insider in Xiaomi, Leijun said one of his worst decision was to declare that “No design is the best design” when launching the first version of Xiaomi mobile phone in August, 2011. This has since become a weak point of Xiaomi. Lei Jun’s team also kept reflecting on this.
Hongmi mobile phone was launched in July, 2013. In March 18, 2014, Hongmi Note was launched and led to a new round of great war of thousand-yuan mobile phone among domestic mobile phone makers.
The OEM for Hongmi is Wingtech (闻泰). According to the insider, Lei Jun is quite satisfied with the sales number of Hongmi. However, he is not as equally satisfied about the control in deliver ability. Lei Jun once visited several suppliers in Shenzhen, and he also held a supply chain session in March. Hongmi has become an important leverage in this years 60 million target set by Lei Jun. In addition to this goal, Hongmi will also launch 3 to 4 new products this year.
Interpretation: In the plan drawn by Lei Jun, Xiaomi 3S aims at the high-end market. Hongmi has a target sales number of 25 to 30 million. It divides the 8-core thousand-yuan mobile phone market into several sections and was intruding each of them.
Interestingly, Hongmi is still working on appearance design as Lei Jun insisted. It “adopts the best plastic material domestically”.
The Risk and Opportunity of Xiaomi
According to Lei’s plan, Xiaomi has a floor sales number of 50 million and an expected sales number of 60 million. “Xiaomi system” is just released as a mobile application in the hope of transforming Android users of other brands into Xiaomi users. In price, Xiaomi 4, 3S, 3 and Hongmi will establish a solid price duration of 2000, 1500, 1200, 900 and 700. By launching Hongmi with candy colors, it will also attract more female users.
However, for a mobile phone manufacturer, the threshold is pretty high, as much as 60 to 80 million. For a company depending on domestic market, a percent of 15% to 16% is sufficient. When the growth of sales in the domestic smart phone market is slowing down, greatly raising the market share is unlikely. This means Xiaomi will be heading for a highly risky and mostly uncertain oversea market.
2014 will be a “year of life and death” for Xiaomi. If it passes the test, the future is bright; else, it will lose the whole game. Together with the fast pace of product releasing and the time ticking of stock market listing, Lei Jun will face the problem of inventory. Lei Jun’s team seemed to have noticed this problem, for it did not announce any new product in this year’s Mifen Festival. Instead, it sold 1 million mobile phones without reservation, which sounds like a clearance sale for the latest product released at the end of April.
In spite of this, the uncertainty lays inside Xiaomi itself. For example, its supply chain system, the healthiness of its capital chain, inside control in high-speed expansion. This exhibits as a huge task for Xiaomi and the management team led by Lei Jun.
Original Post on Huxiu.