Xiaomi probably won’t hit its smartphone sales targets this year

Has the magic finally worn off? Is Xiaomi suffering the effects of China’s economic slowdown? Call it what you will, but as we move into the final quarter of the year, things aren’t looking great for Xiaomi. The company appears to be on track to miss even the low end of its yearly smartphone sales goal.

Last year, Xiaomi gave itself the goal of selling 100 million phones in 2015. That seemed ambitious, but not outside the realm of possibility, especially after the fast-growing company finished 2014 having shipped more than 60 million units after having originally projected only 40 million sales.

2015 has not gone nearly as well, though. By March, Xiaomi CEO Lei Jun had revised this year’s goal to 80 to 100 million units. In July, the company announced that it had sold 34.7 million smartphones in the first half of the year, putting it on track to possibly miss even the lower end of Lei Jun’s revised target.

Now, there are additional signs that even 80 million might be optimistic. Taiwan-based research firm Trendforce just released a report suggesting that Xiaomi is on track to sell around 70 million smartphones this year. Meanwhile, research firm Canalys is saying that Xiaomi’s sales in the third quarter of this year actually dropped year-on-year, the first time that has happened.

Xiaomi hasn’t yet confirmed any official Q3 sales numbers, but with multiple research firms singing the same tune and the year’s official H1 numbers not looking impressive, right now all signs seem to be pointing to a disappointing year for Xiaomi when it comes to growth.

What’s to blame?

So what’s causing Xiaomi’s apparent slowdown? Until we see more official data, it’s tough to say for sure. But here are a few likely factors:

• Increased competition: when it first came out, Xiaomi was the company doing lower-cost, higher-quality smartphones with a hip, internet-company buzz. Now, everybody’s doing that. There’s Meizu, OnePlus, Letv, Smartisan, Qiku, and many more – and that’s in addition to big-time players such as Huawei, which is having an impressive year.
• Decreased hype: you can only be the hip newcomer for so long. You can only play the “limited stock” sales game for so long. Xiaomi is now a respected and established brand, not a buzzworthy startup. That’s not necessarily a bad thing, but it may mean Xiaomi’s days of startup-style growth are over.
• Slow expansion: China’s smartphone market is pretty saturated, and Xiaomi’s global expansion pace has been glacial. The company is set up in India, but it isn’t one of the country’s top smartphone brands yet, and it doesn’t sell its smartphones in many other places yet. Recently, there have been hints that it plans to expand smartphone sales to the US, but that’s certainly not happening before the end of the year.
• Decreased focus: Xiaomi maintains that smartphones remain its core area of focus. But the company has expanded into selling everything from smart TVs to scooters, and it’s working on making a laptop and offering telecom services. Even if these things aren’t internal distractions, they certainly muddy the waters a bit when it comes to Xiaomi being perceived as a smartphone company.

All of that said, readers should remember this isn’t a disaster for Xiaomi. If the company really does ship 70 million smartphones this year, that’s still an awful lot of phones, and it would still represent double-digit year-on-year growth. Plus, there’s the upcoming Singles Day online shopping holiday; Xiaomi could potentially pump its numbers up quite a bit if some clever marketing feat gives the company a strong Singles Day showing.

So no, Xiaomi isn’t dead. But the Xiaomi hype train appears to be slowing down.

Do you think another company could take Xiaomi’s place? Has China just gotten tired of these lower-priced online-only smartphone brands?