Xiaomi may not make money from mobile phones, but the growth point will be IoT?

On the evening of November 27, Xiaomi Group released its third quarter 2019 results report.Revenue for the quarter was 53.66 billion yuan, a year-on-year increase of 5.5%.

And XiaomiTotal mobile phone revenue fell 7.8% year-on-year in the quarter. Xiaomi CFO Zhou Shouzi admitted that the entire Chinese mobile phone market has continued to decline in the past two years, which has indeed put pressure on mobile phone manufacturers. However, Xiaomi said: "We are currently in the transition period from 4G to 5G. We believe that as soon as 5G is turned on, the entire smartphone market will get better and better." It is understood that in 2020, Xiaomi will launch at least 10 5G smartphones in China to seize the smartphone replacement cycle brought about by 5G.

AIoT strategy "one ride to the top"

Previously, Xiaomi has achieved good results in the IoT field. According to Lei Jun, Xiaomi had a bumper year for its AIoT deployment in 2018. This year, Xiaomi became the world's largest IoT consumer-grade IoT platform, connecting 132 million devices (excluding mobile phones and laptops), and the number of activated devices with built-in Xiao Ai classmates exceeded 100 million.

On March 7, 2019, Xiaomi Group issued an internal announcement announcing the establishment of an AIoT Strategy Committee. Xiaomi has once again made architectural adjustments. Lei Jun also officially proposed Xiaomi’s“Mobile + AIoT” dual-engine strategy, and defined it as "Xiaomi's core strategy for the next five years." Although Xiaomi is neither the originator of the concept of "IoT" nor the only practitioner of IoT, as a pioneer in the IoT strategy, even in a market where giants gather, Xiaomi's advantage can be said to be "unparalleled".

Since Xiaomi launched its “mobile phone + AIoT” dual-engine strategy, Xiaomi’s IoT business has developed even more rapidly. In Xiaomi’s financial report released this time, the revenue of IoT & consumer products business proves one point. In terms of such products, Xiaomi Group’s current revenue increased by 44.4% from RMB 10.8 billion in the third quarter of 2018.RMB 15.6 billion in the third quarter of 2019, accounting for 29.1% of total revenue, which is mainly due to the rapid growth in demand for other IoT products such as smart TVs, home appliances and Xiaomi bracelets, as well as the effects brought about by the continued enhancement of the advantages of the AIoT platform.

Xiaomi TV is a major contributor to IoT

The IoT business has made a large contribution to Xiaomi's revenue for two consecutive quarters, of which Xiaomi TV is a well-deserved contributor. In the first half of the year, Xiaomi TV has consistently ranked first in China's TV business by sales, and it still ranked first in the country in the third quarter. at present,Xiaomi smart TV's global shipments exceeded 3.1 million units, a year-on-year increase of 59.8%, ranking first in the country, top five in the world. Judging from the current competitive landscape of the smart TV industry, this achievement is not easy.

Six years after Xiaomi launched its smart TVs, due to the sluggish mobile phone market, this year OnePlus and OV began to focus on the smart TV industry. But Xiaomi did not disappoint thanks to its accumulated user base and other advantages. In September 2019, the monthly active users of smart TVs and Xiaomi boxes reached 23.9 million, a year-on-year increase of 50.1%. Its paying users exceeded 3.2 million, a year-on-year increase of 68.8%.

Zhou Shouzi emphasized in this conference call: "Our major appliances department's business is a very important component of our mobile phone + AIoT dual-engine strategy. We believe that we are experienced in smart TVs. To help us succeed, we have also developed related strategies for other major appliances around the world, including air conditioners, washing machines, etc. Therefore, in the next few years, we will make huge investments in major appliances."

Indeed, as Xiaomi promotes smart home interconnection, in addition to focusing on the performance of TV products, other major home appliances cannot be ignored. In October this year, Xiaomi released four refrigerators, which means that Xiaomi has officially entered the air conditioner, refrigerator, and washing machine markets, expanding its layout in the field of large appliances.

Xiaomi’s magic weapon ecological chain construction

The reason why Xiaomi has become a leader in IoT and smart devices in China is that it has always attached great importance to the construction of ecological chain and accumulated supply chain resources that are difficult for competitors to match. As of now, Xiaomi hasMore than 270 ecological chain companies, covering almost all areas of smart hardware, from power banks and bracelets to sweeping robots and treadmills.

The good feedback from the capital market is the greatest affirmation of Xiaomi's ecological chain. At present, four companies from the Xiaomi ecological chain, Huami, Yunmi, Yujiahui, and Shitou Technology, have gone public. Huami and Yunmi both successfully landed on the Nasdaq last year, and Yujiahui and Stone Technology also landed on the GEM and the Science and Technology Innovation Board respectively.

Xiaomi is also gradually deepening its control over the supply chain. In addition to supporting ecological chain allies, Xiaomi has also begun planning to build its own supply chain and will build a future factory in Yizhuang, Beijing this quarter. Zhou Shouzi said: "The reason why Xiaomi wants to build a factory is to make our manufacturing more advanced and intelligent. In the future, this will be very important to improve efficiency. But we will also rely on Xiaomi's existing mature ecosystem and maintain close cooperation with important factory partners."

write at the end

In addition to continuing to lay out the IoT ecosystem, Xiaomi has also made huge investments in AI and has made huge breakthroughs in advanced artificial intelligence and IoT technologies such as acoustics, speech, natural language understanding, image visual processing, and deep learning.

Although Xiaomi's mobile phone business has experienced weakness, it is undeniable that Xiaomi still delivered a considerable report card in the third quarter. It seems that the development of IoT, AIoT and other businesses has graduallyIt has become Xiaomi’s key breakthrough target.

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