Financial Highlights

Huawei reported a total revenue of RMB 704.2 billion (approximately USD 99.4 billion), marking a 9.6% increase from the previous year.

The company’s net profit rose dramatically to RMB 86.95 billion (approximately USD 12.28 billion), illustrating Huawei’s effective management and strategic realignment in response to external pressures and market dynamics.

The ICT infrastructure segment, a cornerstone of Huawei’s business, generated RMB 362 billion, a modest increase of 2.3% year-over-year. Meanwhile, the consumer business, including smartphones and other smart devices, brought in RMB 251.5 billion, surging by 17.3%.

The company’s burgeoning cloud computing and digital energy sectors witnessed growth rates of 21.9% and 3.5% respectively, further diversifying Huawei’s revenue streams. Notably, the smart car solutions business stood out with a remarkable growth of 128.1%, although from a smaller base, signaling Huawei’s strategic pivot towards new technology frontiers.

Strategic Investments in R&D

Huawei’s commitment to research and development (R&D) remained steadfast, with an investment of RMB 164.7 billion in 2023, accounting for 23.4% of its total revenue.

Over the past decade, the company has invested more than RMB 1.1 trillion in R&D, underscoring its long-term vision to lead in technological innovation and contribute to the global digital economy.

Expanding Global Footprint and Ecosystem

The report highlights Huawei’s efforts in expanding its global ecosystem and fostering open innovation. By the end of 2023, Huawei Cloud boasted over 6 million developers and more than 40,000 partners worldwide, creating a vibrant and innovative digital ecosystem.

Future Outlook

Looking ahead, Huawei remains optimistic about its future growth prospects. The company plans to continue its investment in core ICT technologies and platforms, enhancing its product and service offerings across different sectors.

Huawei’s chairman, Hu Houkun, emphasized the importance of quality, innovation, and open collaboration with partners to create greater value for customers and society at large.

Strategic Moves: EV Sector and Smartphone Market

Xiaomi’s entry into the smart Electric Vehicle (EV) market and continuous innovation in the smartphone segment have been central to its financial success.

The company retained its position as the third-largest smartphone vendor globally, with a total shipment of approximately 145.6 million units.

A notable strategy was the premiumization of its smartphone offerings, which led to an over 19% increase in the average selling price in mainland China.

Growth in IoT and AIoT Platforms

Revenue from Xiaomi’s IoT and lifestyle products reached RMB 80.1 billion, with a gross profit margin of 16.3%.

The number of connected IoT devices on Xiaomi’s AIoT platform as of December 31, 2023, stood at 739.7 million, a 25.5% increase year-over-year.

This expansion is reflective of Xiaomi’s strong position not only in the domestic market but also internationally, with significant presence and market share growth in various regions including the Middle East, Latin America, Africa, and Southeast Asia.

Future Directions: R&D and Global Technology Leadership

Xiaomi announced its strategic goals for 2020–2030, emphasizing long-term investment in foundational core technologies to assert its leadership in global tech innovations.

The company’s R&D expenses for 2023 amounted to RMB 19.1 billion, a 19.2% increase from the previous year, highlighting its commitment to innovation.

About Xiaomi Corporation

Xiaomi Corporation was founded in April 2010 and listed on the Hong Kong Stock Exchange in July 2018. With its core in smartphones and smart hardware connected by an IoT platform, Xiaomi aims to create quality products that enhance global living standards through innovative technology.

Introduction to Xiaomi e-commerce platform Youpin

However, the last quarter saw a 1.2% year-over-year increase in shipments, thanks to strong demand for premium smartphones, particularly in major cities. Apple’s strategic price cuts through third-party channels played a pivotal role in this growth, as did Honor’s reinforced channel partnerships and diversified product offerings, securing their respective top spots in the market.

A remarkable turnaround was Huawei’s re-entry into the top five, after more than two years, suggesting a revitalized competitive landscape. Despite these shifts, the final quarter of 2023 revealed nuanced dynamics: Apple and Honor slightly decreased their market shares, while Huawei saw a significant 36.2% increase, and the ‘Others’ category grew by 11.9%, indicating a diversifying market.

In contrast, Q4 2023 observed a 1.2% year-over-year uplift in shipments to 73.6 million units, halting a streak of declines over ten quarters. This rebound was spearheaded by robust demand for premium smartphones in major cities, while the market for lower-end phones lagged, despite their majority share in China’s market.

Arthur Guo, a senior research analyst at IDC China, highlighted Apple’s ascent to prominence amidst stiffened competition and subdued spending. Apple’s strategic price cuts through third-party channels spurred demand, securing its dominance.

Concurrently, Honor solidified its second position through enhanced channel partnerships and a diversified product suite, appealing to both high-end and mid-range segments.

A notable event in 4Q23 was Huawei’s resurgence in the top five after a hiatus exceeding two years, notes Will Wong, IDC Asia/Pacific’s senior research manager. This comeback intensifies competition in the world’s most significant smartphone arena.

The data reveals a mixed picture:

• Apple’s market share declined slightly from 20.6% in Q4 2022 to 20.0% in Q4 2023, indicating a -2.1% change.
• Honor also saw a slight dip from 17.1% to 16.8%, a -0.9% change.
• Vivo’s market presence shrank by -8.4%, dropping to 15.7% from 17.4%.
• Huawei defied the trend, soaring by +36.2% to reach a 13.9% market share, up from 10.3%.
• OPPO’s share fell by -16.1% to 13.7%, down from 16.5%.
• The ‘Others’ category grew by +11.9%, accumulating a 20.0% share, a significant collective rise.

The overall market dynamics for 2023 contrast with the final quarter, suggesting a nuanced recovery trajectory. While Apple and Honor lead the charge, with Huawei’s return signaling a potential market shakeup, companies like Vivo and OPPO may need to rethink strategies to maintain their footholds.

The Rise of Foldable Smartphones

In a notable development, IDC’s latest quarterly mobile phone tracker highlights the explosive growth of China’s foldable smartphone market, with shipments reaching approximately 2.77 million units in Q4 2023, a staggering 149.6% year-over-year increase.

This surge is propelled by new releases from Huawei, OPPO, and Honor, marking a continuous rapid growth trend for the fourth consecutive year, with a total of 7.01 million units shipped in 2023, up 114.5% from the previous year.

Improvements in hardware technology, software applications, and a drop in prices have enhanced the consumer experience and widened the foldable smartphone’s appeal. The price segment of $400-$600 is becoming increasingly populated, reflecting the segment’s potential for further growth.

Market Preferences and Performance

Consumers have shown a preference for horizontally folding devices over their vertically folding counterparts, despite the latter’s lower price points, due to the superior screen experience they offer.

Horizontally folding models, especially favored by the business sector for mobile office use, regained market share, reaching 68.1%, a 10.4 percentage point increase from the previous year.

In terms of market performance, Huawei dominated the foldable market with its Mate X5 series, capturing a 37.4% share.

OPPO followed with an 18.3% share, leading the vertically folding segment. Honor’s aggressive push in the second half of 2023 earned it third place, with a 17.7% share and the fastest growth rate of 467.0%. Samsung and Vivo rounded out the top five, facing stiff competition in the vibrant Chinese market.

Future Outlook

Arthur Guo of IDC China underscores the importance of balance between design and reliability in the foldable market.

As manufacturers vie for dominance in 2024, the foldable smartphone segment is set to continue its rapid expansion, driven by innovation and an increasing number of market players.

This evolving landscape suggests a dynamic future for China’s smartphone market, with foldable technology at the forefront of the next wave of mobile innovation.

This partnership, announced on January 25, aims to revolutionize AI capabilities in Samsung’s flagship smartphones. The integration of ERNIE into Samsung’s Galaxy AI enhances the S24 Series with features like intelligent summarization, advanced typesetting, and real-time call translation.

This collaboration brings ERNIE’s content understanding and generation capabilities to the Samsung Note Assistant, enabling it to translate and summarize extensive text efficiently.

The S24 Series boasts AI-driven features such as real-time speech-to-text transcription, speaker differentiation, multi-language translation, and automated meeting minutes generation, thus streamlining cross-language communication and office tasks.

The S24 Series introduces the “Circle to Search” feature, allowing intuitive searches across texts, images, or videos via simple hand gestures powered by Baidu Search for accurate and quick results.

Chen Yifan, Vice President of Baidu, highlights ERNIE Bot’s potential for diverse applications, especially given its multimodal data processing and personalization capabilities.

Launched in October of the previous year, ERNIE 4.0 marks Baidu’s most advanced AI foundation model, already serving over 100 million users. Baidu AI Cloud simplifies AI-native application development, offering ModelBuilder and AppBuilder tools to ease the creation of customized AI models.

Global market intelligence firm IDC predicts a surge in AI-enabled devices in China, forecasting that by 2024, over 70% of devices will feature AI functionality, representing 55% of the market.

The brand recognition of HarmonyOS has been steadily increasing year by year. From 50% in February 2021, it has risen to 85% in June of this year.

Currently, more than 700 million Harmony ecosystem devices are in use. These devices include smartphones, wearables, car cockpits, smart screens, tablets, smart home, headphones, and more.

In addition, the number of HarmonyOS developers has exceeded 2.2 million, with API calls reaching 59 billion times per day.

Regarding multi-device collaboration, there has been a 32% growth in fitness and health recording, and mobile application downloads have increased by more than 33%.

It is reported that Huawei began planning its proprietary operating system “HarmonyOS” in 2012 and officially released HarmonyOS in August 2019. After several iterations, HarmonyOS has gradually been applied to Huawei products such as smartphones, TVs, watches, and intelligent cockpits.

Huawei’s focus on HarmonyOS is a significant aspect of its strategy to create a complete ecosystem beyond smartphones. By covering various types of devices, such as wearables, car systems, and smart home appliances, HarmonyOS aims to provide a seamless user experience across the spectrum of everyday technologies.

The increase in brand recognition and the vast number of devices operating on HarmonyOS signal a positive trend for Huawei’s ambitions. With a growing developer community and a clear increase in application downloads, Harmony’s ecosystem seems to be maturing.

These achievements are essential for Huawei, particularly as international tensions and restrictions have impacted its operations in several markets. The development and success of HarmonyOS can give the company more control over its technology and reduce its dependence on foreign operating systems.

The latest updates shared during the Huawei Developer Conference 2023 mark a new milestone in the growth of HarmonyOS.

With significant advancements in multi-device collaboration and a surge in the developer community, Harmony is positioning itself as a comprehensive and versatile operating system. The continued expansion of Harmony’s ecosystem will likely play a crucial role in shaping Huawei’s future, strengthening its presence in various technological domains.

The top 5 smartphone vendors in the Chinese market in the fourth quarter of 2022 are Apple (20.6%), Vivo (17.5%), Honor (17.1%), Oppo (15.6%), and Xiaomi (11.6%).

In 2022, the top five smartphone vendors in the year are Vivo (18.6%), Honor (18.1%), Oppo (16.8%), Apple (16.8%), and Xiaomi (13.7%).

China smartphone shipment in Q3 2022; total shipments down 12%

In the third quarter of 2022, the Chinese smartphone market shipped approximately 71.13 million units, down 11.9% year-on-year, according to data from IDC.

Although the decline narrowed for the first time this year, market demand continued to be sluggish following the first half of the year; thanks to the early release of Apple’s iPhone 14 series and the return of Huawei’s Mate 50 series, the domestic smartphone market achieved a quarter-on-quarter growth of 6.0% in the third quarter.

In the third quarter, Vivo returned to first place in China’s domestic smartphone market in terms of shipments, with a market share of 20.0%. The sub-brand iQOO has been continuously recognized by the market with its good product strength and competitive pricing, and its market share has continued to increase, reaching 4.6% of the domestic market in the third quarter.

The Vivo X series continued the excellent performance of the previous quarter and maintained its leadership in the mid-to-high-end market of US$400-600

Honor and Oppo’s shipments ranked 2nd and 3rd in Q3 2022 with 17.9% and 16.3% market share respectively..

Apple’s ranking rose one place, and its market share increased month-on-month to 15.1%, the only top smartphone vendor to maintain year-on-year growth. Although the two models of the iPhone 14 Pro are still very popular, the iPhone 14 and the iPhone 14 Plus, which were only officially shipped in October, have limited appeal to consumers due to their small upgrades compared to the previous generation, while the iPhone 13 series is still favored.

Xiaomi smartphones shipped about 9 million units in the third quarter, accounting for 12.7% of the market.

In Q3 2022, China’s single-quarter shipments of foldable smartphones exceeded 1 million, a year-on-year increase of about 246%, the largest single-quarter shipment in history.

Strong brand and product power helped Huawei to remain in the first position in the domestic foldable screen smartphone market, with a market share of 44.9%.

Samsung’s two new products, Z Fold4 and Z Flip4, have significantly better sales than the previous generation, ranking second, accounting for 22.2% of the market share in the foldable smartphone segment.

The newly released X Fold+ series also helped Vivo to rise to third place in this market, with a market share of 11.9%. Xiaomi’s new MIX FOLD 2 has also won a better market reputation than the previous generation due to its thin and light appearance, and its market share has increased to 9.3%, ranking fourth.

China IoT market to account for 45% of global spend by 2025

China smartphone market share in Q2 2022

In the second quarter of 2022, China’s smartphone shipment reached about 67.2 million units, a year-on-year decrease of 14.7%, according to data from IDC. In the first half of the year, the domestic smartphone shipment totaled about 140 million units, a year-on-year decrease of 14.4%.

Honor ranked first in domestic market shipments in the second quarter, and Vivo ranked second. In the first half of the year, the domestic shipments of foldable smartphones exceeded 1.1 million, with a year-on-year increase of about 70%.

China smartphone market share in Q1 2022; Apple has 16.7% share

In the first quarter of 2022, China’s smartphone market saw about 74.2 million units shipment, a year-on-year decrease of 14.1%, according to data from IDC.

The impact of the continuous rebound of the epidemic on consumers’ budgets and the small upgrading range of new products have led to the continuous downturn of market demand.

The more uncertain overseas market prospect has led many mobile phone manufacturers to adopt more stable and conservative operation strategies, and the market will face great challenges throughout the year.

Oppo ranked first in terms of domestic smartphone shipment market share in the first quarter, followed by Honor, with a very high year-on-year increase, Vivo in the third place, Apple in the fourth place, and Xiaomi in fifth place.

At the same time, the negative impact of the current domestic epidemic on the logistics and supply side of the mobile phone market is relatively controllable, which brings about the delay in meeting part of the demand.

If there is no additional positive stimulus, the capacity of China’s smartphone market may fall below the 300 million mark in 2022, according to IDC.

Vivo has the largest market share of 19.7% by total smartphone sales, according to Counterpoint, followed by Oppo (18%), apple (17.9%), Honor (16.9%), Xiaomi (14.9%), and Huawei (6.2%). In the first quarter, domestic mobile phone sales fell 14% year-on-year to 74.2 million.

In 2021, the shipments of domestic brand mobile phones in China totaled 304 million, a year-on-year increase of 12.6%, accounting for 86.6% of the mobile phone shipments in the same period. In other words, nearly 87 people buy domestic mobile phones among every 100 people’s purchase.

In 2021, 5G mobile phones shipped 266 million units, with a year-on-year increase of 63.5%, accounting for 75.9% of mobile phone shipments in the same period. In November and December 2021, 5G mobile phones accounted for more than 80%.

In 2021, 329.3 million smartphones shipped in China, with a year-on-year (YoY) growth of 1.1%, according to IDC.

Throughout 2021, 404 new models of smartphones were listed, with a year-on-year increase of 11.0%, accounting for 83.6% of the number of new models listed in the same period. It can be seen that functional phones still have a huge audience.

Top 10 Smart City Forecast in China 2022-2025

Apple and Vivo took the top spot in the last quarter of 2021 and the full year 2021, respectively. Honor continued its momentum in Q4 2021 and gained another spot from the previous quarter. More intense competition is coming in 2022 according to IDC.

In 2021, Apple’s smartphone shipment reached more than 50 million and it also had the largest growth among the top 5 vendors. Honor continued its growth in Q4 2021 with the launch of the Honor 60 series and X30 series in December.

Vivo ranked first in full-year 2021 and achieve a better market position in the >US$400 market and online channels.

Oppo ranked the second spot in 2021, with the K, Reno, and Find series achieving a higher share of its portfolio compared to last year. In Q4, the launch of the Reno 7 series also strengthened Oppo’s position in the US$300-500 price segment.

Xiaomi ranked third in 2021.

In 2021, the Chinese market shipped 1.5 million foldable smartphones with only 0.5% share.

By the end of 2020, there were 1,775.98 million phone subscribers in China, of whom 1,594.07 million were mobile phone subscribers. Mobile phone coverage reached 113.9 units per 100 persons.

The number of 5G plan users of China Unicom reached 70.83 million by the end of 2020, with a penetration rate of 23%, higher than the industry average of 20%.

In contrast, the number of 5G users of China Mobile and China Telecom has reached 165 million and 86.5 million respectively, accounting for 17.5% and 24.6% of the total number of users.

The number of fixed broadband internet users reached 483.55 million, an increase of 34.27 million over the end of 2019. Of this total, fixed fiber-optic broadband internet users totaled 454.14 million, an increase of 36.75 million.

The mobile internet traffic in 2020 was 165.6 billion gigabytes, up by 35.7 percent over the previous year. The number of internet users was 989 million at the end of 2020, 986 million of which were mobile internet surfers.

Internet penetration reached 70.4%; 55.9 percent in rural areas.

Top 10 predictions for China’s blockchain market 2021-2025

Globally, the key benefits of 5G other than speed gains (e.g. network slicing, edge computing, and low-latency services) are not widely appreciated, with many companies believing 4G is ‘good enough’.

But China is a clear exception. Early partnerships and trials from local operators have paid dividends, as evidenced by the widespread intent among companies in the country’s industrial sector to utilize 5G.

Chinese operators are also leading the charge for standalone (SA) 5G, which will help deliver the key benefits of 5G for enterprises.

Awareness and knowledge of 5G are rising as hype makes way for reality.

Chinese consumers are among the most excited by the prospect of 5G. They are generally more optimistic than other markets about the benefits of 5G, with greater expectations of lower service costs, innovative services and new connected devices.

In addition, consumers in China are likely earlier adopters of 5G (versus the US, Japan, and Europe) and seem the most willing to pay more for 5G services – a key driver of potential 5G consumer revenue uplift.

4G is by far the dominant mobile technology across China, accounting for more than 80% of total connections (excluding licensed cellular IoT). However, 4G’s share will peak in 2020 (at 82%) as 5G grows significantly.

Several 5G smartphones have been launched, many by local OEMs, and Chinese consumers are among the most keen to upgrade to 5G.

As a result, China will account for 70% of global 5G connections in 2020, and 5G adoption will grow to just under 50% by 2025, placing the country among the leading nations along with South Korea, Japan and the US.

To support this generational shift and drive consumer engagement, Chinese operators are expected to invest more than $180 billion between 2020 and 2025 in mobile capex, roughly 90% of which will be on 5G networks.

Despite some financial headwinds – including market saturation, increasing competition and the country’s ‘speed upgrade and tariff reduction’ policy – China’s mobile revenue remains stable.

Financials will recover in 2020 and 2021, and revenue will rise steadily at around 1% per year to 2025, largely because of growing revenues in enterprise IoT and new 5G services.

By the end of 2019, 1.2 billion people subscribed to mobile services across China.

This accounts for 82% of the region’s population and places China among the world’s most developed markets. As with all advanced markets, adding new subscribers is increasingly difficult, with the cost of reaching rural populations hard to justify against a challenging financial backdrop for operators.

Despite this, there will be around 60 million new subscribers by 2025.

Since 2012, the number of people subscribing to the mobile internet across China has doubled to more than 900 million. By 2025, nearly 260 million people will start using the mobile internet for the very first time, almost halving the unconnected proportion of the population to 22%.

Mobile continues to make a significant contribution to the Chinese economy.

In 2019, mobile technologies and services generated $759 billion of economic value added (5.4% of GDP) across China. This figure will surpass $900 billion by 2024 as the region increasingly benefits from the improvements in productivity and efficiency brought about by the increased take-up of mobile services.

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Benefiting from the continued expansion in its global smartphone market share, the monthly active users (“MAU”) of MIUI increased to 330.7 million, an increase of 26.7% year-over-year.

As of March 31, 2020, the number of connected IoT devices (excluding smartphones and laptops) on Xiaomi IoT platform reached 252.0 million, an increase of 42.6% year-over-year.

Xiaomi AI assistant Xiao Ai had 70.5 million MAU in March 2020, an increase of 54.9% year-over-year.

Revenue from its internet services segment in Q1 2020 increased by 38.6% year-over-year to RMB5.9 billion, accounting for a record high of 11.9% of its total revenue. Revenue from overseas markets in Q1 2020 totaled RMB24.8 billion, an increase of 47.8% year-over-year, for the first time, accounting for half of its total revenue.

According to Canalys, Xiaomi smartphone shipments in Western Europe increased by 79.3% year-over-year and it attained the largest market share in Spain for the first time.

Xiaomi Smartphone

In Q1 2020, revenue from Xiaomi’s smartphone segment totaled RMB30.3 billion, an increase of 12.3% year-over-year. It shipped 29.2 million units of smartphones in Q1 2020, an increase of 4.7% year-over-year.

According to Canalys, in the first quarter of 2020, Xiaomi ranked 4th globally in terms of smartphone shipments, and Xiaomi’s market share rose to 11.1%. Xiaomi was one of only two of the top five smartphone companies worldwide to maintain year-over-year growth in shipments.

In February 2020, Xiaomi launched Mi 10 and Mi 10 Pro. Shipments of Mi 10 and Mi 10 Pro exceeded 1 million units two months after their launch, enabling the Xiaomi brand to further strengthen its position in the premium smartphone market.

Mi 10 and Mi 10 Pro were launched overseas in late March with prices starting at €799 and €999, respectively. Boosted by Xiaomi’s premium smartphone models, the average selling price (“ASP”) of Xiaomi’s smartphones increased by 7.2% year-over-year in Q1 2020.

The ASP of Xiaomi’s smartphones in mainland China and overseas markets increased by 18.7% and 13.7% year-over-year respectively.

In April 2020, Xiaomi launched Mi 10 Lite Zoom Edition to target the younger consumer segments. With prices starting at RMB2,099, it features a 50x periscope telephoto lens camera and other advanced technologies. Mi 10 Lite 5G was launched in March 2020 in overseas markets, with prices starting at €349.

The Redmi brand continued to introduce highly competitive products at different price points. In March 2020, Redmi launched its flagship K series Redmi K30 Pro and Redmi K30 Pro Zoom Edition, sporting premium features including the Snapdragon 865 processor, LPDDR5, and UFS 3.1, while also featuring a pop-up camera, allowing Xiaomi’s customers to enjoy a full flagship experience at a reasonable price.

On the back of the highly popular Redmi Note 8 series, the second best-selling smartphone model globally in Q1 2020 according to Canalys, Xiaomi launched Redmi Note 9S and Redmi Note 9 Pro in overseas markets, carrying on the ultimate price-performance value proposition of the Redmi brand.

In April 2020, Xiaomi released MIUI 12, the latest version of Xiaomi’s smartphone operating system. Equipped with Xiaomi’s proprietary Mi Light Cone Animation Framework, MIUI 12 offers remarkable animation and a stunning visualized user interface.

In addition, MIUI 12 has introduced a privacy and data protection framework, which enables users to have full visibility of sensitive data retrieval, take control over app permissions, and mask their identity information to remain incognito. MIUI 12 is the world’s first mobile operating system to pass the TÜV Rheinland “Enhanced Privacy Protection for Android Systems” test.

Xiaomi IoT

In Q1 2020, revenue from Xiaomi’s IoT and lifestyle products segment was RMB13.0 billion, increase of 7.8%. Xiaomi’s smart TV business continued to maintain its leading position in both mainland China and overseas markets.

In Q1 2020, despite the overall decline in TV shipments globally due to the pandemic, Xiaomi’s global shipments of smart TVs still increased by 3.0% year-over-year to 2.7 million units.

According to All View Cloud (“AVC”), in Q1 2020, Xiaomi’s TV shipments in mainland China ranked 1st for five consecutive quarters and its global TV shipments ranked among the top five.

In March 2020, Xiaomi launched Redmi Smart TV Max 98”, priced from RMB19,999 (about US$2,815), significantly lower than other ultra-large TVs, bringing high-end TVs to the mass market.

In Q1 2020, Xiaomi continued to expand Xiaomi’s IoT product portfolio and promote the interconnectivity of Xiaomi’s AIoT platform.

In February 2020, Xiaomi introduced Mi AIoT Router AX3600, a WiFi 6 enabled AIoT router, which greatly improves upstream and downstream network speeds, making Xiaomi the first brand in China to support WiFi 6 technology from terminals to routers.

In addition, Xiaomi also launched Mi 65W Fast Charger with GaN Tech, Redmi Smart Display 8” and Mi Bluetooth Speaker with Wireless Charging, all of which enjoyed widespread popularity.

The sales of Xiaomi’s routers increased by 124.0% year-over-year in Q1 2020 and according to AVC, ranked 2nd in mainland China in terms of online router shipments. Sales of Xiaomi’s Xiaomi TWS Earphones, Mi Band, Mi Electric Scooter and Mi Robot Vacuum Cleaner increased by 619.6%, 56.0%, 40.7% and 40.0% year-over-year, respectively.

According to Canalys, Xiaomi ranked 1st in terms of wearable band shipments and 3rd in terms of True Wireless Stereo (“TWS”) earbuds shipments globally in 2019. According to iResearch, Xiaomi also ranked 1st in terms of electric scooter shipments globally in 2019.

Xiaomi Internet Services

In Q1 2020, revenue from Xiaomi’s internet services segment reached RMB5.9 billion, representing an increase of 38.6% year-over-year, accounting for a record high of 11.9% of Xiaomi’s total revenue.

User activity and time spent on Xiaomi’s devices increased in Q1 2020. In March 2020, the MAU of MIUI increased by 26.7% year-over-year to 330.7 million, while the mainland China MAU of MIUI reached 111.5 million.

In Q1 2020, advertising revenue was RMB2.7 billion, an increase of 16.6% year-over-year.

In Q1 2020, online gaming revenue increased by 80.5% year-over-year to RMB1.5 billion, mainly due to the fast-growing online gaming market in mainland China and higher online gaming average revenue per user from Xiaomi’s premium smartphone users.

In Q1 2020, internet services revenue outside of advertising and gaming from mainland China smartphones, including those generated from the Youpin e-commerce platform, fintech business, TV internet services and overseas internet services, increased by 71.5% year-over-year and accounted for 38.1% of Xiaomi’s total internet services revenue.

Xiaomi’s Youpin e-commerce platform continued to broaden its offerings and provide uninterrupted services to customers. The number of new users increased significantly in Q1 2020, laying a strong foundation for further expansion.

In March 2020, MAU of Xiaomi’s smart TVs and Mi Box reached 30.4 million, representing an increase of 46.8% year-over-year. As of March 31, 2020, the number of paid subscribers increased by 53.7% year-over-year to 4.3 million.

In Q1 2020, the MAU of Mi Browser on Xiaomi smartphones in the aggregated overseas market ranked 1st among all browsers. These initiatives increased Xiaomi’s average revenue per user in the overseas market.

Introduction to Xiaomi’s e-commerce platform Youpin

For Q4 2019, Xiaomi achieved the highest year-over-year growth in smartphone shipments among the top five smartphone companies, according to Canalys.

In December 2019, monthly active users (“MAU”) of MIUI increased by 27.9% year-over-year to 309.6 million. As of December 31, 2019, the number of connected IoT devices (excluding smartphones and laptops) on its IoT platform reached 234.8 million, an increase of 55.6% year-over-year.

Xiaomi’s AI assistant had 60.4 million MAU in December 2019, an increase of 55.7% year-over-year. Xiaomi further expanded its global footprint with overseas revenue growing significantly, accounting for 44.3% of its total revenue in 2019.

Overseas revenue was RMB91.2 billion, an increase of 30.4% year-over-year. As of December 31, 2019, its products were sold in more than 90 countries and regions. According to Canalys, its smartphone shipments ranked the top five in 45 countries and regions in 2019.

In 2019, Xiaomi’s research and development expenses increased by 29.7% year-over-year to RMB7.5 billion. As of December 31, 2019, its total cash resources amounted to RMB66.0 billion.

Xiaomi Smartphone

In 2019, revenue from its smartphone segment reached RMB122.1 billion, an increase of 7.3% year-over-year. In Q4 2019, revenue from its smartphone segment was RMB30.8 billion, an increase of 22.8% year-over-year.

Xiaomi captured over 9% of the global smartphone market share in Feb 2020. Find out more here.

For 2019, Xiaomi shipped approximately 124.6 million units of smartphones, while in Q4 2019, shipments were approximately 32.6 million, an increase of 30.5% year-over-year.

In 2019, its dual-brand strategy showed encouraging results.

The Xiaomi brand focused on pioneering advanced technologies and successfully established a solid foothold in the premium smartphones segment.

The Redmi brand, on the other hand, continued to pursue the ultimate price-performance ratio across different price points and make innovative technologies readily accessible to the mass market.

With the launch of Mi 9 Pro, Mi CC9 Pro and the world’s first smartphone featuring surround display, Mi MIX Alpha, Xiaomi developed strong technological fundamentals in wireless charging, imaging, 5G technology, and next-generation smartphone design and are well poised to capture opportunities brought about by 5G technology in 2020.

In February 2020, Xiaomi launched its flagship 5G smartphone models the Mi 10 and Mi 10 Pro.

According to Canalys, the Redmi Note 7 was the best-selling smartphone model among all models made by Chinese companies in terms of global shipments in 2019.

In December 2019, Redmi launched its first 5G smartphone, the Redmi K30 5G, with pricing starting from RMB1,999, making it the first 5G smartphone priced below RMB2,000. Xiaomi believes the competitive pricing will accelerate the adoption of 5G smartphones by a larger population, enabling more people to enjoy leading technologies.

In 2019, the average selling price of its smartphones increased by 2.2% compared to 2018 and the gross margin of the smartphone segment increased to 7.2% from 6.2% in 2018.

In 2020, Xiaomi will continue to focus on 5G smartphones development and strengthen its presence in the premium smartphones segment, which will lead to further ASP expansion.

IoT and lifestyle products

In 2019, revenue from its IoT and lifestyle products segment was RMB62.1 billion, an increase of 41.7% year-over-year.

In Q4 2019, revenue from its IoT and lifestyle products segment was RMB19.5 billion, an increase of 30.5% year-over-year.

AIoT market in China has reached 380.8 billion yuan in 2019, with an increase of over 47%; check out the forecast for 2020-2022 here.

Xiaomi achieved leading positions in key IoT products that are controlling hubs for its AIoT platform, including TVs, wearable devices and smart speakers.

In 2019, its global TV shipments reached 12.8 million units, an increase of 51.9% year-over-year. In mainland China, its annual smart TV shipments exceeded 10 million units, which Xiaomi believe set an unprecedented record in China’s TV industry.

According to AVC, its TV shipments ranked first in mainland China and fifth globally in 2019. Xiaomi also ranked first in India in terms of smart TV shipments for seven consecutive quarters as of Q4 2019 according to IDC.

According to Canalys, Xiaomi is the world’s largest smart wearable device (including smartwatch and wristband) brand in 2019 by shipments. Xiaomi also ranked the top three in terms of smart speaker shipments in mainland China in 2019 according to IDC. Check out China’s wearable device in 2019.

Xiaomi also continued to expand its product portfolio in key smart home products by launching new products including washing machines and refrigerators.

In 2019, its IoT products won over 50 renowned design awards around the world. Recently, its Mijia Smart Baseboard Heater won the 2020 Red Dot: Best of the Best Award and Mijia Handheld Wireless Vacuum Cleaner won the 2020 iF Design Gold Award.

Xiaomi Internet services

In 2019, revenue from internet services reached RMB19.8 billion, an increase of 24.4% year-over-year. For the fourth quarter, revenue was RMB5.7 billion, an increase of 41.1% year-over-year.

In December 2019, MAU of MIUI increased by 27.9% year-over-year to 309.6 million with mainland China’s MAU of MIUI standing at 109.0 million.

In Q4 2019, advertising revenue was RMB3.0 billion, an increase of 17.8% year-over-year.

The MAU of its news feed service increased by 32.6% year-over-year to 78.7 million in December 2019. This was further bolstered by its efforts in increasing monetization through the optimization of its recommendation algorithms and diversification of its advertising customer base by expanding into more vertical industries.

In Q4 2019, online gaming revenue increased by 44.4% year-over-year to RMB874.4 million, mainly due to the strong performance of many popular games operating on its platform.

Diversification of its internet services has become a key growth driver of its internet services revenue.

In Q4 2019, its internet services revenue outside of advertising and gaming from mainland China smartphones, including those generated from the Youpin e-commerce platform, fintech business, TV internet services and overseas internet services, increased by 112.6% year-over-year and accounted for 43.0% of its total internet services revenue.

In 2019, the GMV of its Youpin e-commerce business grew rapidly, with annual GMV surpassing RMB10.0 billion. During the year, Xiaomi has enlarged its merchandise portfolio, insisted on selecting high-quality goods that appeal to its customers and increased its efforts in new customer acquisition.

As a result, the number of active buyers on Youpin showed strong growth momentum.

In Q4 2019, its fintech business delivered strong revenue growth, mainly driven by the growth in its consumer finance business. In January 2020, Xiaomi Finance successfully obtained a consumer-financing license from the China Banking and Insurance Regulatory Commission.

Xiaomi will continue to strengthen risk controls and strictly follow regulatory rules to maintain the healthy growth of its fintech business.

In Q4 2019, its TV internet services grew quickly primarily driven by the growth of its subscription business. In December 2019, MAU of its smart TVs and Mi Box were approximately 27.7 million, an increase of 49.1% year-over-year.

As of December 31, 2019, Xiaomi had 3.7 million paying subscribers, an increase of 62.9% year-over-year. Lastly, its overseas internet services business also witnessed rapid growth.

In India, 10 of its mobile apps recorded MAU of over 50 million in December 2019, including its Mi Browser, Mi Video and GetApps (an overseas version of Mi App Store).

Overseas markets

In 2019, overseas revenue was RMB91.2 billion, an increase of 30.4% year-over-year.

In Q4 2019, overseas revenue increased by 40.7% year-over-year to RMB26.4 billion, accounting for 46.8% of total revenue for the period. In Q4 2019, Xiaomi was the largest smartphone brand in India by shipments for the tenth consecutive quarter, capturing a market share of approximately 28.7%, according to IDC.

In Western Europe, Xiaomi continued to expand its market share.

According to Canalys, its smartphone shipments in the region grew 115.4% year-over-year in Q4 2019. In Spain, Xiaomi was the second-largest smartphone maker by shipments, achieving 65.7% year-over-year growth with a 22.8% market share.

Xiaomi ranked fourth in both France and Italy, with its smartphone shipments increasing by 69.9% and 206.2% year-over-year, respectively.

In 2019, its overseas IoT revenue grew rapidly, driven by the robust sales of its best-selling IoT products in overseas markets, including its smart TVs, wristbands, TWS earphones, and electric scooters.

In 2020, Xiaomi plans to step up its efforts in promoting its popular IoT products to more countries and regions.

Impact of the COVID-19 outbreak

In terms of the supply chain, Xiaomi experienced a temporary disruption in production in February and March 2020, due to the extended shutdown of Chinese factories.

However, its production capacity has recovered to 80%–90% of normal levels as of the date of this announcement. For its mainland China market, during the peak of the outbreak, its offline sales were affected as most of its stores were closed or operated at shortened hours with significantly lower customer traffic.

However, Xiaomi was comparatively less impacted due to its strength in online channels.

Xiaomi has seen smartphone shipments rebounding quickly in late March 2020, showing the resilience of smartphone demand.

For its overseas market, given that the epidemic is still affecting countries and regions around the world as of the date of this announcement, Xiaomi is closely monitoring and assessing its impact, which will likely defer the overall consumption in the affected countries.

While its overseas demand will undoubtedly be affected, particularly in the second quarter of 2020, Xiaomi believes the overall impact is currently manageable.

Investments

As of December 31, 2019, Xiaomi had invested in more than 290 companies with an aggregated book value of approximately RMB30.0 billion.

Xiaomi expanded its investment into supply chain companies to strengthen its partnership with key component suppliers, enhance its sourcing and manufacturing abilities in advanced technology and facilitate the development of the industries, in particular around 5G, IoT, AI, integrated circuits, advanced manufacturing, and industrial internet.

An increasing number of its investee companies have gone public.

In February 2020, Roborock, one of its investee companies, was successfully listed on the Science and Technology Innovation Board of Shanghai Stock Exchange (“STAR Market”) in China, becoming its first ecosystem investee company to list on the STAR Market.

In Q4 2019, net gains on disposal of investments (after tax) were RMB869.0 million.

Mi 10 Pro achieved a score of 124 for camera and 76 for audio on DXOMARK, ranking the flagship smartphone first in both the camera and audio categories.

The Mi 10 series starts from RMB 3,999 (US$572), and will be available in mainland China starting February 24, 2020.

The Mi 10 series is powered by the Qualcomm Snapdragon 865. As the flagship mobile platform of the year, the Snapdragon 865 is the leading 5G platform to-date, offering staggering multi-gigabit 5G connectivity, it also delivers top-notch performance in terms of CPU, GPU, camera, and AI capabilities.

The Snapdragon 865 uses a three-cluster architecture and has a maximum clock speed of 2.84GHz. With the new Kryo 585 being based on the Cortex-A77 architecture, which is the latest generation of ARM processor architecture, CPU performance is increased by 25% compared to its predecessor.

The new Adreno 650 graphics processor also has a 25% upgrade in rendering speed, with a decreased energy consumption of 35%.

The fifth-generation AIE artificial intelligence engine enables AI capabilities that is 2x more powerful than the predecessor, which provides Mi 10 with better performance in videography, imagery, and AI processing applications.

Mi 10 series comes with the latest LPDDR5, supporting a maximum transmission rate of 5500Mbps, and boasting up to 50% improvement in performance while still remaining power efficient.

Paired with the industry’s fastest UFS 3.0 flash memory, and adopting the new Write Turbo technology, Mi 10 series can achieve a maximum sequential write speed of up to 730MB per second.

The series also uses the latest Wi-Fi 6 technology, with speeds up to 9.6Gbps which provides an 2.7x increase compared to Wi-Fi 5, also supporting 8×8 MU-MIMO technology, the download speed for multiple connected devices increases by 100%.

In terms of heat dissipation, Mi 10 series offers the most sophisticated cooling system to date: a 3000mm² super large vapor chamber, graphene, and 6-layer graphite structure. It also includes copper foil heat sinks and thermal gel to improve the overall cooling capability of Mi 10, and ensures the device stays cool for extreme performance and 5G high-speed download.

Mi 10 series features a 108MP main camera with a 1/1.33” ultra large sensor. It is also among the first to support 8K ultra-clear video recording in 7680×4320 ultra-high-resolution, users can also capture ultra-clear 33MP photos while recording in 8K by simply tapping on the screen. With both OIS and EIS support, Mi 10 series ensures stable video capture even in extreme conditions.

In addition to a 108-megapixel main camera, Mi 10 Pro also includes a classic 50mm portrait lens with 2x optical zoom, a telephoto lens with 10x hybrid zoom, and a 20MP ultra wide-angle lens, each of which is of flagship level, and with the camera system supported by dual OIS.

Aside from camera, Mi 10 series offers by far the strongest audio configuration and capabilities of any Xiaomi device. The audio system is equipped with symmetrical dual 1216 linear speakers with large 1.2cc sound cavity, which makes the output volume 100% higher than its predecessor.

Mi 10 series offers AI audio tuning to adapt to the different usage and playback scenarios for better sound quality, delivering an unmatched immersive audio experience.

Mi 10 series sports a 6.67 ”AMOLED curved DotDisplay, with up to 800nit typical and a peak brightness of up to 1200nit, and a contrast ratio of up to 5,000,000:1, which delivers lively and vivid images.

The display also supports 90Hz refresh rate and 180Hz touch sampling rate, delivering an unprecedented smooth experience.

Mi 10 Pro also offers the highest level of color accuracy in the industry, with a JNCD <0.55 and △E <1.1. Each device undergoes careful calibration with seventy-two color analyzers and two spectroradiometers in eighteen production lines prior to sales.

This ensures Mi 10 series displays can accurately reproduce colors as they are intended.

In addition, Mi 10 Pro comes with a 4500mAh high-capacity battery and features 50W wired fast charge, 30W wireless fast charge, and up to 10W reverse charging. The 50W wired fast charge supports charging to 100% in 45 minutes while the 30W wireless charging can charge to 100% in 65 minutes. A 65W charging adapter comes in-box.

Mi 10 comes in glossy black, blue, and gold, with a thickness of 8.96mm and bottom bezel as small as 3.32mm. Mi 10 Pro, on the other hand, features a matte design in blue and white with AG coating for a more premium hand feel and minimizes the chance of leaving fingerprints behind.

Other notable features on the Mi 10 series include in-screen fingerprint sensor for quick unlock, IR blaster for easy home appliances remote control, multifunctional NFC for swift payment, and a linear haptic motor for realistic touch response.

Mi 10 starts at RMB 3,999 and will officially launch on February 14 in three variants: 8GB + 128GB, 8GB+256GB, and 12GB+256GB.  Mi 10 Pro starts at RMB 4,999 and will be available in three variants: 8GB+256GB, 12GB+256GB, and 12GB+512GB.

Mi AIoT Router AX3600: The first router to support Wi-Fi 6 and Qualcomm platform

The event also introduced Xiaomi’s first router that supports Wi-Fi 6 technology – the Mi AIoT Router AX3600.

Packed with Qualcomm’s quad-core processor, six-channel quality signal amplifiers, and an independent AIoT smart antenna, the Mi AIoT Router AX3600 provides blazing connection speeds of up to 3000 Mbps, leading the router products in the 5G era.

It also supports network connection in one simple click for Xiaomi smart products. Priced at RMB 599, Mi AIoT Router AX3600 is available for purchase at Xiaomi authorized channels, starting February 13.

Mi Bluetooth Speaker with Wireless Charging

Xiaomi introduced a Bluetooth speaker that combines wireless charging for smartphones and Bluetooth speakers.

The device incorporates a built-in wireless charging function and a 20° elevation design on its front, allowing users to charge their smartphones while consuming media with ease.

Aside from charging Mi 10, Mi 10 Pro, and Mi 9 Pro with a maximum 30W wireless charging, Mi Bluetooth Speaker is also capable of charging Qi compatible devices, such as Samsung S10 and iPhone 11.

Mi Fast Link Technology is also enabled to ensure smooth connection with NFC and MIUI smartphones. Moreover, when the device is charging Mi 10 or Mi 10 Pro, the smartphone will automatically switch on XiaoAi AI ambient display after the screen is locked, turning the smartphone and the speaker into a XiaoAi AI assistant with touch screens.

Priced at RMB 249, Mi Bluetooth Speaker with Wireless Charging will be available for purchase from mi.com and Mi Home beginning February 18.

Xiaomi Financial Results

In Q3 2019, Xiaomi achieved RMB53.7 billion in total revenue, representing an increase of 5.5% YoY. Gross profit increased to RMB8.2 billion, representing a year-over-year increase of 25.2%. Adjusted net profit increased by 20.3% year-over-year to RMB3.5 billion. As of September 30, 2019, Xiaomi’s total cash resources amounted to RMB56.6 billion.

In Q3 2019, Xiaomi continued to execute Xiaomi’s “Smartphone + AIoT” dual-engine strategy and it yielded positive results. Xiaomi’s user base and the number of devices connected to Xiaomi’s platform have continued to grow robustly.

In September 2019, monthly active users (“MAU”) of MIUI reached 291.6 million, representing an increase of 29.9% over the corresponding period in the previous year.

The number of connected IoT devices (excluding smartphones and laptops) on Xiaomi’s IoT platform reached 213.2 million as of September 30, 2019, representing year-over-year growth of 62.0%. Meanwhile, Xiaomi’s AI assistant had 57.9 million MAU in September 2019, representing a year-over-year increase of 68.6%.

Xiaomi’s products were well received by consumers during the Double 11 Singles’ Day shopping festival in China. Xiaomi’s total payment for sales across all platforms and channels surpassed RMB6.1 billion in China.

Xiaomi’s flagship store on the Tmall platform achieved a total payment for sales of more than RMB2.1 billion, ranking 1st among all brand flagship stores on Tmall for the 7th consecutive year since Xiaomi first participated in the Singles’ Day shopping festival in 2013.

In October 2019, Xiaomi made its debut on the Fortune Future 50 list, ranking 7th, and was the second-highest ranked among all Chinese companies on the list. Furthermore, Xiaomi ranked 57th on Forbes’ Top 100 Digital Companies List.

Xiaomi Smartphones

Xiaomi’s smartphone segment recorded RMB32.3 billion in revenue in Q3 2019. Xiaomi’s smartphone sales volume in Q3 2019 reached 32.1 million units. According to Canalys, Xiaomi ranked 4th globally in terms of smartphone shipments in the third quarter of 2019, with a market share of 9.2%.

Following the introduction of Mi MIX 3 5G in Europe in February 2019, Xiaomi launched Xiaomi’s first 5G smartphone in China, Mi 9 Pro 5G, in September 2019, marking another milestone in its 5G technology development. Mi 9 Pro 5G was well received by the market.

In 2020, Xiaomi expects to launch ten or more 5G smartphone models to capture the 5G smartphone replacement cycle, starting from China.

In Q3 2019 , Xiaomi continued to advance technologically and create breakthroughs. In September 2019, Xiaomi released Xiaomi’s concept smartphone, Mi MIX Alpha, a futuristic 5G smartphone featuring the world’s first surround display and a screen-to-body ratio of 180.6%, demonstrating Xiaomi’s continuous efforts in exploring cutting-edge technology. Xiaomi introduced Mi CC9 Pro in November 2019, which is the first mass-produced smartphone to carry a 108MP penta-camera.

It is also capable of up to 10x hybrid zoom and up to 50x digital zoom. Mi CC9 Pro Premium Edition achieved a DXOMARK score of 121 for overall camera performance, ranking 1st globally at the time of launch. It also achieved a DXOMARK score of 102 in the video category, the highest among all smartphones at the time of launch. Xiaomi also released an overseas version of this smartphone, Mi Note 10, in Spain in November 2019.

According to Canalys, Redmi Note 7 was the best-selling smartphone model among all models made by Chinese companies in terms of global shipments in Q3 2019. Xiaomi launched Redmi Note 8 and Redmi Note 8 Pro in August 2019, Redmi 8A and Redmi K20 Pro Premium Edition in September 2019, and Redmi 8 in October 2019.

The average selling price (“ASP”) of Xiaomi’s smartphones in mainland China continued to increase in Q3 2019, achieving year-over-year growth of 4.6%. The ASP of Xiaomi smartphones in overseas markets recorded a quarter-over-quarter increase of 7.8% and a year-over-year decrease of 4.1% in Q3 2019. The decrease was primarily due to a different product mix compared to the third quarter of 2018.

The gross profit margin of Xiaomi’s smartphone segment further increased from 8.1% in the second quarter of 2019 to 9.0% in Q3 2019.

Xiaomi IoT and lifestyle products

In Q3 2019, the revenue of Xiaomi’s IoT and lifestyle products segment rose by 44.4% year-over-year to RMB15.6 billion.

Xiaomi’s smart TV business maintained its leading edge in both mainland China and overseas markets. In Q3 2019, global shipments of Xiaomi smart TVs reached 3.1 million units, representing a year-over-year growth of 59.8%.

According to All View Cloud (“AVC”), Xiaomi ranked 1st in terms of TV shipments in mainland China in Q3 2019, with a market share of 16.9%. With Xiaomi’s consistent efforts to expand Xiaomi smart TV business globally, Xiaomi ranked top five in terms of global TV shipments in Q3 2019 according to AVC.

Xiaomi further expanded Xiaomi’s product offering in the high-end segment and launched Mi TV 5 and Mi TV 5 Pro in November 2019. Mi TV 5 Pro utilizes a 4K quantum dot display panel that covers a 108% NTSC wide color gamut and comes with HDR10+ support and built-in MEMC technology, enabling a premium picture quality.

Xiaomi has positioned large home appliances as strategic components of Xiaomi’s AIoT strategy. Focused on cutting-edge innovation, superior design and interactive experiences, Xiaomi is dedicated to enhancing the connectivity and compatibility of the whole suite of Xiaomi’s smart home appliances.

Following the successful launch of Xiaomi’s air conditioners and washing machines, Xiaomi launched Mi Refrigerator in October 2019, further expanding Xiaomi’s spectrum of products in the large home appliances category.

In October 2019, Redmi introduced the RedmiBook 14 Ryzen Edition and Xiaomi introduced Mi Laptop 15 Pro, both of which enjoyed widespread popularity.

Following the success of Xiaomi’s Mi Band, Xiaomi launched Xiaomi’s new wearable product, Mi Watch, in November 2019. Equipped with an independent eSIM and supported by MIUI For Watch, Mi Watch is dedicated to bringing Xiaomi’s customers the ultimate user experience in both hardware and software.

Many of Xiaomi’s IoT products have been well received by the market. For example, according to AVC, for the nine months ended September 30, 2019, Xiaomi’s fresh air ventilator was the top fresh air ventilator in mainland China in terms of several measurement aspects, including online brand sales, online single-product sales volume and value, while Xiaomi’s Mi Water Purifier ranked top two in terms of online sales value.

Xiaomi’s AIoT products won multiple domestic and international awards. Xiaomi’s Mi AI Touchscreen Speaker won multiple design awards, including the International Design Excellence Award (IDEA), the Red Dot Design Award, and the Good Design Award.

Meanwhile, Xiaomi’s Mi Router Mesh received a 5-star recommendation in the China Mobile 2019 Smart Hardware Quality Report, and Xiaomi’s Mi Electric Scooter Pro won the Expert Imaging and Sound Association’s Best Product (Electric Vehicle) Award.

Xiaomi Internet services

In Q3 2019, Xiaomi’s user base continued to expand. The MAU of MIUI increased by 29.9% year-over-year to 291.6 million in September 2019. Xiaomi’s mainland China MAU of MIUI remained flat year-over-year in September 2019 at 112.8 million.

The MAU of Xiaomi’s smart TVs and Mi Box achieved 50.1% year-over-year growth, reaching 23.9 million in September 2019.

Revenue from Xiaomi’s internet services segment grew by 12.3% year-over-year to RMB5.3 billion in Q3 2019. Advertising revenue decreased by 9.0% year-over-year to RMB2.9 billion, which was mainly due to pre-installation revenue decreasing to RMB376.6 million from RMB825.4 million YoY. This decrease partly reflected a shift in advertiser preference for non-pre-installation advertising. Excluding preinstallation revenue, advertising revenue grew 6.9% year-over-year in Q3 2019.

In Q3 2019, Xiaomi continued to diversify Xiaomi’s advertiser base by expanding into more vertical industries, including financial services and small- and medium-sized enterprises, to develop a more robust and healthier advertising business.

Revenue from gaming increased by 26.0% year-over-year to RMB822.3 million in Q3 2019. Xiaomi’s other internet value-added services grew by 78.2% year-over-year to RMB1.6 billion, primarily as a result of the strong growth in revenue of Xiaomi’s fintech business and Youpin e-commerce platform.

In Q3 2019, Xiaomi launched MIUI 11, featuring a minimalistic design with efficient office and smart travel application suites. Combining the improvements in efficiency with the new optimized modern user interface design, MIUI 11 provides an all-rounded upgrade to Xiaomi’s users.

With Xiaomi’s continuous efforts to diversify Xiaomi’s internet services business, Xiaomi’s internet services revenue outside of advertising and gaming from mainland China smartphones, including those generated from the Youpin e-commerce platform, fintech business, TV internet services and overseas internet services, increased by 87.8% year-over-year and accounted for 37.2% of Xiaomi total internet services revenue in Q3 2019 .

In Q3 2019, the gross merchandise volume of Xiaomi’s Youpin e-commerce platform maintained a strong year-over-year growth primarily due to the expansion of Xiaomi’s product categories on the platform and the continued growth and diversification of Xiaomi’s user base.

In Q3 2019, the revenue from Xiaomi’s fintech business increased by 91.2% year-over-year to RMB1.0 billion. The increase was mainly due to the strong growth achieved in Xiaomi consumer loan business.

In Q3 2019, Xiaomi’s revenue from TV internet services continued to grow, driven by the increase in both subscription revenue and advertising revenue. In September 2019, the MAU of Xiaomi’s smart TVs and Mi Box reached 23.9 million, representing a year-over-year increase of 50.1%.

As of September 30, 2019, Xiaomi had more than 3.2 million paid subscribers, representing year-over-year growth of 68.8%.

Xiaomi’s AIoT Strategy

In Q3 2019, Xiaomi continued to execute Xiaomi’s “Smartphone + AIoT” dual-engine strategy and maintained Xiaomi’s leading position.

As of September 30, 2019, the number of connected IoT devices (excluding smartphones and laptops) on Xiaomi’s IoT platform reached approximately 213.2 million, representing a year-over-year increase of 62.0%.

The number of users who have five or more devices connected to Xiaomi’s IoT platform (excluding smartphones and laptops) increased to 3.5 million, representing a year-over-year increase of 78.7%.

In September 2019, Xiaomi’s AI assistant had 57.9 million MAU with a year-over-year increase of 68.6% and continued to be one of the most used AI voice interactive platforms in mainland China. Meanwhile, Xiaomi’s Mi Home app had 32.1 million MAU in September 2019, with 63.0% of these active users being non-Xiaomi smartphone users.

Xiaomi continued to strengthen the connectivity across devices on Xiaomi’s AIoT platform. Xiaomi smartphones, smart TVs, AI speakers, and smartwatches can all act as controlling hubs for Xiaomi’s AIoT platform.

Xiaomi Smartphones: Mi CC9 Pro, Mi Note 10

Mi CC9 Pro

Following the groundbreaking concept phone Mi MIX Alpha, Mi CC9 Pro sets another important milestone for the industry to become the world’s first mass-produced smartphone shipping a 108MP camera.

The 108MP main camera offers a 1/1.33″ large image sensor – twice as large as the mainstream 48MP cameras. It supports OIS and features an industry leading resolution of 12032 x 9024.

It also incorporates a 4-in-1 (1.6μm) Super Pixel with the latest RAW multi-frame noise reduction algorithm to capture rich detail, even in low-light conditions.

Mi CC9 Pro sports a penta camera setup that includes a 12MP telephoto camera, a 5MP telephoto camera, a 20MP ultra wide-angle camera, and a 2MP macro camera.

The 12MP telephoto camera supports 2x optical zoom with dual PD autofocus, while the 5MP telephoto camera supports 10x hybrid zoom. All cameras cover day-to-day needs for smartphone photography from landscape, portraits, close-up shots, and even for 1.5cm super macro photography.

A premium offering – the Mi CC9 Pro Premium Edition was also announced at launch. It comes with an 8P lens that produces images that are clearer and of higher definition. It also surged to the top of DxOMark camera rankings with an overall score of 121 and broke the record for video segment with a world’s highest score of 104.

On the hardware front, the Mi CC9 Pro dresses to impress with the flagship two-sided curved screen and a 6.47’’ 19.5:9 Full-HD Display. Adopting a COP sealing technology, Mi CC9 Pro has a 3.43mm chin bezel, making it the most narrow Xiaomi smartphone apart from the Mi MIX Alpha. Mi CC9 Pro also supports 30W fast charge, which brings its 5260mAh high-capacity battery to 100% under 65 minutes.

Mi CC9 Pro and Mi CC9 Pro Premium Edition will be priced at RMB 2799 and RMB 3499 respectively. Three color variants Aurora Green, Glacier White and Midnight Black will be available on official Xiaomi channels in Mainland China starting November 11, 2019.

Mi Note 10

Xiaomi also announced the return of its Mi Note series with Mi Note 10, the latest device of its premium flagship lineup.

Xiaomi’s Mi Note 10 encompasses five different lenses – a 108MP wide-angle lens, 5MP telephoto lens, 12MP telephoto lens, 20MP ultra wide-angle lens, and a macro lens. This setup enables a seamless zoom experience from 0.6x to 50x without compromising image quality.

With the Samsung ISOCELL Bright HMX 108MP sensor, Mi Note 10 features the highest resolution of any smartphone on the market – 12032 x 9024.

For the first time ever, the 108MP camera can produce billboard-level prints up to 4.24 meters high. The device offers a 1/1.33″ large image sensor that supports 4-in-1 pixel binning to capture more detail in low-light conditions, while the 4-axis OIS enables unmatched clarity.

Photography enthusiasts who look to produce the most natural looking portrait photos will be pleased with the Mi Note 10’s 12MP 2x telephoto lens at 50mm focal length, which is one of the most popular focal lengths used by professional portrait photographers. Under low light conditions, the 1.4μm large pixel size and dual PD autofocus allows for sharper and brighter portraits.

The 5MP 5x telephoto lens is also capable of 10x hybrid and 50x digital zoom to complete the epic zoom range. In addition, the lens is equipped with OIS and a f/2.0 aperture for better images under non-optimal lighting environments.

With its 117 degrees field of view, the 20MP ultra-wide angle lets users capture epic landscapes and large group photos without having to cut people out; while the macro lens offers autofocus for closeups images.

Also presented today is Redmi Note 8T, the latest smartphone to join the Redmi family. The device offers a 48 MP quad camera setup and features high-end specifications, starting from €179.

Mi Watch

Featuring a flagship 1.78’’ AMOLED square screen, Mi Watch offers an immersive viewing experience with a 326 PPi pixel density and an elegant four-side curved design.

Being the world’s first wearable to sport a Qualcomm®️ Snapdragon WearTM 3100, Mi Watch guarantees a robust device performance and low power consumption. The device also boasts independent speakers, NFC function, and supports WiFi and Bluetooth connection.

Equipped with a built-in six-axis sensor and a 3rd generation heart rate monitor (HRM) sensor, Mi Watch is able to precisely detect complex motion gestures and heart rate fluctuations during physical activities.

With these capabilities, Mi Watch offers up to 10 pro-sport modes such as outdoor running, outdoor biking, open water swimming, and mountain climbing. It also works with professional sports analytics provider FirstBeat to closely track users’ sleep quality, blood pressure levels, heart rate, and physical energy.

Mi Watch also comes with eSIM, a built-in chip that allows users to make phone calls and connect to the internet effortlessly without inserting a physical nano-SIM. With such technology, users can either share the same phone number with their smartphone for seamless connectivity or have a new private number for the Mi Watch exclusively.

Adding on to all these flagship features, Mi Watch provides a revolutionary UI experience with the MIUI For Watch system, offering 100+ dial plate selections and 40+ of the most used apps for downloading. It also remains an open system for developers to create tremendous possibilities.

XiaoAi AI Assistant can be activated for users to easily use voice commands for music playback, phone calls, and navigation. When connected to the Xiaomi AIoT system, Mi Watch is capable of operating thousands of Xiaomi smart home appliances.

Along with the standard Mi Watch, Mi Watch Special Edition was also announced, with a limited offering of 30,000 units worldwide.

Featuring a major upgrade to blue sapphire glass as the screen material, the Mi Watch Special Edition adds a classy, aesthetic touch to your day-to-day look. The package also comes with an in-box magnetic charger, an adapter, laser-printed limited product code, suede cleaning cloth, certification for limited collection, and a personalized nameplate.

Mi Watch will be available at RMB 1999 for the Black and Silver color variants. Pre-orders start on November 5 via official Xiaomi channels in Mainland China. Mi Watch Special Edition will be priced at RMB 2999 and has a limited number of 30,000 units worldwide, pre-orders will start around mid-December.

Mi TV 5

The newly released Mi TV 5 series features a 1.8mm ultra-narrow metal bezel and a 5.9mm slim body, delivering a compact, futuristic design that is perfectly fit for a modern home.

On the performance front, Mi TV 5 series adopts a flagship 12nm T972 chip that is jointly developed by Xiaomi and Amlogic.

It has a core frequency of up to 1.9GHz, allowing a 63% improvement of overall performance compared to its predecessor, while concurrently supporting 8K content decoding. For storage, Mi TV 5 and Mi TV 5 Pro both provide industry-leading large memory capacity of 3GB+32GB and 4GB+64GB respectively.

Mi TV 5 Pro boasts a 4K quantum dot TV panel and an amazing 108% NTSC color spectrum compared to the industry standard of 72%.

It also meets one of the most outstanding HDR standards – HDR 10+ to provide a stunning graphic display for both game players and Blu-ray lovers. MEMC technology is also adopted to ensures a smooth and high-definition motion picture playback.

All Mi TV 5 variants are enabled with a Far-field Voice Recognition technology that allows users to wake theXiaoAi AI Assistant from a distance without the need of a remote control. Hence, it only takes a simple voice command to conduct film searching, weather checking, or smart device operations.

Built-in microphones are located right in the middle of the bottom frame and are on stand-by 24 hours a day, ensuring the Mi TV 5’s “XiaoAi AI speaker” is ready even during screen-saver mode.

Mi TV 5 Pro 55’’, 65’’ and 75’’ variants will be priced at RMB 3699, RMB 4999, and RMB 9999 while Mi TV 5 55’’, 65’’, 75’’ priced at RMB 2999, RMB 3999, and RMB 7999 respectively. Pre-orders start at 18:00 China time on November 5, and sales on official Xiaomi channels in China will start on November 11.

In the first three quarters of 2019, the total number of mobile phone users of the three telecommunications companies in China, including China Mobile, China Unicom, and China Telecom, reached 1.598 billion, an increase of 3.3% according to the Ministry of Industry and Information Technology of China.

Among them, the number of 4G users was 1.264 billion, accounting for 79.1% of all mobile phone users, 4.7 percentage points higher than the end of the previous year.

The total number of mobile communication base stations reached 8.08 million, of which the total number of 4G base stations was 5.19 million, accounting for 64.2%.

By the end of September, the total number of fixed Internet broadband access users of the three telecommunications companies reached 450 million, a net increase of 42.48 million compared with the end of the previous year.

The number of fixed broadband Internet access users with a receiving rate of 100 Mbps and above reached 362 million, accounting for 80.5% of the total number of users, 10.2 percentage points higher than the end of the previous year.

The fixed Internet broadband access users with an access rate of more than 1000M nationwide reached 580,000 households.

Related: China overtook the U.S. as the largest smart speaker market in 2019

As of the end of September, the total number of IPTV (Internet TV) users reached 292 million, a net increase of 37.04 million compared with the end of the previous year.

In the first three quarters, the length of outgoing calls for mobile phones was 180.5 billion minutes, down 6.4% year-on-year. The decline was 1 percentage point higher than the end of the previous year, but narrowed by 0.4 percentage points from the first half of the year.

The call duration of fixed-line calls was 91.7 billion minutes. It was down 19.3% year-on-year.

Mobile SMS traffic and revenue both continued to grow. Driven by the popularity of services such as service login and identity authentication, the business volume and revenue of SMS services have kept growing.

In the first three quarters, China’s mobile SMS business volume increased by 40.8% year-on-year, and the mobile SMS business revenue reached 29.8 billion yuan, a year-on-year increase of 3.6%.

Pricing and practical features top factors for China smart device users’ purchase

Mini programs competition is heating up with ByteDance building its own ecosystem on its leading apps short-video TikTok and news Toutiao. With Alipay and Baidu following closely, WeChat is stepping up its Mini Program game by going beyond the WeChat interface and partnering with hardware vendors like Samsung.

WeChat and Samsung announced their partnership last week with two additional WeChat Mini Program shortcuts on Samsung smartphones outside the WeChat interface. Users can either swipe right or pull left on the home screen to display the shortcuts to WeChat mini-programs.

Since January of this year, Samsung has already pre-installed this cooperation feature in the S8/S9/S10 series models and Note8 and Note9 series models in China. In the future, Samsung will do so in the flagship Note10 series models and continue to pre-install this function in subsequent new models.

Leading Chinese internet companies are building their own ecosystem with Tencent’s WeChat, Alibaba’s Alipay, and Baidu’s smart program in the leading positions. See the top mini-programs in the first half of 2019 and a quick comparison of WeChat, Alipay, and Baidu.

Is Mini Programs challenging the native mobile apps?

WeChat, widely known in the global media as a super app, covers many aspects and functions beyond instant messaging and social networking. With Mini-Programs launched in early 2017, the imagination of what a mobile user can do on WeChat is infinite.

Can it replace mobile apps?

If a mobile app offers very simple functionality, a WeChat mini program works well as it can be instantly launched. Users don’t have as much hesitation to try a mini-program as they download, register, and try a mobile app. The conversion rate is much higher.

Most mini-programs don’t have complex functionalities due to its light nature. Under the current technology infrastructure, it’s not likely to see very popular mini-programs with complex functions and many features. Businesses should keep this in mind while crafting its platform and acquisition strategies to make their mini-program complement their mobile app in acquisitions.

3 Trends of WeChat Mini-Programs

Xiaomi’s monthly active users (“MAU”) of MIUI reached 278.7 million, an increase of 34.7% YoY. AI assistant “ Xiao’ai ” had 49.9 million MAU; Xiaomi ranked 4th globally in terms of smartphone shipments; and, global shipments of its smart TVs reached 2.7 million units.

Xiaomi financial performance

In the second quarter of 2019, Xiaomi recorded RMB52.0 billion in revenue, representing an increase of 14.8% over the corresponding period of 2018. Gross profit margin increased to 14.0% from the 12.5% achieved in the corresponding period of 2018. Adjusted Net Profit increased by 71.7% to RMB3.6 billion. As of June 30, 2019, its total cash resources amounted to RMB51.1 billion.

The “Smartphone + AIoT” dual-engine strategy that Xiaomi adopted at the beginning of the year has borne fruit. Its user base has continued to expand and the number of devices connected to its platform has continued to grow.

In June, 2019, monthly active users (“MAU”) of MIUI reached 278.7 million, an increase of 34.7% over the corresponding period of 2018. The number of connected IoT devices (excluding smartphones and laptops) on its IoT platform reached approximately 196 million units as of June 30, 2019, representing year-over-year growth of 69.5%.

Meanwhile, its AI assistant “ Xiao’ai ” had 49.9 million MAU in June 2019, representing a year-over-year increase of 88.3%.

Xiaomi has won a number of international recognitions in 2019 to date. It took Xiaomi only 9 years to debut on the Fortune Global 500 list of 2019, becoming the youngest company on the list this year. Furthermore, Xiaomi made it into the 2019 BrandZ Top 100 Most Valuable Global Brands ranking for the first time, ranking 74th with a brand value of US$19.8 billion. Xiaomi has also been recognized as one of the 2019 Forbes China’s 50 Most Innovative Companies.

Xiaomi Smartphones

Its smartphone segment recorded RMB32.0 billion in revenue in the second quarter of 2019, representing an increase of 5.0% over the corresponding period of 2018. Its smartphone sales volume in the second quarter of 2019 reached 32.1 million units.

According to Canalys, Xiaomi ranked 4th globally in terms of smartphone shipments during the second quarter of 2019 and its market share in terms of global smartphone shipments increased from 9.5% in the second quarter of 2018 to 9.7% in Q2 2019.

Both its Xiaomi brand, which focuses on pioneering advanced technologies, establishing itself in the mid- to high-end markets, and building online and offline new retail channels, and its Redmi brand, which is positioned to pursue the ultimate price-performance ratio and focus on online channels have performed well.

After the launch of the new flagship model K20 series under the Redmi brand, Xiaomi has established a comprehensive Redmi smartphone product portfolio that covers a wide price range. In particular, the global sales volume of the Redmi Note 7 series reached 20 million units as of the date of this announcement, achieving this milestone in only around 7 months since its launch on January 10, 2019.

In addition, the global shipments of the K20 series already recorded more than 1 million units within the first month of its launch.

On July 2, 2019, Xiaomi launched the CC series under the Xiaomi brand, which includes Mi CC9, Mi CCe9, and Mi CC9 Meitu Edition. The CC series is positioned as a fashionable series targeting younger customers. The CC series places an emphasis on being visually appealing in terms of both form and function, offering stylish product design and enhanced photography experience.

Mi CC9 Meitu Edition is a joint development with Meitu Inc. which specifically targets the female user market. Leveraging its product development and supply chain management capabilities, as well as Meitu’s image-related algorithms and its deep understanding of female users, the Mi CC9 Meitu Edition offers outstanding photographic experiences and builds a solid foundation for its ongoing expansion into more diversified user markets.

Its products have been strongly recognized by the market as a result of the successful implementation of its multi-brand strategy. The average selling price (“ASP”) of its smartphones has continued to increase, achieving year-over-year growths of 13.3% and 6.7% in mainland China and overseas markets, respectively. In Q2 2019, the revenue generated by smartphones sold for RMB2,000 or more accounted for 32.3% of the total revenue of the smartphones segment.

Following the granting of 5G business licenses in mainland China, 5G technology has officially started to be implemented for commercial use. The commercialization of 5G technology could potentially lead to a new smartphone replacement cycle and boost the overall demand of the domestic market.

Xiaomi established a research and development team back in 2016 for advanced research on 5G technology and are now well-prepared for the commercialization of 5G. The Mi MIX 3 5G, its first 5G model was already available in various European countries, and its second 5G smartphone model will also be launched in China in the second half of the year.

The gross profit margin of its smartphone segment increased from 3.3% in the first quarter of 2019 to 8.1% in Q2 2019. During the early transition period from 4G to 5G technology, Xiaomi will continue to invest in research and development of relevant technologies while remaining prudent with its cash flows and profitability.

IoT and lifestyle products

In Q2 2019, the revenue of the IoT and lifestyle products segment rose by 44.0% to RMB14.9 billion over the corresponding period of 2018. Its smart TV business continues to have a leading edge in both mainland China and overseas markets.

Global shipments of its smart TVs reached 2.7 million units, representing year-over-year growth of 41.1%. According to AVC, Xiaomi ranked 1st in terms of TV shipments in mainland China for the six months ended June 30, 2019.

Xiaomi ranked 1st in terms of smart TV shipments in India for five consecutive quarters as of the second quarter of 2019. With its efforts in expanding its smart TVs globally, Xiaomi achieved a top 5 position in terms of global TV shipments for the six months ended June 30, 2019, according to AVC.

Xiaomi has positioned large home appliances as an important element of its AIoT strategy. Xiaomi will focus on innovation and product design, offering intelligent user experiences and promoting the enhanced connectivity and compatibility of its smart home appliances.

For the six months ended June 30, 2019, the shipments of its air conditioners amounted to approximately 1 million units. At the same time, Xiaomi has also entered the smart kitchen appliances market.

In Q2 2019, Xiaomi continued to enrich its IoT product portfolio. The market share of its laptops has been steadily increasing following the launch of its new products. On May 28, 2019, the Redmi brand introduced its first 14” slim notebook and enjoyed widespread popularity.

According to IDC Consulting (Beijing), the market share of its laptops in mainland China in terms of shipments increased from 5.5% in the second quarter of 2018 to 8.7% in Q2 2019. Its Mi Band ranked 1st in the global wearables market in terms of shipments in the first quarter of 2019.

Meanwhile, the Mi Band 4 recorded shipments of more than 1 million units within 8 days of its launch on June 14, 2019. In addition, Xiaomi has also launched several new products, including its AI Translator “Xiao’Ai Teacher”, Mi Smart Door Lock and Mi Smart Combo Wash and Dryer Pro, which are supported by its AI assistant “Xiao’Ai”. These product launches illustrated its continuous
the pursuit of excellent product design and quality.

Xiaomi has continued to improve the device-to-device interaction and enhance its users’ smart home experience. For example, when a user opens the door through a Mi Smart Door Lock, its
AI assistant will welcome him/her home. At the same time, the Mi Air Purifier, Mi Air Conditioner, and other smart devices could be switched on automatically. The Mi Smart Combo Wash Dryer Pro can be operated by the voice control function through its AI assistant

Xiaomi Internet services

In the second quarter of 2019, its user base continued to expand. The MAU of MIUI rose by 34.7% year-over-year from 206.9 million in June 2018 to 278.7 million in June 2019. The MAU of MIUI in mainland China was 115.1 million in June 2019. The MAU of its smart TVs and Mi Box achieved 53.8% year-over-year growth, reaching 22.6 million in June 2019.

Revenue from its internet services segment grew by 15.7% year-over-year to RMB4.6 billion in Q2 2019. Advertising revenue slightly decreased by 0.6% year-over-year to RMB2.5 billion due to a soft mainland China advertising market, particularly due to reduced advertising spending from other internet companies which contributed a meaningful portion of its advertising revenue.

Over the course of the last few quarters, Xiaomi has continued executing its strategy to diversify its advertising customer base. Through expanding into more vertical industries, such as finance and small and medium-sized enterprises, Xiaomi is developing a more robust and healthy advertising business to capture more future growth.

Revenue from gaming decreased by 4.1% year-over-year to RMB675.1 million. However, its gaming gross profit increased to RMB408.2 million in Q2 2019 from RMB212.5 million in Q2 2018, representing an increase of 92.1%. Its gaming gross profit margin increased from 30.2% in Q2 2018 to 60.5% in Q2 2019 as Xiaomi optimized its gaming distribution and had higher gaming revenue growth from content providers with a high gross profit margin. Its other internet value-added services grew by 89.9% year-over-year to RMB1.4 billion, primarily due to the strong growth in revenue from its fintech business and Youpin e-commerce platform.

Introduction to Xiaomi’s e-commerce platform Youpin

Xiaomi has been focusing on enriching its internet services and content to strengthen its advertising business. Many of its internet services are leading on its smartphones, its Mi App Store, Mi Browser, Mi Security, and Mi Music ranked 1st and Mi Video ranked 2nd in their respective categories in mainland China in terms of MAU on its smartphones in June 2019.

Furthermore, its news feed service ranked 1st in terms of MAU on its smartphones in mainland China, reaching 71.0 million MAU in June 2019, representing a year-over-year increase of 31.0%. Its search service also ranked 1st on its smartphones in mainland China in terms of search query volume in the second quarter of 2019.

Xiaomi developed various entry points for its search function, including browser, negative one screen, launcher searchbox, and its AI assistant. Leveraging its increasingly diversified services and
multi-dimensional data, Xiaomi is able to further improve its algorithm and enhance its users’ experience. Services like news feed and search allow Xiaomi to diversify its advertising customer base.

Internet service revenue outside of advertising and gaming from mainland China smartphones, including those generated from the Youpin e-commerce platform, fintech business, TV internet services and overseas internet services, increased by 108.8% over the corresponding quarter in 2018, accounting for 36.0% of the total internet service revenue in the second quarter of 2019.

For the six months ended June 30, 2019, the gross merchandise volume (“GMV”) of its Youpin e-commerce platform grew to RMB3.8 billion, an increase of 113.9% YoY. In June 2019, more than 65% of Youpin’s GMV came from non-Xiaomi smartphone users.

Revenue from its fintech business increased to RMB792.0 million in Q2 2019, representing year-over-year growth of 62.7%. Its current fintech business focuses on consumer loans and supply chain financing. With its sophisticated risk management model and technology capability, and extensive user base and supply chain partners, Xiaomi had a solid business foundation and potential to grow. In the meanwhile, Xiaomi is also actively exploring other fintech business opportunities.

Its TV internet services are also fast-growing and increasingly diversified. TV internet services revenue is mainly generated from advertising, paid subscription, and app distribution. In June 2019, Xiaomi had over 3 million paid subscribers, representing a year-over-year increase of 83.1%. Xiaomi offers a variety of membership services, including video membership, sports memberships, and children membership. Its subscription services have expanded to other non- Xiaomi TVs to serve a wider user base.

Xiaomi’s Overseas markets

With the overseas expansion of its smartphone business, its overseas internet service revenue also increased significantly. Xiaomi continued to build and strengthen its service offerings in overseas markets. In June 2019, its browser ranked 1st among all browsers in India in terms of MAU on its smartphones. In the second quarter of 2019, the average revenue per user (“ARPU”) in overseas markets recorded a year-over-year increase of 133.0%.

Xiaomi has maintained strong growth in the overseas markets in the second quarter of 2019. Its revenue from the overseas markets grew 33.1% year-over-year to RMB21.9 billion in the second quarter of 2019.

Xiaomi will continue to build and expand its new retail channels in the overseas markets. As of June 30, 2019, there were a total of 520 Mi Home stores overseas, representing a 92.6% year-over-year growth, of which 79 stores were located in India. Furthermore, in India, Xiaomi had more than 1,790 Mi Stores that cater to tier two and rural areas of India as of June 30, 2019.

According to Canalys, in the second quarter of 2019, Xiaomi ranked among the top five in over 40 countries and regions in terms of smartphone shipments. According to IDC, its smartphones have ranked 1st in India in terms of shipments for eight consecutive quarters. In addition, according to Canalys, in Q2 2019, Xiaomi ranked 4th in terms of smartphone shipments for Western Europe, representing a year-over-year increase of 53.2%.

Xiaomi ranked 2nd in open market channels in Spain in terms of smartphone shipments in Q2 2019. Xiaomi has been developing operator channels in Europe. Its flagship smartphones, such as Mi MIX 3 and Mi 9 series, have been launched in operator channels in the United Kingdom, France, Spain, Italy, and Switzerland.

AIoT

In Q2 2019, Xiaomi continued the implementation of its “Smartphone + AIoT” dual-engine strategy and its AIoT platform continued to maintain its leading position. As of June 30, 2019, the number of connected IoT devices (excluding smartphones and laptops) on its IoT platform reached approximately 196 million units, representing a year-over-year increase of 69.5%.

The number of users who have five or more devices connected to Xiaomi’s IoT platform (excluding smartphones and laptops) increased to approximate 3 million, representing a year-over-year increase of 78.7%. In the six months ended June 30, 2019, the shipments of its AI speakers exceeded 4 million units.

In June 2019, its AI assistant had 49.9 million MAU, making it one of the most used AI voice interactive platforms in China. In June 2019, 45% of its AI speaker MAU used voice control to interact with their IoT devices at least once that month.

Xiaomi continued to open up its AIoT platform to build a more vibrant AIoT ecosystem. Its Mi Home app had 30.4 million MAU in the second quarter of 2019 and more than half of the MAU in mainland China were from non-Xiaomi smartphone users. Xiaomi will continue to invest in the development of its open AIoT platform to attract more third parties and users to join this AIoT platform.

The Group’s AIoT Strategy committee will further enhance the development of its AIoT technology, by building a comprehensive AIoT ecosystem, strengthening its research and development, and realizing synergies across business units to improve its smart devices’ connectivity and user experiences.

For example, Xiaomi continues to develop technologies for files to be seamlessly transferred between its smartphones and laptops, as well as for intelligent projection to be enabled between its smartphones and smart TVs.

Xiaomi’s Investments

As of June 30, 2019, Xiaomi invested in a total of over 270 companies with an aggregated book value of RMB28.7 billion, representing year-over-year growth of 20.8%. Xiaomi also expanded its investment into supply chain companies to strengthen its partnership with key component suppliers and to enhance its abilities in advanced technology sourcing and manufacturing.

As of the date of this announcement, Xiaomi invested in 12 supply chain companies. Among those, three of the investee companies were listed on the STAR Market in China. Xiaomi believes its investments not only allowed Xiaomi to establish close partnerships with the investee companies but also provided Xiaomi with recurring investment income.

In the second quarter of 2019, Xiaomi generated net gains on disposal of investments (after tax) of RMB551.8 million.

Over the recent years, smart products appeared in many daily life scenarios, smart home living, including smart TV, vacuum robot, smart lock, and smart speakers, are expected to receive good market recognition in 2019.

In 2019, the price range of the smartphone that majority of China internet users purchase is between 2001 and 3000 yuan (US$291-436) as well as 3001 and 5000 yuan (US$436-727).

Out of the brands that online users consider on top of their minds, Huawei ranks the first. While Xiaomi and Apple take the second and the third place, Xiaomi is favored by male and Apple is favored by the female.

According to Tencent research by Penguin Intelligence, Huawei enjoys the highest loyalty, 62.2%. When replacing the smartphone, 69.4% of online users are expecting better battery performance; also, the core features such as operating system experience and hardware performance are priorities.

When making a purchase, more online users prefer online purchase to offline purchase (54.8% vs 45.2%). The percentage of males, younger customers who do not deny the idea of purchasing used phones are higher.

Regionally, Apple users in first-tier cities take the highest percentage, and user ratio of Xiaomi in tier-2 cities, Huawei in tier-3 cities are the highest. OPPO and Vivo’s user ratios are higher in lower-tier cities.

In 2019, 88.5% of online users plan to purchase at least one smart device of which smartphone accounts the most, with 66.7% of online users are thinking of buying one. Users’ purchase intention for other mobile devices such as smartwatches is 25.6% in term of penetration ratio.

Over the recent years, smart products appeared in many daily life scenarios, smart home living, including smart TV, vacuum robot, smart lock, and smart speakers, are expected to receive good market recognition in 2019.

When choosing smart devices, 80.2% online users prioritize the practical features while the price is an aspect that nearly sixty percent of online users will consider. Other than that, branding, convenience, technical features are considered by over forty percent of China online users.

Premium features as branding, technical features, and design are significantly less considered compared to practicality and price. online users’ purchase of smart devices is more rational in 2019, which can even be regarded as a sign of consumption downgrade.

Among the most expected smart products, security and vacuum products rank the first and the second respectively. Other than that, 56.5% of online users are looking forward to household products that can aromatically adjust the living environment.

For online users more willing to buy foreign smart products, 51.2% of them are considering smartphone and over thirty percent of them are considering foreign smart locks, vacuum robot, and smart TV.

When making a purchase of smart products, online users in the tier-1 cities are most willing to buy foreign products, accounting for 55.8%. In general, the difference in preference of foreign smart devices among online users of different cities is not significant.

Although the willingness of tier-4 and lower-tier cities online users for buying foreign smart products is the lowest, the percentage is still close to the half, reaching 48.5%.

Meanwhile, the younger the online users, the more recognition for foreign products, the percentage of post-00s who are more willing to buy foreign products is as high as 61%.

This is an excerpt from eBook Purchase Intention of Smart Device in China

In the first quarter of 2019, Xiaomi recorded RMB43.8 billion in revenue, representing an increase of 27.2% over the corresponding period of 2018. Profit for Q1 2019 grew to RMB3.2 billion and Adjusted Net Profit grew 22.4% year-on-year to RMB2.1 billion.

Xiaomi continued to focus on their “Smartphone + AIoT” dual-engine strategy and greatly expanded the number of devices connected to its platform.

As of March 2019, monthly active users (“MAU”) of MIUI reached 260.9 million, representing a year-on-year increase of 37.3%. The number of connected IoT devices (excluding smartphones and laptops) on Xiaomi IoT platform has reached approximately 171.0 million units, representing year-on-year growth of 70.0%.

Xiaomi AI assistant “Xiao Ai Tongxue” had over 45.5 million MAU in March 2019, representing a year-on-year increase of 247.2%.

Xiaomi Smartphones

Xiaomi smartphone segment recorded approximately RMB27.0 billion in revenue in Q1 2019, representing an increase of 16.2% over the corresponding period of 2018. Its smartphone sales volume in Q1 2019 reached 27.9 million units.

According to Canalys, Xiaomi ranked 4th globally in terms of the volume of smartphone shipments during the Q1 2019.

In Q1 2019, Xiaomi released several smartphone models under each brand, including Mi 9, Mi 9 SE, Redmi Note 7, Redmi Note 7 Pro and Redmi 7. The market response was positive with regard to the respective product launches.

In particular, Redmi Note 7, which was released on January 10, 2019, and launched in overseas markets on February 28, 2019, was in high demand. The shipments of its Redmi Note 7 series exceeded 4 million units in Q1 2019.

In addition, its new flagship model Mi 9 series, which was released on February 20, 2019, and launched in overseas markets shortly thereafter, has also been very popular to date. The Mi 9 is powered by the Snapdragon 855 processor, equipped with an ultra-wide-angle AI triple camera with the main camera using a 48-megapixel Sony sensor, and has an all-curved holographic back design.

The Mi 9 is also the world’s first smartphone to feature 20W wireless quick charging. As of March 31, 2019, the supply of Mi 9 series smartphones surpassed 1.5 million units while the sales volume of Mi 9 series smartphones exceeded 1.5 million shortly thereafter in early April 2019.

Xiaomi’s smartphone market share in mainland China increased for three consecutive months throughout the first quarter of 2019, from 9.5% in January 2019 to 11.8% in March 2019.

Moreover, due to the continuous optimization of Xiaomi’s product portfolio, the average sales price (“ASP”) of its smartphones in mainland China and in overseas markets achieved year-on-year growth of 29.9% and 12.1%, respectively, in Q1 2019.

Xiaomi IoT and lifestyle products

During Q1 2019, the revenue of the IoT and lifestyle products segment rose by 56.5% to RMB12.0 billion over Q1 2018, maintaining a rapid growth rate.

Xiaomi’s smart TVs continued to lead the way, ranking 1st in terms of shipments for two consecutive quarters in mainland China. As of March 31, 2019, global shipments of Xiaomi’s smart TVs reached 2.6 million units, representing a nearly two-fold year-on-year growth of 99.8%.

Xiaomi has also recently launched a variety of large home appliances. In April 2019, it released Mi Mural TV, Mi LED TV 4 Pro and Mi Internet Vertical Air Conditioner C1, all of which have been perceived positively by the market.

Mi Mural TV is its first smart TV that uses far-field microphone technology, enabling users to activate voice control features even at a distance. Users can switch on their smart TVs, search for movies, check the weather, and control other smart home products without the need of a mic-enabled remote control.

Xiaomi’s smart TVs can also display smart device notifications and act as control hubs for compatible smart home products.

During Q1 2019, Xiaomi’s ecosystem products, such as Mi Band, Mi Air Purifier and Mi Electric Scooter, continued to enjoy wide popularity and achieved robust sales growth.

Xiaomi also launched a variety of other popular products this year, such as Mi Smart Door Lock, Mi Wireless Power Bank, Mi Photo Printer, Mi Wireless Car Charger, and Mi AirDots.

Xiaomi’s Redmi brand also launched various IoT and lifestyle products, such as Redmi AirDots. The designs of Xiaomi’s IoT products have continued to receive significant market recognition.

In Q1 2019, Xiaomi won 25 international design awards. For example, Xiaomi’s Mi Washing Machine was awarded the iF Design Award and Xiaomi’s Mi Smart Door Lock was awarded the Red Dot Award.

Xiaomi Internet Services

Revenue from Xiaomi’s internet services segment grew 31.8% year-on-year to RMB4.3 billion in Q1 2019. Advertising revenue grew 21.8% year-on-year to RMB2.3 billion.

Revenue from gaming grew 6.8% year-on-year to RMB823.1 million. Xiaomi’s other internet value-added services grew 96.4% year-on-year to RMB1.2 billion, primarily due to the rapid growth in revenue from Xiaomi’s internet finance business and Youpin e-commerce platform.

The MAU of MIUI rose 37.3% from 190.0 million in March 2018 to 260.9 million in March 2019. The MAU of MIUI in mainland China also achieved quarter-on-quarter growth. The MAU of Xiaomi’s smart TVs and Mi Boxes achieved 55.1% year-on-year growth, reaching 20.7 million in March 2019.

Xiaomi has continued to diversify Xiaomi’s internet services revenue. Internet services revenue outside of advertising and gaming from China smartphones, including those generated from TV internet services, overseas internet services, Youpin e-commerce, and internet finance business, accounted for 31.8% of the total internet services revenue in Q1 2019, representing year-on-year growth of 167.3%.

Xiaomi’s overseas internet services revenue grew rapidly as they continued to strengthen Xiaomi’s internet services in key markets. For example, we have been actively developing Xiaomi’s internet finance business in India and launched Mi Pay, a payment product, in India in March 2019.

The number of connected devices (excluding smartphones and laptops) on Xiaomi’s IoT platform reached approximately 150.9 million units in 2018, a year-on-year increase of 193.2%. Xiaomi AI assistant Xiaoai had been installed and activated on more than 100 million smart devices as of December 31, 2018, and had over 38.8 million monthly active users in December 2018. 

Xiaomi recorded 174.9 billion yuan (US$26.04bn) in revenue for the year ended December 31, 2018, a year-on-year increase of 52.6%. Revenue from international markets grew 118.1% year-on-year to 70.0 billion yuan (US$10.42bn), accounting for 40.0% of the total.

• 65.1% of revenues were from smartphones (US$16.94bn),  an increase of 41.3% year-on-year;
• 25.1% of revenues were from IoT and lifestyle products (US$6.52bn), an increase of 86.9% year-on-year;
• 9.1% of revenues were from internet services (US$2.38bn), an increase of 61.2% year-on-year.

For the fourth quarter of 2018, revenue increased by 26.5% to 44.4 billion yuan (US$6.61bn) on a year-on-year basis.

Revenue from the smartphones segment increased by 7.0% year-on-year to 25.1 billion yuan, driven by growth in the ASP of smartphones.

Revenue from IoT and lifestyle products segment increased by 75.4% year-on-year to 14.9 billion yuan, primarily due to the rapid growth in demand of smart TVs and several sought-after ecosystem products such as Mi Band, Mi Electric Scooter, and Mi Robot Vacuum Cleaner.

Revenue from internet services segment increased by 39.3% year-on-year to 4.0 billion yuan, primarily due to growth in the advertising business.

For the year ended December 31, 2018, Xiaomi’s gross profit increased by 46.4% to 22.2 billion yuan (US$3.31bn) from 15.2 billion yuan for the prior year. Overall, Xiaomi’s gross margin decreased from 13.2% to 12.7%.

• The gross profit margin from the smartphones segment decreased from 8.8% to 6.2%.
• The gross profit margin fromIoT and lifestyle products segment increased from 8.3% to 10.3%, mainly due to the improvement of gross margin in smart TVs.
• The gross profit margin from internet services segment increased from 60.2% to 64.4% as the percentage of revenue from higher margin advertising business was larger.

For the fourth quarter of 2018, gross profit increased by 55.5% to 5.7 billion yuan. The overall gross margin increased from 10.4% to 12.7%.

• The gross profit margin from the smartphones segment decreased from 7.3% to 6.1%.
• The gross profit margin from IoT and lifestyle products segment increased from 3.6% to 10.6%.
• The gross profit margin from internet services segment increased from 57.4% to 62.9%.

Smartphones

Smartphones segment generated approximately 113.8 billion yuan (US$16.94bn) in revenue, an increase of 41.3% year-on-year. Compared with the 4.1% year-on-year decline of shipments in the global smartphone market, according to IDC, Xiaomi smartphone sales volume reached 118.7 million units, an increase of 29.8% over the prior year period.

To strengthen its market position in the mid- to the high-end range smartphone market in mainland China, Xiaomi launched several flagship smartphones such as Mi 8 and Mi MIX 3, which enjoyed widespread popularity. The average selling price (ASP) of Xiaomi smartphones in mainland China increased by 17.0% year-on-year.

In the fourth quarter of 2018, the revenue generated by smartphones sold for 2,000 yuan or more accounted for 31.8% of the total revenue of the smartphones segment. As Xiaomi shipped increasingly more smartphones in developed markets, the ASP of smartphones in international markets also recorded a year-on-year 9.7% growth.

Xiaomi continued to focus on innovation with increasing investment in smartphone R&D and achieved great progress. Taking the smartphone camera as an example, the new flagship smartphone Mi 9, launched in February 2019, achieved a DxOMark score of 107 for its rear camera, ranking top three globally at the time of launch.

It also achieved a DxOMark score of 99 for the video category, which is the highest among all smartphones at the time of launch. Xiaomi is also one of the early movers in 5G, launching our first 5G smartphone, Mi MIX3 5G, at World Mobile Congress in February 2019.

China smartphone brand loyalty compared for Q4 2018: iPhone, Huawei, Oppo, Vivo, Xiaomi

IoT and lifestyle products

Revenue of the IoT and lifestyle products segment increased by 86.9% to 43.8 billion yuan (US$6.52bn) over the previous year. 2018 was the year when Xiaomi’s large home appliances emerged from a nascent vertical to a robust business unit. The global shipments of Xiaomi smart TVs were 8.4 million units, representing a 225.5% year-on-year growth. Xiaomi also entered the white goods market, launching the Mi Air Conditioner and the Mi Washing Machine in July and December 2018, respectively.

In addition to smart TVs and laptops, Xiaomi ecosystem products such as Mi Band, Mi Electric Scooter, and Mi Robot Vacuum Cleaner experienced robust sales growth. Xiaomi Mi Robot Vacuum Cleaner ranked second in terms of shipments in mainland China in 2018. Xiaomi was ranked second in terms of wearables shipments across the world in the fourth quarter of 2018 according to IDC.

Xiaomi received 43 international industrial design awards in 2018, including iF Design Awards, Red Dot Awards, International Design Excellence Awards, Good Design Awards, and Design for Asia Awards. Two such accolades went to Mi Sphere Camera which was awarded the iF Gold Award and Mi Rearview Mirror which was awarded the Red Dot: Best of the Best award.

2018 marked the commencement of its overseas IoT business expansion. Xiaomi launched smart TVs in India in February 2018 and were ranked first in terms of online TV shipments in this market.

As of December 31, 2018, there were about 2.3 million users who own more than five Xiaomi IoT devices (excluding smartphones and laptops), representing a 16.2% quarter-on-quarter growth and a 109.5% year-on-year growth.

Related: Xiaomi sold 100 million power banks as of Jan 2019

Internet services

Revenue from internet services segment grew by 61.2% year-on-year to 16.0 billion yuan (US$2.38bn).

• Advertising revenue grew by 79.9% year-on-year to 10.1 billion yuan.
• Revenue from value-added internet services also grew 36.7% year-on-year to 5.9 billion yuan, of which revenue from gaming accounted for 2.7 billion yuan, a 7.3% year-on-year increase. Revenue from other internet value-added services grew 79.9% year-on-year to 3.2 billion yuan, primarily due to an increase in revenue contribution from internet finance business and Youpin e-commerce platform.

In the fourth quarter of 2018, over 30% of internet services revenue was from internet
services outside of advertising and gaming from China smartphones. Xiaomi overseas internet services revenue accounted for 6.3% of all internet services revenue in the fourth quarter of 2018, growing 1,295.6% year-on-year.

Xiaomi continued to enhance its overseas internet services and launched popular internet services in international markets.

For example, it launched video, app store, and news feed services in India and Indonesia. The MAU of Xiaomi smart TVs and Mi Box achieved 55.3% year-on-year growth, reaching 18.6 million in December 2018.

TV internet services revenue accounted for 8.2% of the total internet services revenue in the fourth quarter of 2018, a 119.1% year-on-year increase.

The revenue from internet finance business and the Youpin e-commerce platform accounted for 11.9% and 4.1% of total revenue of internet services in the fourth quarter of 2018, with year-on-year growth rates of 80.5% and 427.6%, respectively.

The MAU of MIUI increased 41.7% from 170.8 million in December 2017 to 242.1 million in December 2018. ARPU for internet services increased from 57.9 yuan for the year ended December 31, 2017, to 65.9 yuan for the year ended December 31, 2018.

International markets

Revenue from international markets grew 118.1% year-on-year to 70.0 billion yuan (US$10.42bn), accounting for 40.0% of the total, compared with 28.0% for the prior year.

According to Canalys, Xiaomi smartphones achieved the number one market share position by shipments for six consecutive quarters in India, with year-on-year growth of 59.6%. In Indonesia, Xiaomi was ranked second in terms of smartphone shipments, with year-on-year growth of 299.6%.

Xiaomi smartphone shipments for Western Europe grew 415.2% year-on-year and ranked fourth. Xiaomi IoT business also achieved good progress in its expansion in international markets.

Xiaomi Business Strategy update

AIoT

As of December 31, 2018, the number of connected IoT devices (excluding smartphones and laptops) on Xiaomi IoT platform reached approximately 150.9 million units, a quarter-on-quarter increase of 14.7% and a year-on-year increase of 193.2%.

Xiaomi is encouraging more third-parties to join its open IoT platform. In December 2018, Xiaomi entered into a strategic partnership with IKEA, under which IKEA’s full range of smart lighting products will be connected to Xiaomi IoT platform.

Xiaomi IoT user base is diversified across smartphone platforms. Xiaomi Mi Home app had 20.3 million MAU in December 2018 and over 50% of the users are from non-Xiaomi smartphones.

Through the empowerment of AI, Xiaomi greatly enhanced the user experience of IoT devices.

As of December 31, 2018, Xiaomi AI assistant Xiaoai had been installed and activated on more than 100 million smart devices and had more than 38.8 million MAU, making it one of the most used AI voice interactive platforms in mainland China. Xiaomi AI speakers have accumulated shipment of over 9 million units.

Multi-brand Strategy

Xiaomi adopted a multi-brand strategy for its smartphones in 2018. Xiaomi and Redmi have become independent brands since January 2019. The Xiaomi brand will focus on pioneering advanced technologies, establishing itself in the mid- to high-end markets, and building online and offline new retail channels.

The Redmi brand will pursue the final price-performance ratio and focus on online channels. Also, XIaomi Black Shark, Meitu, and POCO brands will target games users, female users, and tech enthusiasts, respectively.

Efficiency

As of December 31, 2018, Xiaomi had 586 Mi Homes in mainland China, mainly in first-, second- and third-tier cities. Moreover, to establish its offline new retail presence in lower-tier cities and rural areas of China, Xiaomi has built a sizable authorized store network. As of December 31, 2018, Xiaomi had 1,378 authorized stores in total, comparing to 62 as of December 31, 2017.

Quality

Xiaomi won the Top Prize of “China Quality Technical Award” awarded by the China Association for Quality. Xiaomi received further prestigious awards including the “2018 People’s Ingenuity Product Award” and the “2018 China Quality Benchmark Prize”.

Xiaomi’s mainland China smartphone fault feedback ratio decreased by 43.7% year-on-year. Xiaomi redefined the quality standards of smartphones by providing an 18-month long warranty for its Redmi Note 7 series, 50% higher than the industry standard.

Xiaomi officially launched the “smartphones + AIoT” dual-engine strategy in 2019. It expects to invest over 10.0 billion yuan (US$1.49bn) in the development in AIoT in the next five years.

Read more: China’s smart speaker market insights

The three leading smartphone brands – Huawei (excluding Honor), Xiaomi, and iPhone – kept winning more shares in urban China market as all grew their shares over a year ago, according to the Q3 data from Kantar Worldpanel ComTech. Xiaomi Mi 8 was the most popular handset model in Q3 2018. The next three models on the best-seller ranking were all from iPhone, including the runner-up iPhone X.

As more brands followed iPhone’s suit to launch premium products, the average selling price of smartphones in Q3 increased across the industry. The proportion of sales from premium models increased by 7 percentage points from a year ago.

Huawei continued to win consumers from other brands. Huawei ranked No.1 in terms of net new consumers won (=total new consumers won – total new consumers lost) in Q3, followed by iPhone.

Among all the users leaving Huawei and Honor, the proportion of people joining iPhone camp decreased from a year ago. While the proportions of OPPO/VIVO-turned-iPhone user increased.

There is a lot in common in ex-OPPO/VIVO users, such as they’re relatively young, most of them live in tier-1 and -2 cities, not happy with chips and speed, pay attention to other people’s recommendations, etc.

It’s more important, and to some extent easier, for smartphone brands to keep existing consumers compared to win over consumers. They need to invest more in raising loyalty, according to Liang Yaguang, Consumer Insight Director of Kantar Worldpanel ComTech China.

The average Net Promoter Score (NPS) among Chinese consumers dropped in Q3. Huawei (excluding Honor), VIVO, and OPPO are above the average among mainstream iPhone. The NPS for Samsung eclipsed that of Xiaomi for the first time.

As major brands keep expanding their user bases, the user profiles began to look more like each other. OPPO and VIVO both had more male users while Huawei (excluding Honor) and Xiaomi had obtained more female consumers.

In the United States, Android lost ground to iOS in Q3. Early sales of iPhone XS and iPhone XS Max models in the United States are good news for Apple.

Combined with the continued strong momentum among iPhone 8 and 8 Plus, these sales have contributed to a 5.0 percentage point increase in OS share for Apple in the US – the biggest gain seen worldwide in Q3 2018.

iPhone 8 was the top-selling model in the US over the quarter, with a 9.4% share of the handset market, according to Dominic Sunnebo, Global Director for Kantar Worldpanel ComTech.

But in the five main European markets (UK, France, Germany, Spain, and Italy), Android made significant gains against iOS. The Samsung Galaxy S9 was the top-selling model across the big five markets in September. Meanwhile, the newly released Galaxy Note 9 has made it into the top 10 most popular models for the month. Both Huawei (P20 Lite) and Xiaomi (Mi Note 5) made it to the top five handset ranking for the first time.

European consumers are holding on to their handsets more than two months longer than they were in 2016. Huawei has consolidated its position as the second best-selling brand in Europe behind Samsung from the launch of its P20 series.

Xiaomi continued to expand rapidly in Spain and, more recently, in Italy and France. The focused push that Huawei and Xiaomi are making into Europe is causing pain for their rivals across the board. However, it is Sony, LG, and Wiko who are being disproportionally impacted as a result of their historic over-reliance on the ultra-competitive low and mid-price tiers.

In Japan, Apple continued to lead handset sales under the pressure from Sharp and Huawei, both of which has increased shares of sales by 6 percentage points and 3.2 percentage points, respectively. Sharp’s flagship Aquos R2 and Huawei’s P20 Lite were among the top five best-sellers for the third quarter.

This post was originally published on Kantar.com.

Xiaomi shipped 33.3 million units smartphones in Q3 2018, a 20,4% growth year-on-year. That recorded approximately US$5.04 billion in revenue, an increase of 36.1% year-on-year. Xiaomi Mi 8 ranked 1st in terms of sales volume on Singles’ Day shopping festival 2018. Xiaomi smartphone shipments for Western Europe grew 386% year-on-year and ranked fourth in terms of smartphone shipments in Q3 2018. The global sales volume of Xiaomi smart TVs grew 198.5% year-on-year for Q3 2018.

Xiaomi generated 50.8 billion yuan (US$7.31 bn) in revenue in Q3 2018, an increase of 49.1% year-on-year.

Revenue from international markets accounted for 43.9% of the total. Adjusted profit grew by 17.3% year-on-year to 2.9 billion yuan (US$417.58 mn). The IoT and lifestyle products segment experienced the fastest growth.

Xiaomi Smartphones

Xiaomi shipped over 100 million units smartphones for 2018 on October 26, 2018. Xiaomi smartphones recorded approximately 35.0 billion yuan (US$5.04 bn) in revenue for Q3 2018, an increase of 36.1% year-on-year. Smartphone sales volume reached 33.3 million units in Q3 2018, up 20.4% year-on-year.

Shipment of Xiaomi flagship Mi 8 series had reached 6 million units by October 9, 2018. During the Singles’ Day shopping festival in 2018, Xiaomi Mi 8 ranked 1st in terms of sales volume in the 2,000 yuan to 3,000 yuan price range in the smartphone category on Tmall.com and JD.com, as well as in the 2,000 yuan to 2,499 yuan price range in the smartphone category on Suning.com.

Xiaomi smartphone average selling price (ASP) in mainland China was 16% higher over Q3 2017 and was 4% higher over Q2 2018. The smartphone ASP outside mainland China also increased by 18%, which can be attributed to the increase in the proportion of shipments in Western Europe. The percentage of revenue from smartphones over 2,000 yuan accounted for 31% of total smartphones revenue in Q3 2018.

Xiaomi IoT and lifestyle products

Revenue of the IoT and lifestyle products segment increased by 89.8% year-on-year to 10.8 billion yuan in Q3 2018. This revenue increase was primarily due to a rapid growth in the sales of smart TVs. Besides that, laptops and several Xiaomi ecosystem products such as Mi Band and Mi Electric Scooter also experienced robust sales growth.

The global sales volume of Xiaomi smart TVs grew 198.5% year-on-year for Q3 2018. The global sales volume of Xiaomi smart TVs reached 5.2 million units in the first nine months of 2018. Xiaomi smart TVs monthly sales volume exceeded 1 million for the first time in October 2018.

During the Singles’ Day shopping festival in 2018, the sales volume and sales value of Xiaomi smart TVs both ranked 1st among all the TV brands on Tmall.com, JD.com, and Suning.com, respectively. Xiaomi launched its smart TVs in the India market in February 2018, which is now the leading smart TV brand in India, according to IDC Consulting (Beijing) Ltd. (“IDC”).

Xiaomi launched Mi Air Conditioner on July 23, 2018, which received positive reviews from users. There were about 1.98 million users who own more than five Xiaomi IoT devices as of September 2018, excluding smartphones and laptops, representing a quarter-on-quarter rise of 16.5%.

Internet services

Revenue from Xiaomi internet services segment grew 85.5% year-on-year to 4.7 billion yuan in Q3 2018. Advertising revenue grew by 109.8% year-on-year to 3.2 billion yuan. Revenue from internet value-added services also grew 49.7% year-on-year to 1.5 billion yuan, of which 652.5 million yuan were from gaming, a 12.0% year-on-year increase.

Revenue from other internet value-added services grew by 98.6% year-on-year to 892.7 million yuan, primarily due to an increase in revenue contribution from the internet finance business and Youpin e-commerce platform.

Monthly active users (“MAU”) of MIUI increased 43.4% from 156.5 million in September 2017 to 224.4 million in September 2018. The average revenue per MIUI user (“ARPU”) for the quarter under review increased by 29.4% year-on-year to 21.1 yuan.

Overseas internet services revenue accounted for 4.4% of Xiaomi’s total internet services revenue in Q3 2018. The MAU of Xiaomi Mi TV and Mi Box reached 15.9 million in September 2018. Xiaomi also saw a more significant contribution to internet services revenue from non-smartphone devices.

For example, TV internet services revenue accounted for 5.4% of its total internet services revenue in Q3 2018.

International markets

Xiaomi mainland China revenue grew 20.9% year-on-year to 28.5 billion yuan while international markets revenue grew 112.7% year-on-year to 22.3 billion yuan in Q3 2018. Revenue from international markets accounted for 43.9% of the total in Q3 2018.

Xiaomi smartphone shipments for Western Europe grew 386% year-on-year and ranked fourth in terms of smartphone shipments in Q3 2018, according to Canalys.

Xiaomi smartphone shipments for India grew 31% year-on-year in Q3 2018 and achieved the number one market share position in terms of shipments for four consecutive quarters, according to Canalys. Furthermore, Xiaomi recorded orders of more than 6 million smartphones and orders of more than US$1 billion for all of its products for the Diwali Festival in India this year, during the period from October 9, 2018 to November 8, 2018.

In Indonesia, Xiaomi ranked second in terms of smartphone shipments with year-on-year growth of 337%. It also ranked top five in the smartphone markets of 30 countries and regions in terms of shipments in Q3 2018, according to Canalys.

Related: 71 brands pre-sale exceeded 100 million yuan (US$14M) during Double 11

Other business highlights

AI+IOT

Artificial intelligence (“AI”) + IoT forms one of Xiaomi’s core strategies. Xiaomi AI assistant (“小愛同學”) had more than 34 million MAU, making it one of the most used AI voice interactive platforms in mainland China as of September 2018.

At the World Internet Conference in November 2018, Xiaomi’s AI Open Platform for Smart Homes won the “World Leading Internet Scientific and Technological Achievements” award. At the 2018 China Big Data Industry Ecology Conference, Xiaomi was selected as one of the “Top 50 Chinese Big Data Enterprises”.

At the third AI WORLD 2018 World Artificial Intelligence Summit, Xiaomi was selected as one of the “TOP 10 AI Leading Enterprises in China”. At the 2018 World Artificial Intelligence Conference, Xiaomi AI assistant (“ 小愛同學 ”) was shortlisted for the SAIL Award, the conference’s most prestigious award.

During the third quarter of 2018, Xiaomi announced that Mobile AI Bench, its end-to-end benchmark tool for hardware and neural network frameworks testing on mobile devices, would become a fully open source platform. Empowered by AI, Xiaomi’s IoT platform continues to grow and maintain a leading position in the industry.

The number of connected IoT devices (excluding smartphones and laptops) on Xiaomi’s IoT platform reached approximately 132 million units as of the end of Q3 2018, an increase of 13.8% from the previous quarter.

Efficiency

Xiaomi had 499 Mi Homes in mainland China as of September 30, 2018, mainly in first- and second-tier cities. Moreover, to further penetrate lower-tier cities and rural areas of China, Xiaomi had more than 1,100 authorized stores in total by the end of Q3 2018, compared with more than 360 authorized stores in Q2 2018.

Despite the rapid expansion of its offline channels, Xiaomi’s overall operation remained highly efficient with the operating expense ratio at 8.5% for Q3  2018.

Brand Strategy

Xiaomi launched POCO, a new smartphone brand. The POCO smartphone, first released in India on August 22, 2018, is now available in most of Xiao’s international markets and is widely popular among tech enthusiasts.

It also launched a gaming smartphone brand, Black Shark, through one of its investee companies. Black Shark brings together powerful hardware, cutting-edge innovation, refined build and design, polished software, and gamer-centric services to deliver the ultimate gaming experience to users.

On November 19, 2018, Xiaomi and Meitu, Inc. (“Meitu”) entered into a strategic cooperation agreement in relation to, among others, the exclusive global license of the Meitu brand and global license of certain technologies and domain names in relation to all future Meitu branded smartphones under the cooperation and certain smart hardware products.

Through this strategic partnership, Meitu’s image-related algorithms and technologies can help Xiaomi to provide better photographic experiences to its users. At the same time, the strength of Meitu’s brand among females can also help Xiaomi continue to expand and diversify its user base.

Insights of China internet users in lower-tier cities

71 brands exceeded 100 million yuan (US$14.37 million) in GMV in the pre-sale period of Double 11. Among that, 15 brands came from Tmall apparel, i.e. Nike, Adidas, Puma, Lining, Converse, Anta, Fila, Skechers, New Balance, Underarmour, Uniqlo, Eifini, Only, Vero Moda, and Bosideng. The same figure was only 40 in last year’s Double 11. 

14 brands were from consumer electronics, namely, Apple, Huawei, Xiaomi, Vivo, Honor, Haier, Midea, Siemens, Gree, Aux, Hisense, Fotile, Dyson, and Ecovcs.

The story of a Taobao celebrity who sold 300 million yuan products on Double 11

Three brands are from autos, namely, SAIC Volkswagen, Buike, and Lincoln.

17 brands came from makeups, personal care, and maternal & child, namely, Lancome, Estée Lauder, Olay, SK-II, L’Oreal, Pechoin, HomeFacialPro, Innisfree, Elizabeth Arden, Shiseido,  La Mer, Ya-Man, Whoo, Ssulwhasoo, MAC, P&G, and Purcotton.

20 brands were from home decoration, for instance, Linshimuye, KUKA, QUANU, CHEERS, Nabel, Sophia, tata, Shangpin Home Collection, and OPPEIN.

YA-MAN and MOONY were the only two brands in Tmall Global saw GMV hit 100 million yuan in pre-sale.

Consumer electronics: Apple, Huawei, and Haier all in the “100 million yuan club” On November 1st, total pre-sale GMV of Tmall consumer electronics increased by roughly 6 times year-on-year, which remained to be the top platform for smartphone and home appliances.

To be specific, GMV increased by 15 times for smartphones, 10 times for digital 3C, and 4 times for large home appliances.

Notably, Xiaomi’s flagship smartphone MIX3 was sold out at the moment the sale started, Honor’s Magic2 was sold out in the first 5 minutes, and nearly 10 thousand vivoZ3 sold out in 10 minutes.

16 thousand pieces of Haier 10KG tumbling-box washing machine sold out in two days. 20 thousand Dyson supersonic hairdryer and over 50 thousand vacuum cleaner were pre-sold accumulatively.

Apple, Huawei, Haier, Xiaomi, Midea, Siemens, GREE, Dyson, and ECOVACS had already marched to the “100 million yuan club” as of November 2nd. Among them, sales of hot items like iPhone X, iPhone XS Max, Huawei Mate 20 Pro, Apple iPad 128G, and Apple iPad 32G all exceeded 100 million yuan.

How the biggest shopping festival affects China e-commerce apps users growth, engagement, and loyalty

Top pre-sale brands as of November 2nd

Top smartphone brands were Apple, Xiaomi, Vivo, Huawei, honor, Oppo, Meizu, Samsung, Nokia, and Meitu.

Top home appliances brands were Midea, Supor, Joyoung, Ecovacs, Philips, Roborock, A. O. Smith, Flyco, Bear, and Haier.

Among them, hot items were Xiaomi Mijia Vacuum Robot Cleaner, Roborock S51 Smart Robot Vacuum Cleaner, Roborock S50 Smart Vacuum Robot Cleaner, Midea WH2202S induction cooker, A. O. Smith NL1200D Water Purifier, ECOVACS Cleaning Robots, Midea Simple301 electric cooker, ECOVACS Deebot  DT85G Robot Vacuum Cleaner, Midea Simple 101 electric pressure cooker, and OGAWA OG7508S massage sofa.

Tmall Double 11 has become the best timing for launching new consumer electronics products. iPhone XR, Huawei Mate 20 series, Xiaomi MIX3, honor Magic, Dyson Airwrap, and Beats Solo3 Mitch Limited Edition were all in a hurry to catch up with Tmall Double 11.

Apparel: sales of down jacket increased by 90%

It seems that consumers wanted to take advantage of Double 11 to buy everything they might need for a year round.

Over 60 thousand Newbalance565 and 50 thousand MiiOW long underwear suits for couples were pre-sold. Though the snow season had yet to come, 80 thousand snow boots were pre-sold. The sales of down jacket increased by 90%.

The youngest who is in pursuit of street fashion showed extraordinary consumption power. The sales of Edison Chen founded Clot grew by around 60% year-on-year; sales of celebrities Jerry Lee and Wilber Pan co-founded NPC increased by 55% year-on-year; sales of Aape that was under the brand of HK I.T group rose by 45% year-on-year.

Luxury or affordable luxury products were hot. Sales of fur were almost doubled compared with last year’s.  Limited-edition scarves by Burberry were sold out on the first day of pre-sale.

Cosmetics and toiletries: 50 thousand Philips electric toothbrush sold out

Pre-sale GMV of Lancome, olay, Estée Lauder, SK-II, L’Oréal, Sulwhasoo, Elizabeth Arden, and Procter & Gamble were all hit 100 million yuan.

Beauty apparatus generated double sales compared with the previous year. An eyeshadow that was co-branded by domestic brand Perfect Diary and the British Museum sold out at a fast speed of one in every 11.5 seconds. 100 thousand HomeFacialPro’s Hyaluronic Acid Stock Solution – last year’s most trending brand- were sold out.

140 thousand OLAY White Radiance Light Perfecting Essence 50ml sold out in just 4 days of the pre-sale period. Around 20 thousand Givenchy Le Rouge were sold in less than five days. MAC sold over 500 thousand lipsticks in the pre-sale period.

Philips sold 50 thousand electric toothbrushes in the first one minute. Crest sold 6 thousand and 80 thousand 3D White toothpaste in the first one minute and ten days, respectively. Lancome sold 10 thousand Tonique Confort in every minute.

Food & Beverage: sales of 1919 increased by ten times

Pre-sales of KFC increased by 70.4% year-on-year, 5 thousand KFC and Tmall co-branded card were sold out at the moment it launched.  1 million KFC Original Recipe were sold. Three Squirrels new product Trembling Noodle were sold 10 thousand buckets.

1919.cn, an online wine, and spirits shop that has recently received 2 billion yuan investment from Alibaba saw sales of its Tmall flagship store grew by 1,000% year-on-year.

Roughly 80 thousand cars were booked

Autos saw record sales in the pre-sale period. 90 Land Rover at a fixed price of 265.9 thousand yuan was sold out. Buick sold 7,000 cars in a week, over 1,000 consumers in rural areas placed orders through rural Taobao partners. Over 600 high-end Lincoln was booked in 5 days with 300 thousand new customers following its Tmall flagship store.

Users booked a total of 80 thousand cars on Tmall, equal to the entire years’ sales of 30 4S shops.

Alibaba Health: medical beauty services increased by 533% as of October 30th

Online celebrities played a role in the big sales of traditional tonic. The Internet celebrity Li Ziqi’s shop sold 13 thousand jars of Changbaishan honey. For the dietary supplement, BY-HEALTH sold 22 thousand cans of collagen powder, which was bundled with celebrity Cai Xukun-tailored gift.

Inspired by Chinese famous chili sauce Lao Gan Ma’  hoodies that were sold at the New York Fashion Show, several mind-blowing cooperation had sprung up in health care. For example, Durex and Cat’s Kitchen sold 8,000 items of their co-branded popping candy and ultra-thin condom gift box. TongDaoDaShu, a prominent social media influencer, and Omron sold 9 thousand pieces of their co-branded low-frequency massage device.

Fliggy: five-star hotels and business class tickets were the most popular

High-end hotels like Marriott, Hilton, Hyatt, and InterContinental sold 35o thousand night rooms. Airlines also sold 7.5 thousand business class tickets through Fliggy.

Over 200 thousand consumers paid attention to travel products about Hong Kong. Sales of Lao’s hot tourist route was increased by 4 times year-on-year. 16 thousand visas of top destinations Japan, Philippines, and Thailands were booked.

Marriott launched several hundred Double 11-tailored products. Its limited edition pass card for celebrating the coming new year was sold out in two days.

Several online travel agencies united with Tmall Double 11 to release more membership profits like shared membership system and exclusive discounts. For example, Singapore Airlines had shared its membership system with Fliggy on October 28th; the stock was running out in just half an hour after it opened the registration system.

With 180 thousand brands participating this year, which was only 27 brands in the first year of 2009, Tmall Double 11 had become the commercial Olympic for global brands, to a certain extent.

Find out Tmall Double 11 highlights or Double 11 statistics of top retailers & top 50 Tmall stores in 2018

In Q2 2018, Xiaomi reported a high growth of 58.7% in smartphone revenues to 30.5 billion yuan (US$4.61 bn), accounting for roughly two-thirds of the total revenues. Smartphone sales volume reached 32.0 million units, up by 43.9% year-on-year. IoT and lifestyle products grew 104.3% year-on-year in revenues with the global sales volume of smart TVs grew over 350% year-on-year.

Xiaomi achieved 45.2 billion yuan (US$6.82 bn) in revenue, representing a growth of 68.3% year-on-year. Adjusted profit grew 25.1% to 2.1 billion yuan (US$317.1 mn) year-on-year, according to its first results as a public company since its IPO in July.

Smartphone

The smartphones segment recorded approximately 30.5 billion yuan in revenues for Q2 2018, representing year-on-year growth of 58.7%. This growth was driven by an increase in both sales volume and the average selling price (“ASP”). Smartphone sales volume reached 32.0 million units, up 43.9% on a year-on-year basis. Xiaomi is the fastest growing amongst the top five mobile phone companies globally, according to IDC.

In China, Xiaomi’s strategic focus for 2018 is to expand into the high-end smartphone market. Its smartphone ASP in mainland China increased over 25% year-on-year in Q2 2018. Its flagship phone series, Mi 8, which has an average ASP above 2,000 yuan (US$301.98), sold over 1.1 million units in the first month of sales.

IoT and lifestyle products

The IoT and lifestyle products segment grew 104.3% year-on-year in revenue to 10.4 billion yuan (US$1.57 bn) for Q2 2018. Global sales volume of smart TVs grew over 350% year-on-year in this quarter. Xiaomi became the No.1 TV brand in mainland China in Q2 2018. The smart TV was also launched in the India market in February 2018.

Xiaomi also continued to launch innovative IoT products, such as the Mi VR Standalone headset that it co-developed with Oculus, and Mi Band 3, which features a large touchscreen, 50-meter water resistance and battery life of up to 20 days. Mi VR Standalone headset was named one of the best inventions of 2017 by Time Magazine.

As of the end of Q2 2018, Xiaomi had about 115 million connected Xiaomi IoT devices, excluding smartphones and laptops, an increase of 15% quarter-on-quarter. There are close to 1.7 million users who own more than five Xiaomi IoT devices, excluding smartphones and laptops, increased by 19% quarter-on-quarter.

Internet services

Revenue from the internet services segment grew 63.6% year-on-year to 4.0 billion yuan (US$603.95 mn) in Q2 2018, driven primarily by increasing monetization in mainland China. Advertising revenue grew 69.6% year-on-year to 2.5 billion yuan (US$377.47 mn) driven by continued optimization of its recommendation algorithm and increased advertising spending from customers.

Revenue from internet value-added services also grew 54.1% year-on-year to 1.5 billion yuan (US$226.48 mn). Within internet value-added services, revenue from gaming accounted for 703.9 million yuan (US$106.28 mn), growing 25.5% year-on-year.

Monthly active users (“MAU”) of MIUI increased 41.7% from 146.0 million in June 2017 to 206.9 million in June 2018, driven by increasing smartphone sales volume and user adoption.

Average revenue per user (“ARPU”) this quarter increased 15.4% year-on-year to 19.1 yuan (US$2.88). Up until the end of Q2 2018, the internet services revenue was primarily generated in mainland China.

Artificial intelligence (“AI”) technology is a core part of Xiaomi’s strategy. Its AI assistant (” 小愛同學 “) won the “2018 Leading Scientific and Technological Achievement Award — Cool Technologies” and “2018 Leading Scientific and Technological Achievement Award — New Product” awards at the China International Big Data Industry Expo held in May 2018.

As of July 2018, its AI assistant (“小愛同學”) MAU exceeded 30 million. The AI speaker has accumulated over 2 billion activations within the first year of its launch.

To promote the development of the AI industry, in June 2018, Xiaomi announced that its Mobile AI Compute Engine (“MACE”), a prediction framework for a deep learning model optimized for mobile devices, would become a fully open source platform.

Using MACE, developers can more quickly and efficiently develop AI applications on mobile devices and significantly enhance the user experience of these applications. At present, application scenarios covered by MACE include scene recognition, image super-resolution, image stylization processing, intelligent speech, intelligent translation, etc.

International markets

Xiaomi’s international revenue grew 151.7% year-on-year to 16.4 billion yuan (US$2.48 bn), accounting for 36.3% of its total revenue.

Its smartphones continued to experience rapid growth in the Indian market and ranked first in terms of market share by shipment in Q2 2018, according to Canalys.

In Indonesia, Xiaomi also recorded impressive growth and ranked No.2 in terms of smartphone shipments in Q2 2018. In the Western Europe market, Xiaomi expanded into France and Italy in May 2018. Smartphone shipments in Western Europe grew over 2700% year-on-year. As of Q2 2018, Xiaomi was ranked top five in the smartphone markets in 25 countries and regions, according to Canalys.

Expansion of offline channels

As of June 30, 2018, Xiaomi Corporation had more than 400 Mi Homes in mainland China, mainly in first- and second-tier cities. To penetrate more rural parts of China, by the end of Q2 2018, Xiaomi had over 360 authorized stores and also had built a direct supply network covering more than 37,000 locations, spread across over 30 provinces, over 300 cities and over 2,500 towns.

In India, its offline smartphone sales achieved a market share of over 20% and ranked No 1. in 8 cities in Q2 2018, according to GFK. Its overall operation remained highly efficient with an operating expense ratio of 8.8% for Q2 2018.

Top smartphone, technology brands in China 2018

Chinese smartphone brand Xiaomi, which is making debut in Europe, earned 4.4% of sales market share in five major European markets in Q1 2018, ranking No.4, according to latest smartphone OS data from Kantar Worldpanel ComTech.

The top three brands in the big five European markets, Samsung, Apple, and Huawei, made up 71% of smartphone sales in the latest quarter, but it is still very impressive for the newcomer Xiaomi to quietly take the fourth spot. Its growth has come predominantly from just two markets, Spain and Italy. It is also worth mentioning that these were also the markets that another Chinese brand Huawei had conquered first in Europe.

According to media reports, Xiaomi is scheduled to go public in Hong Kong this July and expected to raise as much as US$10 billion in the IPO. It plans to use 30% of the proceeds to fund for its overseas expansion, said its prospectus.

Dominic Sunnebo, Global Director for Kantar Worldpanel ComTech, comments: “Despite being a household name in China and India, Xiaomi has turned its attention to Europe late, and it has quickly proven to be a worthy opponent.

In Asia, Xiaomi’s business model has been focused online and while this remains an important factor in its European model, it is local partnerships with key players like Media Markt, Media World and Carrefour that has allowed it to accelerate sales so quickly.”

On Xiaomi’s home turf of China, it is also the best performing brand in Q1: in urban China, its market share grew 7 percentage points from a year ago to reach 17.9%.

Kantar Worldpanel ComTech carries out monthly panel surveys among Chinese urban mobile phone users to monitor the market share changes of various brands. In China, the panel size is 22,000.

Panelists were recruited from tier-1 to 5 cities and each year more than 260,000 surveys were conducted. The nature of the research methodology means it can cover the influence of smartphones sold in other countries ended up in China and avoid the confusion caused by unsold phones stocked at warehouses of distributors.

In Q1, urban Chinese consumers’ loyalty towards smartphone brands continued to decline: it had slid to 26.6 in the three months from 28.3 a year ago. People are considering more features of a phone when buying a new one – it reached a record high of 4.5 per person, compared with only 3 in the same period of 2015. Among them, “reliability” has overtaken “screen size” and “quality of camera” to become the highest priority for Chinese consumers.

In fact, this trend will be music to Apple’s ears, because our survey has shown that Apple enjoys the highest satisfaction rating among Chinese consumers for “reliability”. For Android brands, Huawei is the highest in this aspect.

This could partly explain why iPhone X is not only Apple’s best-selling model in China but also the best-selling model among all smartphone models in Q1 2018.  This has fuelled iPhone’s market share to 22.1%.

Back to Europe, with Huawei’s entry to the US market effectively blocked by the government, the business has increased the focus and resources it is aiming at Europe. Despite the well-reviewed Huawei P20 flagship not being released until April, the results are already showing.

Huawei has managed to significantly increase its presence across the big five European markets and it now holds almost a fifth of sales in the three months to March 2018 – 19.0%, up from 14.4% a year earlier.

“Most encouraging for Huawei are the signs that progress is finally being made in Great Britain, with share rising to 5.9% – it needs to conquer this market if it’s going to realize its ambition of becoming a premium choice for consumers,” Dominic said.

In the United States, Apple and Samsung have managed to eke out year-on-year share gains, up 0.1 of one percentage point and 1.4 percentage points respectively. Google has achieved its highest ever quarterly sales share of 3.4%, up from 1.7% a year earlier, thanks to the success of its Pixel line. ZTE, also under pressure from the US government, saw its sales share fall to 2.5% in the latest quarter.

In the US and the European top five markets, iPhone 8 sold in marginally higher numbers than the flagship iPhone X, indicating that as early iPhone X demand is fulfilled, the price difference between the two devices is playing a notable role in consumers’ choices.

Find out here what Xiaomi reveals in its IPO filing.

This post was originally published on Kantar.com.

Xiaomi filed an initial public offering (IPO) in Hong Kong on May 3, 2018, becoming the first technology corporation to use Hong Kong’s new rule, i.e. dual-class shares, for going public.

The filing is expected to raise at least US$ 10 billion and value the company at between US$100-120 billion, making it the largest IPO since Alibaba in New York.

According to the IPO filing, Xiaomi’s revenue grew 167.5% from 68.43 billion yuan in 2016 to 114.64 billion yuan in 2017.

Xiaomi’s operating profits reached 12.22 billion yuan in 2017, an increase of 222.7% year-on-year. Xiaomi made a net loss of 43.9 billion yuan in 2017, down from 0.49 billion yuan profit a year earlier.

In 2017, Xiaomi derived nearly 70.3% of its revenue from smartphones, which was 80.56 billion yuan. Revenue derived from IOT (internet of things) and lifestyle products reached 23.45 billion yuan, accounting for 20.5% of the total. Revenue derived from internet service was 9.9 billion yuan, accounting for 8.6% of the total.

In terms of sales volume and average selling prices of Xiaomi smartphone, Xiaomi sold 66.546, 55.419, and 91.41 million smartphones respectively from 2015 to 2017. The average selling price of a Xiaomi smartphone was 807.2 yuan, 879.9 yuan, and 881.3 yuan respectively from 2015 to 2017.

As of 31 March 2018, Xiaomi has developed 38 10-million-MAU and 18 50-million-MAU mobile apps including Xiaomi App Store, Xiaomi Browser, Xiaomi Music, and Xiaomi Videos. On average, a Xiaomi user spends about 4.5 hours on the smartphone.

Check out China mobile app user insights 2018

China smartphone sales reached 455.9 million units in 2017, an increase of 1.1%, according to data from Analysys. It forecasts the total smartphone sales will decrease to 437.99 million units in 2020.

China smartphone market declined 15.7% year-over-year (YoY) in Q4 2017 and 4.9% for the whole of 2017 according to IDC.

REPORT Digital screens wider and deeper influence in China

China smartphone market declined 15.7% year-over-year (YoY) in Q4 2017 and 4.9% for the whole of 2017 according to IDC.

Apple’s share increased YoY and QoQ in Q4 2017. Although the iPhone X was available in short supply initially at launch in early November 2017, the supply constraints for this model eased towards the end of the quarter. Apple’s ASP increased by 23.9% YoY in 2017Q4 largely due to the shipments of the iPhone X. Apple alone made up 85% of the overall shipments in >US$600 premium segment.

Huawei appears on the radar to compete with Apple in the >US$600 premium segment. Huawei grew in Q4 2017 largely due to the strong shipment for both its Honor and Huawei branded phones in the US$600 premium segment still remains low, it has grown from making up 2% of the shipments in this segment in 2016Q4 to 8% in Q4 2017. With its Mate 10 and Mate 10 Pro series being quite popular, Huawei will be a potential competitor to Apple in the >US$600 premium segment in China.

With Samsung’s continued troubles in the China market, Huawei has successfully managed to break into the high-end Android vendor space, although price points of the flagship Huawei phones are carefully priced lower than the iPhone prices at launch.

OPPO and vivo are focusing more on the mid-range segment, with a higher share of their portfolio focused on the mid-range segment compared to a year ago. The reduction in the number of OPPO and vivo models in the low-end segment also contributed to their YoY decline in Q4 2017.

While focusing more on the mid-range segment has hurt its overall shipment growth, OPPO and Vivo’s overall ASPs have increased YoY. In terms of revenue, OPPO ranked second to Apple and was above Huawei. vivo follows at fourth place. Thus, while OPPO’s shipments may have declined, it is growing in terms of its overall revenue.

China smartphone users: iPhone vs Android

The Big Picture of Mobility: 2017 Deloitte China Mobile Consumer Survey is an online survey conducted by Deloitte China TMT industry during the past five years. The survey focuses on consumer behaviors, trends, and opinions regarding a broad range of wireless and mobility products and services.  

Aiming to explore the level of applications, devices and support, this survey covers several recent hot topics such as the content consumption, mobile payment, digital devices, data security, biometrics and internet of things (IoT) in order to reveal the key trends that drive the mobile markets and to provide suggestions for relevant enterprises.

Smartphones will still remain dominant

• The mobile phone has surpassed tablets and other digital devices in ownership rate, and vastly exceeded emerging digital products represented by smartwatch and smart bracelet in this regard.
• The smartphone’s success in the future is likely to be the introduction of an array of innovations that are largely invisible.

Machine Learning (ML) will be fitted as standard in phones

• AI chips will be fitted as standard in smartphones, and the amount of machine learning-based applications is expected to steadily increase.
• With smartphones becoming an increasingly viable deployment option for ML, the spectrum of potential scenarios is expanding.

Fingerprint authentication marks the password-free era

• Fingerprint authentication has become a standard configuration of smartphones, exceeding password as the main way of unblocking smartphones.
• At the moment, nearly seventy percent of smartphones are with fingerprint authentication function. Full coverage will be achieved in the future and more usage scenarios of fingerprint authentication will appear.

Consumers attach more importance to the phone storage space

• The consideration of necessity and storage space will become major factors that affect the number of Apps installed. In view of this, App differentiation is likely to be the new ground for the development of mobile phone applications.

The self-introspection of mobile phone addicts should arouse attention 

• Consumers are trying to limit their phone usage to prevent live and work from being occupied, while smartphones utilization will continue to rise given the increasingly assembled function embedded in smartphones.

Physical stores and online stores will keep the back-and-forth relationship

• The physical stores are showing signs of revival since the consumers focus more on the product experience, brand, and innovation etc.
• Online stores are losing price advantages and will experience a slowing growth in the future.

The outlook of wearable devices and IoT devices are still unclear

• Due to the price issue as well as low intelligence degree, IoT equipment will keep low ownership rate in short time and will mainly focus on entertainment products.

Mobile video will encourage the data traffic consumption

• The video contents are popular and the demand of consumers for data traffic will further increase. Hence the core position of data traffic services in the whole business of operators will be further deepened.

Personal information leakage becomes the new normal 

• Driven by economic interest, enterprises collect and reveal consumer information, which causes the frequent leakage of personal information and arouses consumer attention on such behavior of enterprises.

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Leading smartphone brands have tightened their grip of urban China market. In the three months ending October 2017, the top five brands – Huawei (including sub-brand Honor), Xiaomi, Apple, Vivo and OPPO – made up 91% of smartphone sales in urban China, compared to 79% a year earlier, according to the latest smartphone OS data from Kantar Worldpanel ComTech.

China, a market once overrun with new challengers, is maturing.

“Chinese challenger brands like Meizu, LeTV, Coolpad, ZTE, and Lenovo were once on the same trajectory as like of Xiaomi, but any momentum they once had has abruptly stopped, with many struggling to get past a 1% share,” said Dominic Sunnebo, Global Business Unit Director for Kantar Worldpanel ComTech. “Samsung’s performance in China continues to deteriorate, with its share now down to just 2.2% of that market.”

Kantar Worldpanel ComTech carries out monthly panel surveys among Chinese urban mobile phone users to monitor the market share changes of various brands. In China, the panel size is 22,000. Panellists were recruited from tier-1 to 5 cities and each year more than 260,000 surveys were conducted. The nature of the research methodology means it can cover the influence of smartphones sold in other countries ended up in China and avoid the confusion caused by unsold phones stocked at warehouses of distributors.

Digging deeper into the data, we can see that Xiaomi and Honor both realized significant growth in August – October period. Xiaomi’s sales market share jumped to 20.1%, 1 percentage point higher than in the May – July circle. However, due to its previously lacklustre performance, currently only 13.8% of all urban smartphone users are using Xiaomi, 2.1 percentage points lower than a year ago.

Honor’s share was 11.7% in August – October, also 1 percentage point higher than in May – July circle. Among all urban smartphone users, 9.8% are using Honor, 1.3 percentage points higher than a year ago.

Among the top 20 best-selling models during August – October period, eight are from Xiaomi or Honor.

Even though “price” is the biggest advantage of both brands when people making their purchasing decision, Xiaomi and Honor have both managed to achieve higher selling prices. Between August and October, the average selling price of Xiaomi models is 1,640.32 yuan, 321.96 yuan higher than a year ago; that of Honor phones is 2,136.66 yuan, 506.53 yuan higher than a year ago.

It’s a bittersweet period for Apple. Urban China remained a bright spot for Apple, with its share edging up 0.5 percentage point in the latest three months to reach 17.4%.

But globally, iOS share fell in key markets, making clear the impact of the flagship iPhone X not being available to buy in the month of October.

Dominic said: “It was somewhat inevitable that Apple would see volume share fall once we had a full comparative month of sales taking into account the non-flagship iPhone 8 vs. the flagship iPhone 7 from 2016. This decrease is significant and puts pressure on the iPhone X to perform.

“Considering the complete overhaul that the iPhone X offers, consumers may be postponing their purchase decisions until they can test the iPhone X and decide whether the higher price, compared to the iPhone 8, is worth the premium to them,” he said.

He added: “As of October 2017, 35.3% of Apple’s installed base customers across Europe and the United States had owned their iPhones for more than two years – up from 30.1% a year earlier and signifying considerable pent-up demand within Apple’s base. In pure value terms, it is likely the iPhone X average selling price will more than make up for a dip in sales of older iPhone models.”

China smartphone market in Q3 2017; 4 out of 10 using Huawei or iPhone

More than three-quarters (76.3%) of smartphone users (461.4 million) in China will use phone payment for goods and services at the point of sale (POS) in 2017 according to eMarketer, raising its projections by more than 86.0%.

eMarketer estimates by 2021, 79.3% of smartphone users will be tapping, scanning and swiping at the POS, comparing with 31% in the US.

Over 90% of Alibaba’s Double 11 transactions are from mobile in 2017.

Chinese consumers spent US$5.5 trillion via mobile payment platforms in 2016, about 50 times more than their American counterparts. By the end of 2016, Tencent alone saw its active mobile payment accounts exceed 600 million users per month.

The average payment transactions also exceed 600 million transactions per day. The cashless lifestyle is now becoming a reality in China. REPORT Mobile Payment Usage in China 2017 »