Xiaomi Corp is popularly know as the Chinese smartphone maker that challenged Apple Inc. with sleek designs and low prices. However it is now going against another industry leader, not in the mobile phone market but UAV space. The company is planning to introduce its first drone at a price more than 20 percent below a comparable product from market leader SZ DJI Technology Co.
The drone, made by FIMI Technology, will record high-resolution 4K video and cost about $610 and that compares with $799 for the Phantom 3 4K device on DJI’s website. Xiaomi shot to the top of China’s smartphone market by offering inexpensive devices packed with premium components, undercutting established rivals including Apple and Samsung Electronics Co. The price of its first entry into the nascent drone market suggests a similar strategy will be used to win customers for unmanned flying vehicles as smartphone growth slows.
According to Li Zhuoqi, a marketing director at Xiaomi, the company plans to keep making good-quality products while becoming more competitive with price points. Without disclosing a price or sales estimates, a very thin margin has been set for drones but the product line is set to be profitable.
Xiaomi is joining the crowd of upstarts in the drone market, hoping to take share from Shenzhen-based DJI, the leading seller of consumer devices. Today drones are still largely novelty items, with sales expected to reach almost 4 million this year and forecast to rise to 16 million by 2020.
Newer players are targeting the lower-tiered part of the market, such as Syma Toys and Hubsan. Xiaomi is betting that it can capture a part of the consumer drone market that Grand View Research expects will reach reach $4.19 billion by 2024.
Beijing-based Xiaomi last week said it will unveil its first drone on May 25, without detailing an expected price or specifications. The company has already begun to expect slowing growth in the Chinese smartphone market as it matures.
After capturing smartphone customers with its online flash sales model that sold inexpensive smartphones directly to consumers, bypassing retail outlets and wireless carriers, Xiaomi has struggled as others copied the model. Xiaomi missed its target of selling 100 million devices in 2015 and was overtaken by Huawei Technologies Co.
Xiaomi, which was valued at $45 billion after a 2014 funding round, has no plans for an initial public offering and doesn’t need to raise money, Chew said. DJI’s valuation hit$10 billion last year, according to CB Insights.
As seen on Bloomberg