A Xiaomi drone (Photo/Courtesy of Xiaomi)
Move may help upstart seize share in booming industry: experts
Chinese smartphone maker Xiaomi Corp officially entered the consumer drone market on Wednesday, introducing its first camera drone, as sales of smartphones in China have slowed in recent years.
Xiaomi CEO Lei Jun launched the drone through a live video online and called the move "historic," saying it will make camera drones affordable and fun to use for most consumers.
With the Xiaomi drone, Xiaomi, which is known for competing with Apple Inc and Samsung by offering sleekly designed smartphones at lower prices, is set to challenge Shenzhen-based DJI Technology Co, which dominates the Chinese market, analysts said.
In a reply DJI sent to the Global Times on late Wednesday, the company said it welcomes Xiaomi to the world of unmanned flight.
We have spent 10 years and millions of flight hours relentlessly innovating and improving our aerial platforms, so we know how challenging it is to create a new drone that is fun, safe and reliable, DJI said.
Lei didn't attempt to conceal that strategy in the live video, saying, "Why has the Xiaomi drone been so highly anticipated? Because people know it's going to be of high quality and cost-effective."
The Xiaomi drone comes in two versions: One with a camera that shoots high-resolution 4K videos, which is priced at 2,999 yuan ($457) and one that can shoot HD 1080p videos, which is priced at 2,499 yuan.
Even the higher-priced model is significantly cheaper than the 8,999 yuan DJI charges for its most basic model, the Phantom 4.
"These prices will be the lowest among comparable products," said Lei, noting the drone will have a slew of new design features and technologies, including a battery that can provide enough power for the drone to fly 27 minutes without recharging.
Xiaomi's move comes as sales of smartphones are slowing in the country.
In 2013, China's year-on-year shipment growth was 62.5 percent; by 2015, it had dropped to 2.5 percent, according to data released on January 28 by US-based in-formation technology consultancy International Data Corp (IDC).
Xiaomi is also facing intensifying competition from another Chinese telecommunication giant Huawei Technologies Co.
In 2015, Xiaomi claimed the top position in smartphone sales in China, selling 67.5 million smartphones and capturing a 15 percent share of the Chinese market, the IDC data showed. That was followed by Huawei, which sold 62.2 million units in 2015, IDC said.
But Xiaomi fell short of its target of selling 100 million smartphones in 2015, according to media reports.
In the first quarter of 2016, Xiaomi, which sold 15.05 million smartphones worldwide, was overtaken by Huawei, which sold 28.86 million units in the quarter, according to data from IT research and advisory company Gartner Inc released on May 19.
Xiaomi was also pushed out of the top five best selling smartphone brands worldwide in the first quarter of 2016, replaced by Chinese smartphone maker Vivo, according to separate data from IDC that was released on April 27.
"With its smartphone business slowing down, Huawei is clearly looking at new areas to expand to maintain revenue," said Zhao Yang, an analyst at the Beijing-based CCID Consulting firm.
And the drone market, which is still quite new and offers tremendous opportunities, is "a natural choice for Xiaomi," Zhao told the Global times on Wednesday.
The camera drone market in China has soared in recent years with rapid growth expected in the next few years, US financial network CNBC reported on February 18, citing an IDC report. The report estimated that camera drone shipments in the Chinese mainland will hit 3 million units by 2019, a significant increase from its forecast of 390,000 shipments in 2016, according to CNBC.
"There is no doubt that the Chinese drone market will grow rapidly, because the device has such diverse commercial and personal demand," said Zhao. "And that is what Xiaomi is after."
But its move into the drone market "won't be a smooth one," rather, it faces great challenges from existing competitors, She Xiaolin, an industry analyst with the market research firm Analysys International, told the Global Times on Wednesday.
"DJI will be the biggest competitor," She said, noting that DJI has established a dominant position in the Chinese market and enjoys a "very good" reputation among customers.
"More competition will spur every company in this industry to improve its technology," DJI said, noting the company will continue to strive to be the market leader.
DJI had a 68.5 percent share in the Chinese camera drone market in the third quarter of 2015, according the CNBC report.
"Having been relatively longer in the market, DJI's research and development capability in drone technologies may be stronger," She said. "And its reputation has been positive among users, which is usually a very connected group of hardcore fans."
Xiaomi is also likely to face other competitors, with more Internet companies and traditional camera manufacturers such as GoPro and Sony likely to jump on the drone bandwagon, IDC said.
