iPhone 6S and 6S Plus (Photo : Reuters/Beck Diefenbach)
Smartphone sales in China have gone slower, with Apple grappling with the slow economy, and Xiaomi struggling to stand out amidst intense competition.
On Tuesday, Apple reported the slowest increase in iPhone shipments with the weakening of Chinese market. That slowdown in the world's second biggest economy is threatening to cripple consumption across the country.
China's most important start-up Xiaomi, with a value of $45 billion, is under threat, after it missed hitting the target of $1 billion in handset sales and Internet service revenues in 2015.
As the country's economy grows at its slowest in a quarter of a century, China's once booming handset market has gone saturated. For vendors whose products have gone commoditized, and make little to no profit at all, that does not mean the years of easy growth are buried in the past. What it means is to keep struggling to keep their heads above the water.
Last year, IDC estimated that the smartphone market grew 2 percent. From 2011 to 2013, the market on average more than doubled its size every year.
As per an internal document reviewed by Reuters, Xiaomi's internet service revenues increased 150 percent to 3.71 billion yuan ($563.94 million) from 1.48 billion yuan a year earlier. A spokeswoman from the company declined to comment its revenue for 2015.
The company has grown rapidly since it began in 2010, but Xiaomi's valuation has recently been questioned as it has battled to maintain its early growth increase.
Xiaomi missed its global shipment target by 12 percent, selling 70 million smartphones last year, when domestic rivals such as Huawei and Lenovo countered the homes with the same Internet-only device sales campaigns.
According to a tech analyst from Stratechery Ben Thompson, Xiaomi has been valued as a company providing a commodity handset, missing their services revenue goal by such a significant margin more than missing their handset target. Xiaomi needs to grow its revenue fast to prove its critics that they are wrong.
