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Xiaomi Seeking New Growth Engines, Unveils Home Cleaning Product

| Sep 02, 2016 10:16 PM EDT

Tech companies are investing into smart home equipment as they see the potential benefits of Internet of Things to consumers and businesses.

Xiaomi Corp is looking for new markets and revenue source as it launched a smart vacuum cleaner on Wednesday, Aug. 31, amid a decline in its phone shipments and a tough challenge from its competitors, China Daily reported.

Although some analysts said that the rising incomes of Chinese consumers have made them less conscious of price, the smart vacuum cleaner, which costs 1,699 yuan ($254) shows that Xiaomi still adheres to its strategy of providing consumers with affordable electronic products.

Xiaomi expects its new cleaner to compete with iRobot Corp's Roomba 880, which is priced at around $500. Xiaomi's cleaner is equipped with 12 sensors and a central processing unit. It can also measure the size of rooms and plan the best routes to do the cleaning.

According to Liu De, co-founder and vice-president of Xiaomi, the home cleaning product was designed to help white-collar workers and middle-class families and make housework more fun and interesting.

The introduction of the new product is part of the company's broad plans to present it as the Muji in the country's tech sector. The concept was taken from Muji, a Japanese retail company that sells a wide selection of household and consumer products.

In an attempt to build an ecosystem that can be connected to the Internet, Xiaomi has invested in more than 50 smart hardware manufacturers in recent years. It has launched various products that included air purifiers, drones and rice cookers.

However, it would be difficult to offset the decrease in its revenue despite its expansion into smart-home equipment, James Yan, a Beijing-based analyst at Counterpoint Technology Market Research, said.

Shipments of Xiaomi's smartphones in China dropped 38 percent in the second quarter this year, putting them in the fourth spot, much lower than its domestic rivals Huawei Technologies Co Ltd and Oppo Electronics Corp.

"Xiaomi derives most of its revenue from smartphones. The market for drones, virtual reality devices and other smart-home equipment is still in the infant stage and cannot help Xiaomi boost its revenue too much," Yan said.

Experts, however, said that Xiaomi was right in expanding into the service robot market as a surge in the demand is expected with the country's aging population and the mounting labor costs. The government said in April that more than 30 billion yuan ($4.6 billion) worth of service robots will be sold by 2020.

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