Xiaomi Is Looking To Make Five Times More Money

After conquering the budget smartphone segment in India, the Chinese smartphone manufacturer, Xiaomi, is ready to enter the burgeoning arena of internet services. The company’s already launched a lot of these services in India — like Mi Pay, Mi Videos, Mi Music and Mi Drop — but now, it’s looking to monetize those business models.

The recent Rs. 35 billion infusions into the Xiaomi’s India operations is going to be used to build more on the digital content and services business according to Xiaomi India’s managing director, Manu Kumar Jain.

Within the first quarter of 2018, two new players — Spotify and YouTube Music — entered India’s over-the-top (OTT) services space. Services like Hotstar and Netflix have also been experimenting their subscription option to optimize them for the Indian consumer.

Even the digital wallet market is getting more competitive as Google, Amazon, PayTM, PhonePe and JioMoney are launching partnerships and offers to reel in more consumers.

The Indian over-the-top (OTT) streaming services is estimated to grow to $5 billion by 2023 and the current players have only touched the tip of the iceberg according to the Boston Consulting Group (BCG). If Xiaomi’s smartphone pricing strategy is anything to go by, then its not afraid to undercut the competition.

From smartphones to internet services

Most of Xiaomi’s revenue is derived from the sale of its smartphones. In fact, 65.1% of the company come from smartphones according to the company’s annual report. But, the gross profit margin on those devices fell from 8.8% in FY17 to 6.2% in FY18.

In the same period, the gross profit margin of internet services increased from 60.2% to 64.4%. And, though internet services only account for 9.1% of Xiaomi’s total revenue, the segment has shown a year-on-year growth on 61.2%.

Things as they stand

Currently, Mi Music and Mi Video has over 40 million users per month in India. And, Xaomi’s already started monetizing those services by introducing a subscription plan for the former.

Xiaomi’s file transfer service, Mi Drop has crossed over 100 million downloads in Google’s Play Store after being launched in January this year. And, it’s also reportedly at the helm of introducing Mi Credit, an instant loan platform, in India after it unveiling Mi Pay, its Unified Payments Interface (UPI) application last month.―Business Insider