Why Xiaomi Has the Edge over Apple in Wearables Segment in China
Xiaomi’s Mi bands have seen robust growth
Xiaomi has become the second-largest player in the wearables market (WEAR) with a near 100% increase in its shipments in 4Q16, according to IDC. While Xiaomi is well known for its smartphones, it is also a major player in the fitness tracker market.
Xiaomi released its first Mi band back in July 2014. The band comes with basic features like activity tracking and sleep tracking. The slightly more expensive version of the band comes with non-continuous heart rate measurement. The reason behind Xiaomi’s success in China is its very low prices and a long battery life (over 30 days).
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Xiaomi remains the wearables leader in China
Apple’s total revenue coming from the Greater China region fell by 12% on a year-over-year basis in fiscal 1Q17. Apple’s smartwatches face stiff competition in China, where Xiaomi has an upper hand. Xiaomi shipped a total of 5.2 million units in 4Q16. A good chunk of those sales came from China, though the company has also penetrated India and Indonesia in recent quarters. The Mi band is much cheaper than similar products. It can do the same step tracking and sleep quantifying as Fitbit and Jawbone for a fraction of their price.
Despite a drastic drop in market share in the wearables market in 2016, Xiaomi still has a decent lead in the segment, well above Apple (AAPL). While Xiaomi has a 30% a share in the Chinese wearables market, Apple has a paltry 4% share. However, Xiaomi is yet to see significant penetration in markets outside China. The Mi band looks underwhelming compared to products from other players. It doesn’t have a screen, so it can’t display notifications and can’t connect to third-party apps.
Xiaomi seems to be having a more significant impact on the wearables market with its new smart shoe. Intel (INTC) is also creating its Curie module, which can count steps, calories, and distance traveled.