Xiaomi Pricing Its First Drone at $610 in Challenge to DJI

  • Drone with 4K video said to be priced at about 4,000 yuan
  • Company has already announced plans to unveil drones

Maintaining Momentum: a Look at the Future of Xiaomi

Xiaomi Corp., the Chinese smartphone maker that challenged Apple Inc. with sleek designs and low prices, is planning to introduce its first drone at a price more than 20 percent below a comparable product from market leader SZ DJI Technology Co., according to a person with direct knowledge of the matter.

The drone, made by FIMI Technology, will record high-resolution 4K video and cost about 4,000 yuan ($610), the person said, asking not to be identified as the details are private. That compares with $799 for the Phantom 3 4K device on DJI’s website.

Xiaomi shot to the top of China’s smartphone market by offering inexpensive devices packed with premium components, undercutting established rivals including Apple and Samsung Electronics Co. The price of its first entry into the nascent drone market suggests a similar strategy will be used to win customers for unmanned flying vehicles as smartphone growth slows.

“While making good-quality products, the price point has to be competitive as well,” Li Zhuoqi, a marketing director for Xiaomi, said without disclosing a price or sales estimates. “We have set a very thin margin for drones but the product line is set to be profitable.”

Xiaomi is joining the crowd of upstarts in the drone market, hoping to take share from Shenzhen-based DJI, the leading seller of consumer devices. Today drones are still largely novelty items, with sales expected to reach almost 4 million this year and forecast to rise to 16 million by 2020.

Newer players are targeting the lower-tiered part of the market, such as Syma Toys and Hubsan. Xiaomi is betting that it can capture a part of the consumer drone market that Grand View Research expects will reach reach $4.19 billion by 2024.

Beijing-based Xiaomi last week said it will unveil its first drone on May 25, without detailing an expected price or specifications.

Xiaomi has already begun to expect slowing growth in the Chinese smartphone market as it matures.

“The natural ceiling for the market is about 500 million phones,” Chief Financial Officer Shou Zi Chew said in an interview with Bloomberg Television earlier this month. Smartphone shipments in China reached a record 438 million units last year, according to Strategy Analytics.

After capturing smartphone customers with its online flash sales model that sold inexpensive smartphones directly to consumers, bypassing retail outlets and wireless carriers, Xiaomi has struggled as others copied the model. Xiaomi missed its target of selling 100 million devices in 2015 and was overtaken by Huawei Technologies Co.

Xiaomi, which was valued at $45 billion after a 2014 funding round, has no plans for an initial public offering and doesn’t need to raise money, Chew said. DJI’s valuation hit $10 billion last year, according to CB Insights.

— With assistance by Selina Wang

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