Xiaomi's smartphone sales drop, but they aren't worried

Xiaomi blew everyone's mind last month when they announced their Mi MIX phone, which whether you like it or not, brought some innovation and courage (not the "let's remove the headphone jack" courage) to the market.

However, the company, according to the recent report from the research firm IDC, is struggling with smartphone sales. Last year, they missed their global smartphone target by 12%, and this year's Q3 sales in China, which is their primary market, have dropped by 45%.

We asked Anshel Sag, Associate Analyst at Moor Insights & Strategy, what caused the drop in Xiaomi's smartphone sales.

Xiaomi has been facing stiff competition in China from makers like Huawei, LeEco, Oppo and Vivo. They have recently expanded into markets like India, but they need to be present in the European and North American markets if they want to protect themselves from the cutthroat nature of the Chinese smartphone market. They need to diversify, and fast. That's why you're seeing Xiaomi express interest in the American market, it's just taken them too long. Phones like the Mi MIX would absolutely raise the company's profile globally if they could launch it in the US.

Although their smartphone sales dropped, Xiaomi doesn't seem to worry. Hugo Barra, Xiaomi's global vice-president, told Reuters that their "business model was not based on money made from handset sales per se." He went on to explain that their goal is to secure revenue streams over many years.

Xiaomi also manufactures a range of home appliances that positively effect their earnings.

However, if they want to stay competitive in the smartphone market, they will have to start exploring new markets. Hugo Barra announced they will make their debut at CES in Las Vegas in January, where they will launch a new product.