Hugo Barra: Xiaomi’s smartphone sales drop in China wouldn’t impact its long-term profit growth
During the course of a recent interview with Reuters, Xiaomi's Hugo Barra - the company's global VP and former Android VP - said that the company's long-term profit growth will not be affected by the decline in its smartphone sales in China.
Barra said that the Xiaomi business model is about selling smartphones only to the extent that the company can, later on, generate recurring service revenue on the smartphones sold by it.
In an explanation of his comments, which came against the backdrop of Xiaomi's increasingly lackluster smartphones sales in China, Barra said that 10 billion smartphones can be sold by Xiaomi without making a single time in profits.
Barra further elaborated that the reason why Xiaomi is basically selling its smartphones "without making any money" is that the eventual objective of the company is to ensure "recurring revenue streams over many years" instead of near-term margins on hardware.
Barra also highlighted the fact that, along with smartphones, Xiaomi is progressively focusing more on other categories, including sale of smart home devices, and revenue generated from software and services.