As Xiaomi, one of China's biggest smartphone makers, struggles with slumping sales, a new product launch on Wednesday may not be the required panacea.
The company, which disrupted the mainland tech industry with its line of well-built, cheap smartphones, is expected to reveal the Redmi Pro—the latest model in its budget brand of Android phones—at a Beijing press conference, as confirmed by CEO Lei Jun's recent Weibo post.
So far, however, analysts have greeted the anticipated launch with caution.
Heralded as the world's most valuable tech start-up in 2014, Xiaomi currently faces slumping smartphone sales and diminishing revenues.
Second quarter shipments fell around 20 percent on-year, Canalys reported on Tuesday. In 2015, global shipments grew 22.8 percent on-year, paling compared to the near-triple digit percentage growth of previous years, according to IDC, while 2015 revenues stood at $12.5 billion, relatively flat on 2014's $12 billion.
Lackluster results like these have sparked a wave of analysis questioning Xiaomi's strategy. This month alone saw Forbes publish an article entitled "The Dramatic Rise (And Fall) Of Xiaomi," while Fortune magazine ran an in-depth piece called "Xiaomi What You've Got." Both reports branded the firm's poor performance a reality check following the massive hype that followed its first smartphone sold in 2011.
"I don't think this one single model [the Redmi Pro] will be significant enough to help combat the slowdown in shipments," Tay Xiaohan, senior market analyst at IDC, cautioned.
"Students who used to purchase a Xiaomi phone may move on to the other more expensive brands when they start to work and can afford to spend more on a phone," she added, noting the high-end products available from other major Chinese vendors such as Huawei, OPPO and Vivo.
Xiaomi's focus on low-cost phones proved helpful when it first started expanding into emerging markets but Tay warned that the price factor wasn't enough to ensure future growth given there is also rising competition in the budget sector.
Indeed, new phones may temporarily boost sales but to regain market share, Xiaomi needs to rethink its overall channel strategy, according to Frost and Sullivan.
"Xiaomi's sales have been skewed towards cheaper models such as Redmi 3 and Redmi Note 3, which are sub-$150 smartphones, and as a result Xiaomi has lost mindshare in high- to premium-tier phones," echoed Neil Shah, research director of devices and ecosystems at Counterpoint Research.
Furthermore, smartphone innovation by the company appears to be slowing.
"Xiaomi was surprisingly was one of the last Chinese brands to bring fingerprint sensor to its phone and thus brands such as Huawei, Lenovo and OPPO have leapfrogged in mindshare and market share. In June, OPPO surpassed Huawei and Xiaomi to become the leading brand in China," said Shah. As a result, he forecasts Xiaomi's smartphone shipments to grow a modest 2-5 percent this year.
On a brighter note, there was strong speculation CEO Lei would present the brand's first-ever laptop on Wednesday.
If Xiaomi released a hybrid notebook—a laptop and tablet in one device—that would suit the firm's Internet of Things (IoT) ecosystem, according to Shah.
Over the past 12 months, Xiaomi has diversified its product range by entering the "connected hardware" space, producing smart home appliances that ranged from kettles to drones to mosquito repellents. "It's hoped that this diversification will help Xiaomi find an unique position to keep revenues afloat, be on the consumer's mindshare and cross-sell more devices from the Xiaomi IoT ecosystem," Shah explained.
Moreover, a Xiaomi laptop might be well received considering the brand's ability to take Linux mainstream and the slowing global laptop market could also , Frost and Sullivan said.
