Summary of Key Points
This news article focuses on the current state of Xiaomi's mobile phone business. On one hand, the Redmi K100 Pro series represents an important attempt by Xiaomi to move into the high-end market. While the product specifications are impressive (fifth-generation Snapdragon 8 Gen 2 processor, 9070mAh battery, 185Hz refresh rate), there is controversy around its market performance, with discrepancies between official and third-party data. On the other hand, Xiaomi's mobile phone business is facing declining sales and a diminishing advantage in terms of cost-effectiveness. The company is shifting its resources to higher-profitting sectors such as automobiles and home appliances, and there are internal organizational adjustments. Additionally, there is an issue of over-reliance on founder Lei Jun. All these factors indicate that Xiaomi's mobile phones are no longer the sole driver of growth for the group, and their future role and trajectory are in question.
I. K100 Pro: A Mixed Bag of High-End Attempts
The Redmi K100 Pro series is Xiaomi's first attempt to truly compete in the 4000 RMB price range, with nearly top-of-the-line specifications (including the fifth-generation Snapdragon 8 Gen 2 processor, large 9070mAh battery, and 185Hz display). Xiaomi claims that the initial sales of the Pro Max were 150% higher than those of its predecessor, but third-party data shows that overall sales for the series were only 65% of the previous generation. Why is there this discrepancy? By highlighting only the successful high-end models, Xiaomi suggests that its high-end strategy has not yet been fully accepted by the market. In the past, Xiaomi's success relied on offering high-specifications within the 2000-3000 RMB range. However, at the 4000 RMB price point, consumers are looking for more than just specifications; they also value brand reputation, user experience, and after-sales service. For example, Huawei has its HarmonyOS ecosystem, and Apple has its brand premium. Xiaomi's “cost-effective” label has become a drawback in the high-end market, as consumers may prefer to spend more on flagship models from Xiaomi or competitors like Huawei and Apple.
II. Declining Mobile Phone Sales: Not Just an Industry Problem, but Also a Loss of Competitive Advantages
Xiaomi's mobile phone sales have dropped from first place in the Chinese market in 2025 to fifth place in 2026, with global shipments decreasing year-on-year. The company's annual target has been reduced from 135 million units to 95 million units (later increased to 110 million units, still 60 million units less than last year). The industry environment is indeed unfavorable, with rising prices for memory chips and a longer replacement cycle of 2-3 years. However, Huawei and Apple are seeing growth. The problems lie with Xiaomi itself:
- Loss of Cost-Effectiveness: In the past, Xiaomi's 3000 RMB range products offered the best specifications, but now consumers consider AI capabilities, imaging quality, and ecosystem integration when making choices, not just technical parameters.
- Premature Exhaustion of Government Subsidies: Government subsidies in 2025 stimulated early replacements by Xiaomi users. Without these incentives, the demand for new phones has declined.
- Failing to Break into the High-End Market: Neither Xiaomi's flagship series (such as the 14 series) nor its high-end Redmi models have established a strong presence above the 4000 RMB price point, resulting in a position stuck between mid-range and high-end markets.
III. Shift in Corporate Focus: Mobile Phones Are No Longer the Central Business
Xiaomi is allocating more resources to other areas:
- Home Appliances as a Profit Driver: The gross profit margin for mobile phones is only 10.9%, compared to 23.1% for IoT products, especially home appliances. As a result, Xiaomi is reducing the display area for mobile phones in its physical stores and increasing the presence of home appliances, with targets requiring that home appliance sales account for more than 20% of total revenue.
- Automobile Business Drawing Attention: The Xiaomi SU7 model led to rapid expansion of physical stores, but this has slowed down recently, with over 50% of related positions (such as store location and engineering) being cut. Nevertheless, the automobile business remains a key focus for the company.
- Changing Role of Mobile Phones: Mobile phones are now used more as a means to attract customers to stores, from which Xiaomi can then sell higher-profiting home appliances.
IV. Internal Organization: The Over-reliance on the Founder
Xiaomi is laying off employees across various business units (for example, the network development department was reduced from 50 to 20 people). More concerning is the over-reliance on founder Lei Jun:
- Only Projects Led by Lei Jun Succeed: From Xiaomi's early mobile phones and Redmi products to the current automobile and Xuanjie chip business, projects involving Lei Jun have been successful. However, other businesses face bottlenecks when they are not managed directly by him.
- Centralized Decision-Making: Even minor details like SU7 promotional gifts (such as umbrellas and cups) are decided by Lei Jun, and the company culture revolves around his words. Resources are also allocated based on the importance of a project to the founder's interests. While this ensures execution for key initiatives, it limits the organization's ability to develop independently. If Lei Jun's attention is diverted to other businesses, the mobile phone business may struggle to grow.
Conclusion: Where Does Xiaomi's Mobile Phone Business Go From Here?
The K100 Pro has impressive specifications, but the real issues for Xiaomi are not about the quality of its products. The company needs to address how to break away from the “cost-effective” label associated with its mobile phones in the high-end market, maintain growth despite the shift in resources to other areas, and reduce its over-reliance on Lei Jun. These questions are more critical than the sales performance of a single product and must be answered by Xiaomi if it wants to continue thriving.