Sina Technology Zhang Jun

Xiaomi's CFO responded in a conference call that it was in the 4G to 5g transition period, and Xiaomi chose to digest all the bad inventory to improve profitability and cash reserves.

In this quarter, Xiaomi's R & D investment reached 2 billion yuan, an increase of 32.5% year-on-year, which also set a quarterly high.

According to the financial report, Xiaomi's smartphone revenue in the third quarter was 32.3 billion yuan, a year-on-year decrease of 7.8%; its smartphone sales reached 32.1 million in the third quarter, and 33.3 million in the same period last year.

However, according to canalys, Xiaomi's share of the global smartphone market in the third quarter of 2019 was 9.2%, still ranking fourth.

For the year-on-year decline in smartphone revenue and sales, Xiaomi's CFO said: "we are now in the 4G to 5g switching period, the mobile phone market environment is under pressure, we choose to grow steadily, improve our profitability and cash reserves, and digest the bad inventory, so we are in a very healthy period, for the 5g era, we are very confident, we I am very good at bringing high-tech technology to the public. 5g mobile phones will be more expensive when they come out, and our efficient business model advantages can also be reflected. "

Lei Jun also said that Xiaomi's transition to 5g mobile phones has already started preparation this year. So far, Xiaomi's stock is at a very low water level, laying a good foundation for 5g.

In addition, the arrival of 5g will further promote the outbreak of IOT categories.

In this quarter, the business income of Xiaomi IOT and consumer products reached 15.6 billion yuan, up 44.4% year on year. As of September 30, 2019, the number of devices connected to Xiaomi IOT platform, excluding smartphones and laptops, reached 210 million, up 62.0% year on year.

Nearly half of overseas revenue

In the third quarter, Xiaomi's overseas market revenue was 26.1 billion yuan, up 17.2% year on year, accounting for 48.7% of the total revenue. The share of overseas market revenue in total revenue also reached a quarterly high.

Since 2017, Xiaomi has vigorously promoted its internationalization strategy. Xiaomi's smartphone shipments rank in the top five of more than 40 countries and regions, according to canalys. India is the most typical and the best country for Xiaomi's internationalization. According to IDC data, Xiaomi's smartphone has been the first in nine consecutive quarters in India.

This year, the European market is Xiaomi's international focus. According to canalys data, in the third quarter of 2019, Xiaomi smart phones ranked fourth in the Western European market, with a year-on-year growth of 90.9%; in Spain, smart phones ranked second in the open channel, with a year-on-year growth of 63.7%. The market share reached 22.9%.

Whether Xiaomi can further expand its share in the European market, Lei Jun said, Xiaomi has only two years to enter the European market after all, and half of the European market is operator market, while the operator business is corporate business, so Xiaomi still needs a little time.

In addition, after the independence of redmi brand, internationalization has become an important strategy. Lu Weibing, vice president of Xiaomi and general manager of redmi brand, said in an interview with sina technology that this year, redmi will continue to increase its investment in the Indian and European markets, as well as new markets such as Latin America and Africa.

With the domestic market saturated and 5g mobile phones not yet large-scale, increasing internationalization has become the common choice of many domestic mobile phone manufacturers. Lei Jun has previously said Xiaomi's overseas market revenue will soon surpass China's.

R & D investment reached a quarterly high of 2 billion yuan

In this quarter, Xiaomi's R & D investment reached 2 billion yuan, an increase of 32.5% year-on-year, which also set a new high of Xiaomi's single quarter R & D investment.

From the perspective of smart phone business, Xiaomi's R & D investment effect has begun to show. Take mix alpha, a 5g surround screen concept mobile phone released by Xiaomi in September this year as an example. This product achieves 180.6% of the screen share through the surround screen design. It took 2 years for R & D, 1000 people were invested before and after, and R & D investment exceeded 500 million yuan.

Lei Jun said in a conference call that Xiaomi is expected to invest about 7 billion yuan in R & D this year. Next year will be a reasonable proportion, and the R & D cost will continue to be further increased.

Before that, Lei Jun said at Xiaomi's mix alpha conference that Xiaomi's R & D investment will increase to about 10 billion yuan next year.