Xiaomi And Apple Sales Declined, Fan economy dissipating?

Xiaomi and Apple have a lot of similarities which don’t end with their founders’ love for turtlenecks. Both companies have their die-hard fans and detractors, and both the companies are leaders of their respective fields in their own backyards. Recently however, both Xiaomi and Apple are seeing a little downturn in their fortunes, and some of their product releases haven’t exactly caught the imagination of their fans.

According to a report published last month by Slice Intelligence, a company that tracks online orders by scanning the e-mail inboxes of more than 2 million panel members, estimates that Apple has sold barely 2.79 million of its smartwatches, rather than the exorbitant 15 – 20 million figures that have been quoted by speculators. Also, according to media reports, Huawei has been catching up with Xiaomi in terms of smartphone sales and according to some, may even have displaced the company to become the top Android device manufacturer in China, although, the exact sales data is not readily available.

In the recently concluded e-commerce promotion in China, Xiaomi wasn’t even in the top two amongst mobile phone vendors, something that was unthinkable even last year. For both Xiaomi and Apple, fans are an important economic representative of the respective enterprises, and both the companies have – or had, in case of Apple – charismatic founders, who have been able to attract a large number of fans, who have a strong loyalty to the brand.

However, sooner or later, a tipping point comes when the blind fan-following gives way to disillusionment, and logical thought takes over from illogical fascination with a particular brand, resulting in the brand’s declining attractiveness.

Apple’s iPhone was initially released in 2007 amidst a lot of hype and fanfare. In one fell swoop, the phone was to change people’s perception of what smartphones could be like, with stunning design and unprecedented marketing, which made consumers line up for the device for days in advance to get their hands on one. Then came the apps and along with them, the app store ecosystem, which made a large number of developers stakeholders in the industry, and eventually, they have become cheerleaders for Apple and its iPhone.

Till the Apple iPhone 5, the company was able to dominate the mobile phone industry with innovation, if not with market share. However, since the death of Steve Jobs, Apple has slipped into the mediocre with innovation taking a backseat and a me-too approach taking over. The features Apple has been introducing to its handsets (larger screens, higher resolution etc.) have been introduced in rival platforms like Android and Windows Phone long ago, and Apple has become a follower in the very industry it helped create not so long ago.

Apple had high hopes for its Apple TV, but that didn’t go anywhere, and the project has now basically been aborted. The decline of the global tablet PC market has also been talked about for a while, and with the smartphone market becoming an increasingly difficult and notoriously competitive market, where the company just cannot seem to cross the 20% threshold in terms of market share, the company seemed to have turned its attention towards a new segment entirely – the smartwatch.

Even then, sales of Apple’s wristwatch hasn’t exactly soared as some would have expected it to. Empty watch counters at Apple stores are a fairly common sight, even when iPhone and iPad counters are filled with excited buyers. Even after several generations of smartwatches, they functionally still play a supporting role at best to smartphones, and the battery life continues to be disappointing. The pricing also remains an issue with most smartwatches costing as much as flagship smartphones, and most people complain the devices look like toys for kids rather than wristwatches for adults. As a result, their appeal continues to be niche and limited. The devices have so completely failed to capture the imagination of mainstream consumers, that even for the elite, the will for conspicuous consumption is just not there.

Xiaomi, as mentioned earlier, has a lot of striking similarities with the Cupertino-based company, not just in terms of their devout fans, but also in terms of product design and marketing. However, the history of Xiaomi is considerably shorter when compared to Apple, and in recent years, with China entering the 4G era, the inadequate R&D of Xiaomi in areas of product and chip design seems to have put them in a disadvantage as opposed to rivals like Huawei, who have had years of expertise in those departments.

Xiaomi also have digressed substantially from what the company started out as – a pure play smartphone manufacturer. After the success of its smartphones, the company chose not to put in more research in this field, and instead, chose to take advantage of the fan-economy to introduce completely unrelated new products like headphones, routers, power strips and even air conditioners and TV.

Dedicated fans can be the greatest asset a corporate have, but they won’t be taken for granted for too long. Emperor Taizong’s eternal saying holds completely true in this case. ‘The same water which carries a boat can also sink it’, he said. The same fans who make your company the success it is today, can also desert the company in droves, thereby wiping out a business as quickly as they had helped built it, if you try to squeeze the last drop of blood out of them by offering a slew of half-baked, inconsequential products, which makes it critical to look at how to treat fans. Fans are meant to be loved and nurtured, not exploited for their dedication to the company.