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Xiaomi takes over Meitu to focus more on selfie-centric smartphones

Meitu, known for its photo-editing app, will hand over much of its phone operations to Xiaomi while taking charge of developing image algorithms and tech solution.

Nov 24, 2018 by The Passage Team
Xiaomi takes over Meitu to focus more on selfie-centric smartphones

Xiaomi’s(小米)shipments in China dropped by 16% in third quarter of 2018 following a 38% plunge in the second quarter.

This year, global shipments fell by 6%, signaling a fierce competition on an international scale. Meanwhile, Chinese people no longer fancy smart phones under the price range of 1000 RMB (USD 143.92), whereas phones priced between 1000 RMB (USD 143.92) to 2000 RMB (USD 287.84) are in high demand.

Redmi is now paying the price for betting on the cheap phone segment.

The company has now entered a strategic partnership with beauty camera brand Meitu(美图)and is counting on them to bring in more female users. Meitu,known for its photo-editing app, will hand over much of its phone operations to Xiaomi while taking charge of developing image algorithms and tech solution.

In return, Meitu will receive 10% of the gross profit from selling its phones for up to 5 years, and USD 10 million a year after that.

Partnership with Meitu comes with its share of merits and risks. Smart phone brands such as Apple, Huawei, vivo and OPPO have caught the customers’ eye because of their image editing techniques and impressive cameras. Meitu smart phone’s specialised photo editing feature has huge female following and accounts for a high average gross profit of 42.87% in 2018.

According to Xingye Securities (兴业证券), Meitu is the leader in facial recognition, image modification and image production categories. Meitu Imaging & Vision Lab technology has nearly 10 billion facial images in its database.

Xiaomi can use Meitu’s resources to leverage its product line and expand business.

Meitu smart phone sales have always targeted female demographic with a total of 3.5 million sales in the last five years.

However, the sales dropped by 26.71% in the first half of this year. It remains to be seen how much will Xiaomi benefit from the alliance as more and more smart phone brands have started investing heavily invest in image technologies.

(Story by Xintong Chen, an intern with The Passage.)

The Passage Team

The Passage is committed to creating in-depth content over technology industry across Asia with a focus on emerging startups in the technology, healthcare, education, food, tech, travel & mobility segments.

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