Government's move to ban apps will hurt Xiaomi India revenue: Analysts

NEW DELHI: The government’s recent move to ban Xiaomi’s popular web browser, the ‘Mi Browser Pro’ along with the previously banned socializing platform ‘Mi Community’ could severely hurt the Chinese phonemaker’s revenue opportunity from value added services (VAS) worth millions of dollars, analysts say.

“Having built a user base of 90 million users and captured almost 30% market share, Xiaomi makes around $1 per user per month through such value-added services,” Faisal Kawoosa, founder at TechArc said.

“Even if we assume that half of this base uses the apps, it fetches Xiaomi a revenue of $45-50 million per month,” Kawoosa added. Xiaomi India earned revenue of close to Rs 35,426.92 crore (or $4.7 billion) in FY19, as per filings with the Registrar of Companies. This is the latest available financials of the unlisted Indian unit of Xiaomi.

A browser earns royalties from its default search engine (i.e Google for Mi Browser), digital ads and other integrated shortcuts on its home page. Mi Browser currently displays 15 shortcuts including social media platforms such as Facebook, Instagram, Youtube, LinkedIn and shopping websites ShopClues etc.

“It is possibly an important part of the larger and longer-term non-hardware devices revenue strategy for Xiaomi,” Navkender Singh, Research Director at IDC, India said. “It must and will definitely make a representation and try to address the concerns raised by the government.”

A Xiaomi spokesperson on Wednesday said it will work with key stakeholders for an opportunity to make its submissions.

“Xiaomi continues to comply and adhere to all data privacy and security requirements under the Indian law. We are working towards understanding the development and will take appropriate measures as required,” the company said.

ET had reported on Wednesday that the follow-up ban by the government on 47 Chinese apps late last month included Mi Browser Pro. Mi Community was part of the 59 apps banned by India in June, alongwith top social media platforms such as TikTok, WeChat and Helo, to protect the country’s “sovereignty and security”.

Though the ban will not render an immediate blow to the company as the current users may continue to use the app without an issue, it is detrimental to Xiaomi’s brand image which may drive away its loyal fanbase, experts say.

“We don’t see a direct immediate impact on Xiaomi devices but it’s critical from the company’s brand image,” Tarun Pathak, assistant director at Counterpoint said. “Xiaomi has been upfront and quite open about certain issues in the past, so we assume a similar move for this development as well.”

Government's move to ban apps will hurt Xiaomi India revenue: Analysts Government's move to ban apps will hurt Xiaomi India revenue: Analysts Reviewed by TechCO on 8/05/2020 Rating: 5

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