Xiaomi claims smartphone sales drops will not harm it

980China’s Xiaomi will not suffer from the downturn in smartphone sales as its profits will be driven by sales from smart home devices as well as revenue from its software eco-system.

But last year Xiaomi missed its global smartphone targets by 12 percent, while its third-quarter China smartphone sales have fell by 45 percent. Analysts are a bit worried that the company’s high value might not be still warranted.

But Xiaomi’s global vice-president Hugo Barra said the company’s business model was not based on money made from handset sales and that it did not need to raise more funds or see any point in doing so at a valuation of less than $46 billion.

The company model was giving handsets without making any money but getting it back on the recurring revenue streams over many years.

Xiaomi could flog 10 billion smartphones and not make a cent, he said. Which further confuses the question of how the outfit makes money at all. Xiaomi, which discloses little of its profit and revenue figures anyway.

Recently it has emphasised its range of home appliances such as air and water purifiers, and rice cookers as key earnings drivers.

The company has invested heavily in India and Southeast Asia and is making its first forays into the U.S. market – launching next month its first device capable of roaming on the country’s 4G networks.

Barra said they are first targeting Chinese users traveling in the US, but are laying the groundwork for direct sales to US consumers.