Xiaomi has taken a giant leap forward after acquiring Chinese selfie app and smartphone maker Meitu. As part of the strategic partnership, Meitu would license its brand, hardware and technology to Xiaomi. Excluding the image related algorithms and technologies, Xiaomi would play a significant role in the makeup and marketing of the phones. It would involve production, design, Research and development, business operation, sales and marketing.
Going forward, the future phones would carry the Meitu brand, but a major chunk of phone development would be carried by Xiaomi. Meitu has taken this major stride owing to minimise its recurring losses in its business. Last year, it logged a loss of $28 million last year and this year the loss is projected anywhere between $137 and $173 million. The prime factor for the loss can be attributed to the release of only a single smartphone this year as opposed to the release of five smartphones in the previous year. Further, Meitu hopes the strategic partnership would help it achieve its mission of inspiring more people to express their beauty.
Meitu is not a major smartphone brand by any means! Since its establishment five years ago it has sold a mere 3.5 million smartphones. The partnership would also boost Xiaomi as it can be expected to release more selfie-focussed camera phones. It is learned that Xiaomi would pay 10 per cent of its gross profit on the phones to Meitu for a period of five years. It is indeed a right decision made by Meitu as the losses are expected to be five-fold compared to previous year. So, from now on Meitu can focus on its efforts in next-generation image processing technologies. Equally, for Xiaomi, it can now try out new technologies as it is looking for a broader international appeal. On a lighter note, Xiaomi has managed to eliminate one smartphone brand from the competition.