Sales of consumer and commercial flying drones picked up speed in 2016. Drone makers DJI and Parrot are one and two in market share, selling high-end devices with an average selling price of $550. Just this month, one of China’s fastest-growing tech companies, cellphone manufacturer Xiaomi, unveiled a more affordable sub-$500 drone with a claimed range of four kilometres and a video camera capable of 4K resolution.
The 4K version can fly for 26 minutes and has a range of almost 4 miles. DJI drones fly for 23-28 minutes depending on the model. The Mi Drone includes a 360-degree camera that can shoot 4K video, and handheld remote which has the option of attaching a smartphone for a streaming view from the drone.
DJI is frequently called the “Apple of drones.” It reportedly owns 70% of the consumer drone market and appeals to high-end tech shoppers. Apple even agreed to display DJI’s new Mavic Pro drones in big “feature bay” displays at over 400 of its brick-and-mortar stores, serving as DJI’s exclusive retailer during the drone’s initial launch in March. DJI employees also visited select Apple Stores to provide training sessions to customers.
In response to DJI’s rapid growth, Xiaomi recently launched the Mi Drone, a 4K drone which only costs $460, its entry into drones. That’s less than half the price of most DJI drones, which cost over $1,000. The Mi Drone represents another way for Xiaomi to diversify beyond its core smartphone business, which has been ceding market share to low-cost rivals like Oppo and Huawei.
Xiaomi’s main strategy is to sell devices with high-end hardware at low-end prices via an online model that eliminates brick-and-mortar markups. That causes it to run on paper-thin margins — its last known operating margin was 1.8% in 2013, and that figure has likely declined due to rising competition in smartphones.
DJI profits might decline if it has to match Xiaomi’s aggressive prices. However, Xiaomi’s Mi Drone still lacks HDR, burst shot, time lapse photos, and obstacle detection — all features which are included in DJI’s Mavic Pro.
Similar to other Xiaomi products, the company didn’t actually create the Mi Drone itself. Instead, it is working with a China-based startup, Flymi, which designed and developed the UAV. Xiaomi is arranging the manufacturing and branding and selling it via its channels.
Should Xiaomi be worth more than DJI? It remains to be seen.