Meitu Drops Smartphone Business – Xiaomi Takes the Wheel

Chinese photo-editing software developer Meitu Mobile announced plans to drop its smartphone business on Apr. 14. The mobile phone business will be transferred to Xiaomi Corporation.

“Making smartphones that aims to beautify people means that we’re catering to a niche market, which in turn means that the sales volume is small. Thus, we are not able to reduce production costs to compete in the intensifying price war. As a result, our mobile phone business will be closed in the middle of the year, and Meitu mobile will be exclusively licensed to Xiaomi Corporation,” Meitu said in an announcement.

According to Meitu’s financial report, the company’s revenue from its internet business increased 26.3 percent year-on-year to 948 million yuan ($141.31 million) in 2018, whereas the revenue from smart hardware dropped 50.7 percent year-on-year to 184 million yuan last year.

Meitu T9
Meitu T9 (Source: Meitu)

Meitu said that the company has adjusted its unprofitable e-commerce and smartphone business in a timely manner to transform into an Internet-focused light asset company, thereby freeing up more resources to invest in its “beauty and social” strategy.

Meitu phones will now be developed, produced, sold and promoted by Xiaomi; Meitu will continue to provide support for imaging technology and beauty algorithms. In addition, Xiaomi is also authorized to produce and promote a range of Meitu branded smart hardware products.

Meitu's softwares
Meitu’s softwares (Source: Meitu)

Xiaomi has commented on the decision, saying that it believes Meitu’s image algorithms and technologies will help provide a better camera experience for smartphone users. The first smartphone made and marketed by Xiaomi with a Meitu camera is expected to launch in mid-2019.

Redmi by Xiaomi
Redmi by Xiaomi (Source: Xiaomi)

The cooperation between Meitu and Xiaomi started back in November when the two companies reached a global strategic cooperation agreement that gave the latter exclusive rights to Meitu’s mobile phones, image technology, and smart hardware products for up to 30 years.

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