Xiaomi could be just the hero GoPro needs - TechCentral

Xiaomi could be just the hero GoPro needs

GoPro Hero6

I’ve long bemoaned the fact that GoPro is a one-trick pony, and its declining sales reflect this fact.

CEO and Founder Nick Woodman did a brilliant job giving cameras a new lease on life while the rest of the industry struggled to deal with the combination of phones and cameras. But being the hippest buggy-whip maker doesn’t count for much when people have foregone horse and carriage altogether.

GoPro’s problem is that it hasn’t done much in 16 years. Its product line is little changed, with mere iterations of the same tiny rugged camera, and the company still relies on its home market for the bulk of sales. Consider that in 2004 — when GoPro released its first camera — Apple’s hottest product by units was the iPod.

The few attempts to diversify have failed. An entry into the drone market in 2016 lasted less than 15 months at a time when DJI and others were enjoying booming growth. Asia accounts for just 21% of revenue.

Xiaomi, meanwhile, can’t be accused of standing still. The Chinese smartphone start-up has its fingers in so many pies that it’s hard to keep up. So it makes sense that it would consider making a bid for GoPro, as The Information reported. Xiaomi may offer up to US$1bn, but doesn’t want to overpay, the news website said.

A tie-up with another device maker is exactly the future I envision for GoPro. Right now it’s a technical feat to film a day on the slopes, then take it back to show on the TV in your ski lodge. For many, it’s just easier to shoot with an iPhone and a selfie stick, which is the crowd Woodman should be chasing. A combination with Roku, the provider of streaming content players, is one I have advocated for a while. Xiaomi has MiBox, as well as routers and other connected devices.

A $1bn outlay for Xiaomi shouldn’t damage its balance sheet, and the upside could be immense. Founder Lei Jun and his team are preparing for a listing, so having a cool US brand could help enamour his company to investors. It would also give Xiaomi access not only to the US market, but the global distribution channels through which GoPro gets 46% of its revenue. GoPro sells in 30 000 outlets in 100 countries, which is the kind of reach Xiaomi needs to dilute its geographic concentration.

My biggest caveat is that Xiaomi leave the GoPro name alone and refrain from plastering its brand over everything. That would entail a multi-brand strategy, with GoPro’s original team left in California (and incentivised to stay). From there, Xiaomi could help them expand into new product lines under the GoPro brand.

Of course, this is all predicated on the idea that US regulators will allow the deal to go through. The trade war with China isn’t conducive to cross-border M&A. But if a surfer dude can build a billion-dollar company from scratch, maybe he’s just the hero to make it happen.  — By Tim Culpan, (c) 2018 Bloomberg LP