It appears Chinese smartphone giant Xiaomi Inc. is interested in buying GoPro Inc. (GPRO) for about $1 billion, but not more. That’s fine considering nobody even wanted to buy GoPro. Last year GoPro was the nerd no one would take to prom. But what changed?
GoPro’s first camera came out around 14 years ago giving people something to be excited about, second only after the series finale of Friends. What did GoPro do after that? Sadly, not much in terms of innovation or diversification. Its cameras haven’t changed much, and its foray into drones in 2016 did not take off well.
Once valued at around $10 billion following a solid IPO, GoPro lost its footing in the age of smartphones that promised bigger and better cameras and pictures. Falling sales, job cuts, and declining stock value pushed the company backward. GoPro’s shares have fallen more than 30% so far this year.
So why does Xiaomi want GoPro? Xiaomi is looking for an entry into the U.S. market, and an accessible path would be through a well-known American company. Xiaomi started selling electronic products through its online stores recently in the U.S., and it is planning to roll out its smartphones into the U.S. market by next year.
Xiaomi, which has its own action camera brand, would also benefit from the acquisition by getting GoPro’s patents and eliminating its competition in the camera market. Acquiring GoPro would not just give Xiaomi the U.S. market but also a broad reach in terms of global distribution. The price seems fair as well.
GoPro has been looking for a buyer, and if things work out with Xiaomi, it will help the company financially. Together, GoPro and Xiaomi could bring about new products by leveraging capabilities and GoPro’s brand value would benefit Xiaomi immensely in terms of expansion in the U.S.
All this seems fine, but it remains to be seen if the deal will get approved in the first place. The U.S. and China are not exactly seeing eye to eye right now thanks to an impending trade war, and the Trump administration’s reservations on Chinese investments in American companies.
However, if this union manages to cross all the hurdles and get approved, it could paint, I mean click, a better picture of the future.