"Hammer Technology can achieve profitability, and it's happening now," Luo Yonghao said with a sharp tone.
Last week, Hammer Technology held its 2017 Autumn Conference in Chengdu, where Luo unveiled the Pro2 smartphone and the Smooth Breathing Air Purifier. During the event, he chose not to hide the positive news, instead announcing that the Nut Pro had sold over one million units in the past six months. Compared to the previous goal of selling two million phones in two years, this was a historic milestone for the company.
However, despite this progress, Hammer still lacks the scale to be considered a mainstream player in the mobile phone industry. According to a report by GFK Jiefukai Market, China’s mobile phone market saw 232 million units sold in the first half of 2017. When compared to the millions of units sold by Apple, Samsung, and Huawei in a single quarter, Hammer’s numbers still seem small.
In addition to the smartphone, Hammer made its first move into the air purifier market by launching the Smooth Breathing model. To support this expansion, the company established a wholly-owned subsidiary in Chengdu called Chang Breath Technology, focusing on R&D in air purification. This clearly shows Luo’s emphasis on the new product line, which could potentially be the easiest way for Hammer to generate profits.
**High User Attention, Low Penetration Rate, Huge Market Potential**
The popularity of Chai Jing’s documentary *Under the Sky* in 2014 sparked nationwide discussions about smog and significantly boosted the air purifier market. In 2014 alone, sales of air purifiers in China reached 15.1 billion yuan, doubling from 7.75 billion in 2013.
According to GF Securities, the air purifier market is expected to grow at an average annual rate of 17.8% for unit sales and 20.8% for total revenue (including consumables) between 2017 and 2021. By 2021, the market is projected to reach 9.85 million units in sales volume and 43.1 billion yuan in revenue.
With such promising growth, many companies have entered the space. In 2014, Cheetah launched its first air purifier, followed by Xiaomi and others. In recent years, platforms like Jumei Youpin, NetEase, and Ink Weather have also entered the market. Even traditional brands like AO Smith and Supor have expanded their product lines to include air purifiers.
As of now, more than 700 air purifier brands are competing in the Chinese market. However, the penetration rate remains low—only around 1% in China, compared to 45% in the U.S. and 27% in Japan. This suggests there is still significant room for growth.
**Why Start with an Air Purifier?**
Luo Yonghao explained that the air purifier industry lacks a dominant brand, offers high profit margins, and is suitable for startups. For a company like Hammer, which once faced financial difficulties, high margins are crucial. A researcher from the China Household Electrical Appliances Research Institute noted that the technology behind air purifiers is mature and the entry barrier is relatively low.
While other industries like AI and smart speakers are competitive, Hammer doesn’t have the resources or technological foundation to compete effectively. Similarly, in the home appliance and 3C sectors, the competition is fierce, and Hammer lacks the capital to invest heavily.
In contrast, air purifiers offer a lower threshold, strong market potential, and higher profit margins, making them an ideal starting point.
After the press conference, Luo didn’t shy away from comparisons with Xiaomi’s ecosystem. He mentioned that a smart speaker is also in the planning stages, but he emphasized that this is just the beginning. The goal is to expand through several initial projects, build up financial strength, and eventually establish an investment fund to grow the ecosystem.
Xiaomi’s ecosystem has shown success, with 77 invested companies and four "unicorns." But Luo’s approach differs—he focuses on industrial design and provides reference designs in branding, product design, and smart features, leaving execution to the partners.
Expanding through an ecosystem is a proven strategy, but for Hammer, the question remains: how long can a 1 billion yuan funding round last?
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