On platforms like TikTok or YouTube, you may have encountered videos showcasing a dazzling beam of light rapidly tracing intricate patterns onto wood, creating detailed cut-outs in seconds. Alternatively, a plain white t-shirt might be instantly transformed with vibrant, personalized designs amid the hum of machinery. Such content garners millions of views globally. Beyond the screen, this massive wave of engagement not only fuels the sharing and creative impulses of everyday users but has also propelled a Chinese hardware technology firm, xTool Innovate Limited (referred to as xTool), into the spotlight.

Recently, xTool submitted its listing application to the Hong Kong Stock Exchange, reporting annual revenue exceeding RMB 20 billion in 2024. The company's rise is emblematic of its era; it is not merely a hardware manufacturer but also a key enabler of the "creator economy" in the age of short-form video. By adapting industrial-grade laser engraving technology for desktop use, xTool has successfully leveraged a shift from business-to-business (B2B) applications to consumer adoption. This "content-driven hardware sales" model has led some investors to view xTool as the "Insta360 of the laser world." However, as the initial surge of online attention subsides, significant uncertainty remains over whether xTool can replicate the latter's sustained, cross-cycle growth.

In 2024, xTool demonstrated rapid momentum with a year-on-year revenue growth rate approaching 70%. However, this growth sharply decelerated to 18.57% for the first three quarters of 2025. This stark slowdown highlights underlying concerns that laser engraving machines have yet to achieve a true breakthrough into the mainstream consumer market. While its core customer base remains concentrated among tech enthusiasts and professional hobbyists, failing to achieve the widespread appeal seen with products like panoramic cameras, a significant consumption gap likely separates xTool from fulfilling the narrative of being the "next Insta360."

xTool specializes in laser engraving and cutting and has established a significant position within its industry. In 2024, the company led the market for laser-based personal creative tools with a 35.1% share based on a gross merchandise volume (GMV) of $365 million, surpassing the combined total of the second to fifth-ranked brands. Its ascent is intrinsically linked to the short-form video era. Traditional laser engraving was often perceived as technically demanding and industrial. xTool transformed the process into visually engaging content through technological refinements. Crucially, software optimizations have dramatically lowered the operational barrier, allowing users to create simply by importing a design. This dual nature—functioning as both a production tool and a platform for content creation—enhances its appeal. Users can share their creative processes to gain social media followers and monetize the finished products, creating a compelling cycle that boosts purchase intent.

Beyond accessibility, xTool's distinctiveness lies in its brand-building strategy. For a long time, "Made in China" often implied anonymous supply chain participation. Even pioneers with brand aspirations frequently opted for a seemingly straightforward path: establishing a presence as a "channel brand" on major e-commerce platforms like Amazon. Even anchor overseas success stories like Anker Innovations have historically derived over 50% of their revenue from Amazon in recent years. xTool, however, has charted a different course. Its global expansion relies not on OEM manufacturing or third-party marketplace dominance but on direct sales through its own official online store. In the first three quarters of 2025, this direct-to-consumer channel contributed RMB 10.86 billion, accounting for over 60% of revenue. This approach also affords xTool healthier profit margins, with a gross margin of 56% for the same period—a figure comparable to top global hardware companies like Apple.

A key future growth driver for xTool lies in the potential for recurring revenue from consumables and accessories as its installed base expands. By the end of September 2025, the number of xTool's connected devices had surpassed 405,000. As this base grows, sales of specialized materials and components are expected to create a strong complementary effect alongside device sales. This potential for high-frequency, high-margin consumable revenue represents a more predictable and sustainable growth trajectory, a vision clearly outlined in xTool's prospectus. The company emphasizes its ecosystem of compatible materials and machine extension modules, designed to maintain user engagement and extend product lifecycles.

Despite the sound theoretical logic of the "razor-and-blade" business model, practical challenges remain. Unlike high-frequency essentials like smartphones or office printers, laser engravers are low-frequency creative tools for most individual users. If users lack consistent creative inspiration, devices risk sitting idle. Low usage rates directly undermine the premise of recurring consumable purchases. Furthermore, consumables like wood, acrylic, and mugs are largely standardized, commoditized products that are easily replicated. In a price-sensitive consumer market, users may bypass the official store for cheaper third-party alternatives. This means xTool must compete not only with other device manufacturers but also navigate price competition from an open supply chain.

Analyzing xTool's business model inevitably invites comparison to Insta360, another Shenzhen-based consumer electronics company that rose to prominence through a content ecosystem. Both companies benefited from the robust supply chain of the Greater Bay Area and the boom in short-form video. While the market is eager to crown xTool as the "next Insta360," hoping for a similar growth trajectory, a closer look reveals fundamental differences in their respective market ceilings. Insta360 started with panoramic action cameras but has successfully expanded its product line to include diverse formats like thumb-sized cameras. More importantly, its user base has broadened significantly from professional creators to mainstream consumers. In contrast, xTool's core audience remains largely confined to DIY enthusiasts and crafters—a more niche, specialized demographic yet to achieve widespread penetration.

This disparity in achieving mainstream "breakout" appeal is starkly reflected in the companies' growth rates. From 2021 to 2024, Insta360 maintained year-on-year revenue growth exceeding 50% for four consecutive years. xTool's period of high growth has not proven as durable. Although its revenue reached RMB 24.76 billion in 2024, surging by 69.97% year-on-year, growth slowed markedly to 18.57% in the first three quarters of 2025. Notably, the net profit growth rate for this period significantly outpaced revenue growth, but this was not primarily due to improved product margins. Instead, it was buoyed by a 36.4% increase in other net income, including interest and exchange gains, which accounted for over half of the net profit. In the consumer electronics landscape, the transition from a "niche, hardcore" product to a "mainstream necessity" is critical for determining a company's valuation ceiling. Insta360 secured its ticket to the mass market by lowering barriers and expanding usage scenarios. If xTool remains reliant solely on capturing the existing potential of its vertical market, it may struggle to sustain the grand narrative of being the "next Insta360" that the capital markets envision.