What is Xiaomi?
Xiaomi is a company that was founded in June 2010 by 7 very powerful partners that have strong connections with the governments of China and Singapore. Between them are Qiming Venture Partners, IDG Capital and particularly Temasek, an investment group owned by the government of Singapore.
Three years after the creation of Xiaomi, they were already selling more phones within China than Apple, with a market share of 2.5% and a value of 10 billion dollars. That same year, Xiaomi appeared in the global news for having contracted Hugo Barra, one of the principle figures responsible in the development of Android within Google.
A year later, in the fourth quarter of 2014, Xiaomi was already leading their market above popular brands like Apple, Samsung, or Huawei with a market share of 12.5%, becoming the most valuable emergent business in the world only four years after being founded, reaching a total value of 45,000 million dollars, surpassing the 40,000 million dollar value of the Uber taxi app.
Xiaomi’s Success
Xiaomi bases its strategy on the sale of medium to high range smartphones for relatively low prices. Furthermore, Xiaomi is directed by Lei Jun, who many call the Chinese version of Steve Jobs. His presentations, the way he dresses, the way he communicates and even the way he moves his hands and arms while doing presentations remind many of those done by the late founder of Apple. If we combine the company’s promotional methods with the low price of the devices, their success is understandable.
Even though Xiaomi is still lesser known outside of Asia, in barely 4 years of life it has already turned into the third largest manufacturer of cellular phones in the world, behind Samsung and Apple.
Low cost but high range
Their business model consists of making cellphones that are low cost but with high range specifications.
One of the biggest issues with Android is the large variety of brands and models it can be used on, which makes it complicated to successfully ensure that each of the devices end up having the most recent system updates. Furthermore, all of the phone providers also have to “personalize” the devices, so we end up seeing updates take even longer still.
But in Xiaomi it is not a problem because they have designed their own operating system based on Android, called MiUi. Basically, they take Android, make some modifications, add functions it doesn’t already have and put it on the devices. With that, they achieve in providing devices that are much faster and have functions and a level of performance that others don’t.
Xiaomi still doesn’t have a global market
Until now it has been centered on China and other adjacent markets in the south of Asia, like Singapore and, recently, in India, the second market in the world of mobile phones.
According to Hugo Barra, even though Xiaomi is obtaining good results in various Asian countries, it is unclear how they will be able to replicate the formula to their success in other markets where the competition with Samsung and Apple is stronger.
Xiaomi has already announced plans to expand in more than a dozen fast growing markets, which include Malaysia, Indonesia, Thailand, Russia, Turkey, Brazil, and Mexico.
Why Xiaomi?
There are many reasons to buy a device from this brand. Looking at the current price of many smartphones, it is a relatively economic alternative that maintains high quality in power and design, technical support, updates and everything else that is important for a smartphone user. Additionally, they don’t only manufacture phones, but also tablets, smart tvs, devices to measure daily physical activity, and headphones. They even make an external battery for smartphones with one of the best performances on the market (Power Banks). In fact, in future articles we will do a review of the best products offered by this great brand.
However, in buying Xiaomi products today there tends to be an extra charge. The brand does not sell directly outside of Asia and we always have to use a third party who tends to inflate the price. For that reason, many hope that the Chinese manufacturer will make the leap and have an official presence in more regions of the world. Nonetheless, Xiaomi has made it clear that there is no rush to expand which, according to them, is due to the difference between markets.
Hugo Barra justifies this by saying that, for example, in the United States people look less at price and are more accustomed to a model where they go to purchase their devices in a store, and that purchase is tied to a contract with a certain provider. On the other hand, in China they look a lot more at the prices and the purchase is not as bound to physical stores nor the providers.
It is curious to see how, in spite of being centered in markets that are so far away, they continue to be a brand that attracts so much interest. They are doing it right, they have high quality devices and are a brand with great standing.