Xiaomi – Technology King Of Asia

Xiaomi Inc. is a Beijing-based company which was founded on 6 April, 2010 by Chinese serial entrepreneur Lei Jun, along with eight other partners. Xiaomi’s team of professionals includes people from reputed organizations and industry leaders such as Google, Microsoft, Yahoo, Kingsoft and Motorola. It has shown meteoric growth in the few years since its inception. The company began its activities with he development of Android based firmware MIUI, which was launched that same year in August. A year later Xiaomi unveiled its first flagship which was a smartphone with pre-competitive MIUI firmware. In April 2014, they hired former Google employee Hugo Barra to expand their business to international markets. The company saves the operational cost by minimizing expensive marketing and touting its products through microblogging, user forums, and social networking. Xiaomi is known for being responsive to feedback and suggestions submitted by their customers, as well as updating their interface weekly. The company’s product lines includes Mi Phones, Mi Pads, Mi TV, Mi Routers, Power banks, mobile accessories and wide range of Smart Home devices.

Xiaomi has 8,100 employees and it is currently operating in China, HongKong Taiwan, Singapore, Malaysia, Indonesia, Philippines, and India.

 

FOUNDERS:

Mr. Jun Lei: Mr. Lei Jun is founder, current Chairman and CEO of Xiaomi. He started his career as a software engineer in Kingsoft after graduation from Wuhan University in 1992. He became the CEO of Kingsoft in 1998. In 2000, he founded joyo.com an IT information service and download website. Mr. Jun resigned from Kingsoft in December 20 2007 due to health reasons. He invested in successful start-up companies like YY, Vancl and UC. He founded Xiaomi on April 6, 2010. In July 2011, he again joined Kingsoft as Chairman of the Board. Currently he has 4 investments in 4 companies.

Mr. Bin Lin: He is co-founder and President of Xiaomi.  He is former Vice Director of Google China Academy of Engineering (2006 to 2011). He was Development Director of R&D Group of Microsoft Asia Pacific Group from 1995 to 2006.

Mr. Wanqiang Li: He is co-founder and serving as Vice President of Xiaomi. He is heading the e-commerce management, operations and marketing teams of Mi.com. After co-founding Xiaomi, he led software and hardware design, development, marketing departments. He is also co-founder of the UIUX Design Center. He is one of the earliest HCI and UI experts in China. In the past, he worked at various positions Kingsoft.

Mr. Guangping Zhou, PhD: Dr. Zhou is co-founder, Vice President and director of Xiaomi’s Mi-Phone Team. He completed his doctorate in 1991 from Georgia Tech University. He joined Motorola in 1995 as a core expert engineer. He established R&D Center for Motorola China in 1999 and he served as at various positions during his career at Motorola.

 

A closer look at Xiaomi

Xiaomi targets low end users – many of which are teens who desire awesome smartphones at lower price points. Xiaomi uses high quality state-of-the-art components in their phones.  Xiaomi keeps each of their phone models on the market longer, in the same way the Apple does, and sometimes even much longer. On average the smartphone companies renew their products every 265 days in the industry – which was 345 days in 2009. But Xiaomi launches their new phone model after quite a longer period of time. For example, there was a full 18 month gap between release of Mi4 and Mi5. The price of Xiaomi’s phones are marginally higher than the cost of components. As the price of the component drop by more than 90% in two years, Xiaomi pockets the difference by maintaining its original price. On the other hand Apple collects its highest profits with the launch of each model. Xiaomi also earns revenue by selling phone accessories, peripheral devices, smart home products, apps and themes as Hugo Barra says “We are an Internet and a software company much more than … a hardware company.”

Xiaomi sells its products exclusively from its online store which further reduce overhead costs. It also relies on social networking services and word-of-mouth to promote and advertise its products. They also keep a tight control over their stock, which means its supply is dictated by demand and limited flash sales ensure this approach. It further helps Xiaomi to place cheaper batch orders.

Xiaomi has successfully built an extensive online community (MIUI forum) through which they listen closely to their customers. As a means of engagement and positive PR, the company often offers their forum members opportunities to  experience upcoming features through induction of beta users from forum members.

 

This kind of interaction with its customers is not merely a PR ploy but a basic value of the company. As Mr. Lei Jun, the CEO of Xiaomi describes “When I was with Kingsoft, I had the opportunity to work with Nokia and Motorola, two mobile phone giants of their time. One day, I pointed out to their R&D boss, some inadequacies. After that, they merely acknowledged my input, but never acted upon what I had said. So I thought to myself, if I make a phone, you can tell me anything you wish for it or what’s wrong. If it is justifiable, we will work on it immediately. I’ll give you an update every week and you may even see your wishes come true within a week”

Their product managers spend time going through the posts on company forums and once they find useful suggestion they ask their engineers to act upon it. The company ships devices every week with improved software.  

Products

MIUI is most famous and earliest digital product of Xiaomi. Other core products of Xiaomi are Mi phones, tablets, Mi TV and Mi routers. All other products fall under the category of Mi Ecosystem called MIJIA.

  1. MIUI:

It is Xiaomi first product and now there are  two versions in MIUI which is China ROM and Global ROM. The China ROM is for Chinese users while the Global ROM comes with Google Apps and more languages for its international users. All Xiaomi smartphones have pre-installed MIUI and it can be flashed on other Smartphones brands such as Sony, Samsung, Huawei, HTC, LG and Nexus. The latest running version of this ROM is MIUI 7 and soon would be MIUI 8.

  1. Mi Phone

Mi series is a flagship product line which is very famous among the tech geeks because it comes with the latest hardware configuration and therefore they are slightly higher in price. Redmi series is a consumer-oriented product with a lower price point. Mi 5 Pro, released in 2016 is the Lastest flagship device of Xiaomi which is equipped with latest Snapdragon 820 processor (2.15GHz), 128 GB flash memory and up to 4GB RAM.

  1. Mi Tv

Mi TV is a smart TV series and the latest model is Mi TV 3S 65” Curve, which is ultra thin equipped with 65” Samsung curved display.

4.Tablets

The latest Tablet from Xiaomi is non cellular Mi Pad 2. It is not much improved from the first generation Mi Pad.

  1. Mi Routers

Mi Router, also called MiWifi is an important product of Xiaomi because it connects all their Mi ecosystem products at home.

  1. Mi Ecosystem

Mi Ecosystem includes a wide range of gadgets such as Mi Band, Mi In Ear Headphones, Mi Powerbank, Mi Smart Scale, Mi Water Purifier etc. They are made by local and international companies which received funding from Xiaomi.

  1. Competitors:

The China smartphone market has expanded three-fold in the last few years, and the country is now the world’s largest smartphone market; it is three times larger than the US market.

At home, Xiaomi is facing stiff competition from well established Chinese firms such as ZTE, Lenovo Group and Huawei Technologies. These firms compete fiercely in emerging smartphone markets of the world such as India and Brazil. The executives of Xiaomi admit that their five-year old startup’s small portfolio is a major challenge which is giving hard time in entering new markets. At the same time the popularity and love for Xiaomi is giving a tough time to market leaders accustomed to earning fat margins and quickly gaining market share.

Xiaomi is a fierce rival of Apple and it has already beaten Apple in China by outselling Apple’s devices. Xiaomi is alleged to be a copycat of Apple and sometimes it is called China’s Apple due to striking similarities between Apple devices and Mi phones. It also appears that Xiaomi is beating another of world most famous brand Samsung in China. Although the company has hired former Google executive Hugo Barra to help expand its business into global markets, but until now they are not able to see their expectations come true. The strict patent laws outside China are also one of important hindrance in the way of Xiaomi to go global.   

 

SALES AND REVENUE

Though Xiaomi produces a variety of software and hardware, the main source of their revenue is smartphone devices, which account for 94% of total revenue. In 2012, Xiaomi sold  a total of 7.9 million phones and  generated 12.6 Billion yuan ($205M) revenue for the company with a net profit of $293M. This profit doubled to $566M in 2013, in which they sold 18.7 million smartphones and revenue was more than double (11 billion). The company experienced very fast growth that is 300 percent from 2013 to 2014 in which they sold 61 million phones.

Xiaomi failed to achieve its sky high goal of 266% growth in 2015.  In chasing the target of 100 million devices, they sold only 70 million devices. On the other hand, their competitor Huawei shipped 108 million devices in 2015 with 44% growth rate.  Documents revealed that Xiaomi fall short its 2015 targets for both mobile handset  sales and internet services revenue.

The $45 Billion valuation of Xiaomi has been questioned recently as it failed to fulfill the expectation of investors. The recent Mi Fan Festival held on 6th April, Xiaomi concluded with revenue of $290 million (1.87 Billion Yuan) sales in  a single day.

Funding, Investments and partners

Xiaomi received the total equity funding of $1.45B in 6 rounds from 11 investors All-Stars Investment, Singapore sovereign wealth fund GIC, DST Global, Morningside Group, Qiming Venture Partners, HOPU Investment Management company, Qualcomm Ventures and Ratan Tata. Xiaomi started its operations in 2010 from first round of funding from the Singaporean government owned investment group called Temasek Holdings, Chinese venture capitalists IDG Capital along with Qiming Venture Partners and mobile processor developer Qualcomm. In December 2014 the first round of equity funding completed, which was led by All-Stars Investment limited of Hong  Kong. Xiaomi became the world’s most valuable tech start-up after making its valuation more than US$46 billion. The other participants in this round included DST Global, a Russian investment firm and GIC, a Singapore sovereign-wealth which were already share holder on Xiaomi.

In April 2015, Indian Business leader Ratan Tata invested an undisclosed equity in Xiaomi. He stated “Xiaomi is one of the fastest-growing companies in the world. It has brought its innovative business model and highquality products to India with huge success,”

Xiaomi has also 13 investments in 12 companies and it is lead investor in Hungama ($25M) and Jimubox ($37.19M). The other includes: Pebble interfaces ($11M), GWC (undisclosed stake), Westhouse ($20M), Xunlei ($310M), iHealthlabs ($25M), Careland ($14M), iQiyi ($300M), Misfit wearables ($40M) Lizhi, Ninebot ($20) and Jimubox ($84M)