Xiaomi
China’s Apple-like phones with Jobs-like leader
Xiaomi saw its smartphone sales sink in 2016 due in part to its ramped-up competition with Huawei and BBK. But the company has seen remarkable international growth It sold 2 million devices in India in fall 2016—and hopes its sleek new Mi Mix and Mi Note 2 smartphones will reignite sales in China. Xiaomi is also working to upend the narrow perception of its brand: The company’s wide-ranging hardware offerings include everything from headphones and fitness bands to tablets and power strips and water purifiers. In 2016 alone, it introduced its first laptop, a set-top box, a robot vacuum, a smart rice cooker, a $29 VR headset, a quadcopter drone, and its MiJia electric scooter, among a slew of other ventures. Xiaomi aims to become an internet of things powerhouse through its investments, so far, in 77 companies, which can tap into Xiaomi’s resources, supply chain, and growing retail presence online and off (Xiaomi opened three-dozen brick-and-mortar stores this year, with hundreds more in the pipeline) to scale up faster. The company believe this portfolio approach—which doesn’t involve hiring engineers to build all these products—will create an ecosystem of devices and services with recurring revenue streams.
Xiaomi is best known for its iPhone-like smartphone, and Steve Jobs imitating CEO. Within 18 months of launching its first MiPhone, Xiaomi had become China’s fifth largest brand, largely due to the high profile of its leader, Lei Jun. With faded jeans and black turtle necks, he bounds onto stage, rock music and dry ice, adored by the young Chinese, proclaiming his latest innovation. Or should that be imitation.
Of course Xiaomi maintains that it is different. It has no stores, and only sells direct, online. Whilst its phones may be similar in style, their customisable software is distinctive, with a fast growing range of Chinese apps. The stretch from phones to tablets and notebooks was obvious, but the business is thinking broader as it first reaches across the world’s emerging markets (from Brazil to India, with their similar social and economic landscapes), and into western markets too.
Significant leaps forward included the MiBand launched in 2015 for around $10 (a fraction of the price of competitors like Jawbone, or even Apple Watch), enabling it to have a low-cost entry point to its ecosystem, and building a mountain of big data which enables it to know people more personally, and to engage them more frequently. In 2016, the brand went into completely new categories, with a beautifully simple and compact rice cooker, set to become the iPod of the Asian kitchen!
Lei Jun has said that his priorities are to innovation, iteration and image. Perhaps most impressive is the boldness and speed of Xiaomi’s growth. Latest estimates have the business to over take Apple in terms of revenues and profits by 2017-18. In fast growth, still emerging markets, the ability to imitate a premium and proven business model makes sense, particularly if the cost base makes it accessible to the new audiences. The ability to build a personality leader and cult-like following, is a powerful strategy for any brand.
