Hello Fans ,
In just five years, closely held smartphone maker #Xiaomi Corp. has become a force to be reckoned with in China. Selling full-featured phones at near cost, the Beijing-based company has successfully challenged bigger-name rivals such as Apple Inc. and Samsung Corp. and become one of the world’s most valuable startups, at an estimated $45 billion.
Xiaomi Vice President #HugoBarra, a former Google executive, sat down with Wall Street Journal Deputy Editor in Chief Rebecca Blumenstein to discuss the company’s evolving business model and expansion plans.
Here is the discussion happend between the them:
Your business model is obviously very different than Apple’s and Samsung’s. Your MiPhone is half the cost of an iPhone. You do viral marketing. You have a fan base. You engage them in design. You now have some imitators who are trying to copy you. How is the business model evolving in China and beyond?
Without a doubt, smartphone sales in China and the rest of the world are moving online. In China, about 40% of the smartphones sold are sold online, which is a significant growth. There are players that have also emerged as sort of primarily focused online, although really, I think what they’re doing is looking at the business model that we had maybe a year ago.
We continue to move forward. We continue to innovate. For example, we have introduced a crowdfunding model in China for some of our ecosystem products. We launch a project to the community, and they decide whether they want to back it. If enough people back it, then we manufacture the product.
This is a very scalable model that allows us to, essentially, build an entirely new business on top of what we already have today.
Affordability is one of your key drivers. Tell me more about that.
Our mantra is innovation for everyone. We are focused on bringing the highest-end technology to users at the lowest possible price.
Handsets are getting very competitive, so your big bet is on services and products beyond phones. How many companies do you have partner relationships with, and how is it going in terms of having your users buy multiple Xiaomi products?
We have what we call the Xiaomi ecosystem. Think of it as a portfolio of companies that we’ve backed from the beginning. In some cases, we actually put the company together.
We connect [these companies] to our supply chain, meaning they have access to the best components at the best possible
prices. They have access to manufacturing.
We also hook them up to our industrial-design team, so they’re building products that are consistent from a design-language perspective with all of our other products. We then sell those products with our brand on our channel. We’ve so far backed 50 companies like this.
One of the latest products that we released is the Mi Water Purifier. We also have audio products. We have a security camera. We have our action camera. These products, and many more to come, are part of the sort of lifestyle experience that we’re building, primarily focused on your home.
You recently launched in Brazil. Can you give us a sense of how sales are going?
Brazil is the fourth-largest smartphone market in the world, and it’s growing very, very quickly. It’s also a peculiar market in the sense that it’s highly protected. To enter the Brazilian market—which I know very well being from there—we actually had to set up our manufacturing operation there.
But it’s a market of technology enthusiasts, so the latent demand that exists is significant.
Your online sales in India are growing quite rapidly. Are you satisfied?
Very happy. An IDC figure for the second quarter [shows that] Xiaomi was the No. 3 smartphone vendor online, with a 15% market share. That’s pretty healthy for a company that’s only been there for one year.
I think we’ve actually moved market forces in India, in a sense because we’ve accelerated the pace with which smartphone sales are going online. We entered 2014 with about 20% of all smartphones sold in India sold online. We’re probably going to exit this year with 30%.