Xiaomi: It's China's Apple, though you've probably never heard of it
Western brands scoff that Chinese mobile manufacturer Xiaomi just copies them, but Charles Arthur sees genuine innovation
The easy way to think of Xiaomi is as a Chinese smartphone maker which mimics Apple’s designs. But that would be wrong. It’s a narrative that was enunciated by Apple’s head of design Jonathan Ive, who when asked about the company last October was blunt: he “didn’t see [the similarities in design] as flattery” and called the superficial similarity in appearance of Xiaomi’s phones and software “theft” and “lazy”.
Some might instead think it’s a startup that aims to undermine Samsung, previously the sales leader in China, by offering phones with the same specifications as the South Korean giant, but at lower prices. Certainly it has mimicked some of its names: one of the new phones unveiled on Wednesday, a 5.7in device called the “Mi Note”, echoes the 5.7in Galaxy Note phablet range.
Both lines of thinking miss what keener observers believe is Xiaomi’s true character, and its ambition: to become China’s biggest provider of internet-connected devices to an eager, ever loyal, following drawn from a young demographic numbering hundreds of millions who will soon be outfitting their first homes – and looking for a brand to help furnish it.
Furthermore, it could be ideally placed to do what neither Apple nor Samsung can: become the first company of the smartphone age able to shift into and control the next era – the “internet of things” age, when all sorts of items around the home and elsewhere have internet connectivity.
Neither the company’s chief executive/founder Leu Jun, nor any of its pronouncements, have expounded that strategy. Yet it’s clear that it must have had a persuasive story to lure Hugo Barra away from head of product management for Android inside Google in mid-2013 to spearhead its international expansion. Barra’s interviews, however, haven’t said anything about longer-term strategy; only that he saw “a dream job, this idea of building a global company which could be as significant as Google, from the ground up.” He suggested in September 2013 that it would aim to sell its phones nearly at cost, and profit on services – but which services is unspecified.
Most people outside China, or away from the tech mainstream, haven’t heard of Xiaomi. Even the pronunciation can be a challenge; try replacing the “er” sound in “shower” with “me” (that is, “sh-ow-me”). In China, though, Jun has almost rockstar status, product unveilings are shrouded in mystery and rumours – beforethe latest phones were released, some suggested (wrongly) they would have expensive sapphire screens – and thousands of excited fans pack the venues.
However, if Xiaomi were just another smartphone company, even a popular one in the world’s biggest phone market, that wouldn’t really justify the $45bn valuation it attracted in late December when it raised $1.1bn in venture funding. Handset makers generally struggle to make profit, even in China where hardly any use Google’s services, instead using the open-source Android Open Source Platform (AOSP) and offer (and monetise) their own maps, search and app download services.
As a phone company, it’s thriving: Jun founded Xiaomi in 2010, having already had success as chief executive at software maker Kingsoft, Joyo (which he sold to Amazon for $75m in August 2004), and as chairman of browser maker UCWeb.
Xiaomi’s revenues have doubled each year, and it ended 2014 having shipped 61m smartphones – more, that is, than the entire Windows Phone ecosystem, where about 50m were shipped. In all, 97% of Xiaomi’s phones were sold in China, with a few in India and the rest of Asia.
So what’s special about it? The first clear clues emerged with a study in January 2014 by analytics company Flurry, which found Xiaomi users spend more time on their devices than those of any other brand – including Apple’s iPhone. For every 100 minutes iPhone users spent in apps, Xiaomi users spent 107; for Samsung users the figure was 86, for HTC users 73, and averaged across other Android devices it was 71. That means Xiaomi users spent 50% more time on their phones than non-brand Android users.
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