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China Smartphone Star Eyes US Market

Robert Clark
News Analysis
Robert Clark
6/13/2014
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Xiaomi might not be a familiar name outside of China, and certainly not in the US, but that may soon change.

The four-year-old handset firm caught attention outside China when it enticed Google's Hugo Barra to take over its Android business in last August.

But it's now starting to take its distinctive and so far highly successful business model abroad. It has had some early success in Singapore, and has nominated ten other countries for expansion this year. Barra has told an Android news site that the company will target North America from as early as next year.

Last year it sold just under 19 million phones, increasing sales by 150% to 31.7 billion yuan ($5.1 bn) -- but the sales chart doesn't tell the full story.

The company updates its Android-based OS, MIUI, each week based on customer suggestions. It holds feverish events with delirious fans, known as "Mi-fen", whose passion makes Apple fanboys look anemic. During one of these in April it sold 1.3 million phones in a day.

By limiting its distribution to online, Xiaomi, whose name means "little rice," creates scarcity. Right now it has a lengthy waiting list for half a dozen devices, including 9.82 million in the queue for a single product, the Mi 2.

Until now, it has sold just a handful of devices outside China. But the appearance of President Lin Bin onstage at the GSMA's annual Asian conference this week underlines its global ambitions.

Xiaomi has a solid international background. Founded in April 2010, its original backers included Qualcomm, Singapore government investment arm Temasek, and IDG Capital. Its eight founders, including Lin and CEO Lei Jun, all had a history with foreign companies in China such as Google, Microsoft and Motorola.

In his pitch to the GSMA audience, Lin cited figures that showed that seven Xiaomi handset models ranked in the top 15 devices most heavily used online in China. He says the new Mi 3 is the world's fastest smartphone and the first non-PC to carry the Nvidia K1 chip.

With the support of its suppliers such as Qualcomm Inc. (Nasdaq: QCOM), Nvidia Corp. (Nasdaq: NVDA), Sony Corp. (NYSE: SNE) and Sharp Electronics Corp. , it has expanded its product line to tablets, smart TVs and hi-fi gear.

While the company sells directly to users in China, it may decide it needs help in the channel in cracking new markets. Opportunities beckon for operators.

— Robert Clark, contributing editor, special to Light Reading

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SachinEE
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SachinEE,
User Rank: Light Sabre
6/25/2014 | 5:30:33 AM
Re: China Smartphone star eyes US market
It is a good thing that Xiaomi has decided to branch out and invest their product more in the US. This bold step will be a good one since it has been a success in China. Technology advancements are always a better thing and this will significantly boost the economy of the United States. The number of android users has also increased because of its efficiency and the fact that android phones are cheaper than I- Phones. It is definitely a good business opportunity for Xiaomi.
DHagar
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DHagar,
User Rank: Light Sabre
6/16/2014 | 12:44:32 PM
Re: China Smartphone Star Eyes US Market
@Kruz, I am cheering with you. 

I think they have the opportunity to not only compete well, but even possibly to change the market - that would be even better.
DHagar
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DHagar,
User Rank: Light Sabre
6/16/2014 | 12:41:04 PM
Re: China Smartphone Star Eyes US Market
@danielcawrey, very true.  It appears they have the ability to compete and potentially provide even more innovative consumer choices with their business model.  That is what can change the market.
Kruz
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Kruz,
User Rank: Light Sabre
6/16/2014 | 4:21:20 AM
Re: China Smartphone Star Eyes US Market
Innovation driven by a customer experience feedback, a nice model to push.

I hope Xiaomi will be able to find itself a place in times where big players are struggling to grab a tiny market share.
danielcawrey
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danielcawrey,
User Rank: Light Sabre
6/15/2014 | 2:30:33 PM
Re: China Smartphone Star Eyes US Market
I welcome Xiaomi coming to the United States. Consumers need to have options, and Android versus iPhone is simply not enough in my estimation. 

Those two platforms need a third player to keep competition at world-class levels. We can expect Blackberry or Microsoft to step up, but a new disputer might be capable of doing so. 
DHagar
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DHagar,
User Rank: Light Sabre
6/13/2014 | 7:50:55 PM
Re: China Smartphone Star Eyes US Market
Robert, incredible!  It sounds as if they have taken the Apple phenomenon to a new high.

Not only the changes and the adapability, but the hype they appear to be generating appears to be creating a "cult" following, along with the multiple products they are offering.

Does sound like a great business opportunity,
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