Xiaomi future strategy
Xiaomi was founded in , launching its own operating system later that year and releasing its first smartphones in In just a few years, Xiaomi had grown into the largest smartphone maker in China. However, sales plummeted in , and the company fell in the rankings. Many in the fast-moving tech world assumed that Xiaomi would collapse entirely. Against all odds, the company surged beginning in , while sales figures and revenue have risen since that time.
Despite its late entry, OnePlus has found a niche in India that it won’t let go
Xiaomi's brand image has always been regarded as down to earth, not only because Xiaomi's retails price is set at half of its competitor's, but also because even as a big name amount all the internet tycoons, Lei Jun is very approachable as well and always mingles with young internet users. Even though Xiaomi's pricing strategy is close to the ground, you can't say that Xiaomi doesn't envy the high-end market.
In fact, Xiaomi wants to enter the high-end market through recruiting Tony Leung as its brand endorser, cooperating with master designer Stark, and many more.
However, after all this, Xiaomi still doesn't seem like a high-end brand, its smartphone price mostly from mid to low price range, Average Selling Price unchanged. Today I will go through 3 aspects about why it is so hard for Xiaomi to enter the high-end market. I'm Danny, focusing on auto and tech industry. All the arguments in this episode align with my OCD standard, four words: refute as you wish.
All evidence presented in this video is from first-hand sources. With the brief introduction of Xiaomi's business model, let's come back to today's topic: why is it so hard for Xiaomi to enter the high-end market?
We like to compare Xiaomi with Huawei, however, their brand perceptions have become very different in the past few years. Huawei has become a model for all brands which want to enter the high-end market. Xiaomi also needs to learn from Huawei if Xiaomi wants to enter the high-end market.
At the beginning I said that Xiaomi picks the down to earth strategy, Huawei, on the other hand, picks international high-end strategy, through the partnership with first-class, international brands like Leica, Porshe design, Panton and Devialet, and wins the heart of many executives.
But what we saw is the superficial phenomenon. There is a misconception in the market that Huawei becomes high-end just by cooperating with some international brands, is that true?
Of course not, there are so many companies in China, which spends millions to cooperate with other brands. Just like rich rednecks pay celebrities to join their events and take photos with them in order to experience superior. As time passed, eventually will become wool hat boys. From this perspective, rookie Xiaomi has a long way to catch up with Huawei. How about Huawei? Many people questioned that Huawei is not a public listed company, where did you get the data? Actually, Huawei releases its audited financial report every year and even started to share its quarterly report from Its financial records can also be backtracked from it.
And you should able to guess why Huawei starts sharing its financial details in One evidence is that in the Q3 earnings call, an analyst asked Lei Jun a sharp question. True, but you should know the coupling reaction between each Huawei's business segment, in another word, there is a strong synergy between each segment, they will support each other eventually.
As I say, Huawei has gradually entered the high-end market in the past few years. After all, the technology industry is different from the luxury industry. The mobile phone has almost become a human organ, and the consumer decisions on technology products are relatively rational and transparent. There is no doubt that a clever person like Lei Jun has realized this. Of course not, Xiaomi does have its difficulties. Actually, it's not because Xiaomi has a poor performance, but the opponent is super-strength, um, this is a duo punch line.
Xiaomi does not have as much capital as Huawei. On the one hand, the scale of the company is not as wide as Huawei. You can see from DannyData that the revenue difference of Xiaomi and Huawei are tremendous:. On the other hand, Xiaomi chose a difficult business model.
As consumers of Xiaomi, we are all responsible for this. That is the second point I want to say, the funnel decides how to make money. Here are some explanations for the beginners. What is the difference between Xiaomi's IoT and consumer products?
IoT refers to Xiaomi's Internet of Things-related equipment, such as air purifiers, water purifiers, the three essential pieces, TV, air conditioners and washing machines, etc. These products are the future strategic focus of Xiaomi's product line. Meanwhile, consumer products refer to Xiaomi's products which are not connected to the internet, such as Xiaomi Power Bank, signature pen, battery, hand-washer, etc.
In fact, Xiaomi has not made much money on selling these consumer products, and these products are not Internet-connected. The main purpose of selling these is giving you the feeling that all the products of Xiaomi are reliable, and you can choose any products without any doubt. It's similar to the Costco, which Lei Jun has always respected. Let's back and talk about the Funnel of Xiaomi's business model.
The answer is yes. If you are interested, you can go and check them. Xiaomi'shardware is not very profitable, but since Xiaomi is a running business need to make profits. Relying on the fourth layer of the funnel, Internet services including financial services, advertising, etc.
This problem is indeed sensitive to Xiaomi. On the one hand, it is necessary to focus on the user experience. Cutting off a large part of the ads will seriously lose the profit. On the other hand, Xiaomi has already given up the profit of the hardware, while the users have not let Xiaomi advertise on MIUI.
As we all know, you cannot "require the horse to run and also expect the horse not to graze. I suppose someone here will refute me: "Let Xiaomi make money? This is a treacherous business thinking, and I just want to get a deal from it. Lei Jun chose a tough path which makes Xiaomi's hardware profit margin extremely low. Some people say that the profit margin reflects the influence of the brand. It feels like you are not drinking wine but SK-II toner. But I think that "the profit margin reflects the influence of the brand" is a one-sided idea and traditional industry thinking.
Xiaomi is on its way of actively reducing the profit margin of the hardware with a lower price for more sales, which will be the excellent preparation of the future layout. Xiaomi actively reduces the hardware profit margins, which is a good thing for consumers. But it is also a stumbling block for Xiaomi to enter the high-end market.
You have to admit that among the many old school Chinese people, Xiaomi's low-priced hardware is not high-end enough. Many old sayings in China seem to make sense, such as "cheap things are always not good", but many people do not use it well, such as overgeneralization.
When Xiaomi says that their products are cheap, it's a relative concept that for the same hardware, Xiaomi has a lower price. However, for the people who don't like Xiaomi, they treat "cheap" as an absolute concept that for them Xiaomi's products are sleazy.
They use old Chinese sayings to label Xiaomi's products in a serious way, which they are quite used to do this kind of thing. But actually, many old sayings themselves are contradictory, for example, "the early bird catches the worm" and "the nail that sticks out gets hammered down".
To defence the attacks from the public buzz, Xiaomi was split into two brands, Xiaomi and Redmi in early Xiaomi faces the new high-end retail market, and Redmi faces the most cost-effective online market.
This step also paves the way for Xiaomi to enter the high-end market. When the next time someone uses "cost-effective" to discredit Xiaomi for not high-end, Lei Jun can respond: "Are you talking about cost-effective? You are welcome to buy a Redmi. Therefore, the extreme price-performance ratio, which can also be mentioned as"impressive products with a reasonable price", pursued by Xiaomi from the beginning is the "original sin" towards the high-end market.
Although Xiaomi has been trying to improve this situation, it still has a long way to go. Let's talk about the third point, brand image selection, which is also the reason why Xiaomi is currently unable to reach the high-end market. When we mention Xiaomi's brand image, it's always inseparable from Lei Jun'spersonal image. To be clear, I'm definitely not saying that Lei Jun is not high-end enough. As I mentioned at the beginning, Lei Jun is definitely a bigshot among the Internet tycoons, and he is also a well-known hardworking person in the Internet circle, Xiaomi's No.
Lei Jun had published 97 Weibo in a week to promote Xiaomi 9. You can also count the number of messages posted about Xiaomi 10 released recently. Lei Jun often personally faces Xiaomi's young user group, and jokes about his"Are you ok". He is patient and not afraid of self-deprecating.
This personal style of Lei Jun fits the preference of young Internet users, who are the core user base of Xiaomi. Since Lei Jun has chosen to have good fun with young netizens, he will inevitably lose some stereotyped "old cadre" users.
They will think that the Xiaomi is not classy and serious enough, just like a toy for youngsters to play with. In my opinion, people who make a fuss over this matter haven't seen the bigger world themselves. If you listen to the some English accent of corporate executives and university professors in the United States and Europe, you will think LeiJun's English accent is alright.
In addition, the educational resources of Lei Jun's generation are limited. Presumably, Lei Jun's English teacher's accent is no better than him. Thanks to the education dividend brought by the rapid development of China, our generation is better in English. Take myself as an example, I think my accent isn't as good as people born after , even though my three-years studying in Europe. Although I disagree with this "old cadre" view, I have to admit it.
As an analogy, Xiaomi's brand image is more like Du Fu the potent, but his style is lacking temperament than Li Bai. So one day, if you suddenly find that Lei Jun is not so close to the people anymore and become distant, you should not be too surprised. The change in Lei Jun's style may also be accompanied by the growth of Xiaomi's core user group.
Xiaomi's had a phenomenal , but brings with it new challenges. while flexing its engineering prowess via bold, new, future-facing concepts. even more aggressive sale strategies across various price segments. Ranking 7th, it demonstrates the company's steady execution and forward-looking strategic nimbleness. Created by global management.
The brand—owned by BBK Electronics, also the parent company of other major smartphone brands Realme and Vivo—has not only grown its own market share in India but also expanded the premium smartphone segment in the price-sensitive market, according to Vikas Agarwal, general manager, OnePlus India. Edited excerpts:. It was sort of a dream opportunity for me because I always wanted to work for a global brand and I got to launch a new brand in India.
Chinese tech giant, Xiaomi has often been dubbed, "the Apple of China" — due to its similarities with the i-Phone maker in terms of its sleek product design, or retail stores which feature bright lights and eager employees donned in solid-colored T-shirts.
Xiaomi's brand image has always been regarded as down to earth, not only because Xiaomi's retails price is set at half of its competitor's, but also because even as a big name amount all the internet tycoons, Lei Jun is very approachable as well and always mingles with young internet users. Even though Xiaomi's pricing strategy is close to the ground, you can't say that Xiaomi doesn't envy the high-end market. In fact, Xiaomi wants to enter the high-end market through recruiting Tony Leung as its brand endorser, cooperating with master designer Stark, and many more.
Why is Xiaomi hard to enter the high-end market?
Xiaomi makes and invests in smartphones , mobile apps , laptops , bags, earphones, shoes, fitness bands, and many other products. Xiaomi released its first smartphone in August and rapidly gained market share in China to become the country's largest smartphone company in Xiaomi has 16, employees [15] [ failed verification ] worldwide. The company was listed at the Hong Kong Stock Exchange since On 6 April Xiaomi was co-founded by Lei Jun and six others:.
Xiaomi may abandon the more budget-friendly ends of its market in the future: company CEO
What do you do next? The Chinese have an obsession with setting world records. So when Xiaomi launched offline stores in India in one go in October, it got another world record to its name. For a brand that has relied mostly on flash sales online, going big offline this way was different. Globally, smartphone shipments declined 4. In fact, it is one of the few high-growth markets in the world right now. In , nearly That means a growth of
Let me clear that up. Apple is mainly known for launching premium-end devices for a niche audience who can afford it.
Xiaomi's CEO Lei Jun has advised the company's fans that the days of its brand's association with cost-effective hardware is over. The OEM has built a sizeable business out of targeting the mid-to-low tiers of the smartphone and tablet markets. However, Lei has indicated that those days may be over soon for the company. This apparent move may be a bid for more effective revenue-building by the Chinese electronics firm.
Is Xiaomi Competing With Itself in India?
An award-winning team of journalists, designers, and videographers who tell brand stories through Fast Company's distinctive lens. Leaders who are shaping the future of business in creative ways. New workplaces, new food sources, new medicine--even an entirely new economic system. Xiaomi saw its smartphone sales sink in 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 —and hopes its sleek new Mi Mix and Mi Note 2 smartphones will reignite sales in China. Citrix MailChimp. Events Innovation Festival The Grill. Follow us:. Lists Top 50, China, Consumer Electronics. Stories about Xiaomi. But radical new design brings radical new engineering challenges.
