Smartphone maker Xiaomi’s web-focused strategy produces 135% growth in 2014
January 7, 2015 04:20 PM
Xiaomi Inc. has rocketed into the top ranks of the world’s smartphone manufacturers with a strategy of primarily selling online, and the 4-year-old Chinese company keeps on growing at a stunning rate.
Xiaomi sold 61.12 million smart phones in 2014, up 227% from 2014 from 18.7 million in 2013, founder and CEO Lei Jun disclosed in a post this month on Weibo, the Twitter-like Chinese social network. Xiaomi plans to sell more than 100 million smartphones in 2015, Lei says. He also said revenue grew 135% to 74.3 billion yuan ($11.96 billion) in 2014, from 31.6 billion yuan ($5.09 billion) in 2013.
The growth has moved Xiaomi into the No. 1 position among smartphone manufacturers in China and No. 3 worldwide, behind Samsung Group and Apple Inc., according to market research firm IDC. Xiaomi, a private company, says a $1.1 billion investment last month by Russian investment firm Digital Sky Technologies and Singapore’s GIC Pte valued the company at more than $45 billion. That’s more than China’s largest direct-to-consumer retailer, JD.com Inc., which now has a market value of $33.9 billion.
Xiaomi ranks No. 3 in the Internet Retailer China 500; JD.com is No.1.
Xiaomi sells its products online on its own e-commerce site, Mi.com, and also on web marketplaces such as Alibaba Group’s Tmall.com. In addition, some Chinese mobile network operators sell Xiaomi phone via their retail networks, either offline or online in China, according to Xiaomi. In 2014, the web accounted for about 70% of Xiaomi’s sales, the company says.
Lei says users of the company’s MIUI mobile operating system, which is based on Google Inc.’s Android, now exceed 85 million. Xiaomi encourages consumers to provide feedback from the web and has turned their suggestions into many new features of its software, such as a spam blocker that lets a user block unwanted calls, for example from people not in his address book.
Lei say Xiaomi had “huge successes in international markets” in 2014 and Xiaomi, including selling 1 million phones in India. However, Xiaomi also hit some bumps in the road as it expanded beyond China, for example when Sweden-based telecom company Ericsson sued Xiaomi for patent infringement in India in last year. Xiaomi says it has obtained a temporary sales license from an Indian court and is negotiating a long-term agreement with Ericsson.
Xiaomi has entered seven markets outside of mainland China in the past year: Hong Kong, Taiwan, Singapore, Malaysia, Philippines, India and Indonesia. Xiaomi says it plans to expand into further in 2015, including into Russia, Brazil and Mexico.
Lei also notes that Xiaomi now not only makes smartphones, but also such products as tablets, TVs, TV set-top boxes, air purifiers and wearables, such as an Internet-connected wristband.
Xiaomi also invested in more than 20 electronic companies in 2014, such as U.S. firms Misfit Wearables and iHealth Lab Inc., and China’s Midea Group, the company says.
Xiaomi invested $25 million into iHealth in September and says it aims to quickly provide electronic health care products. Xiaomi and iHealth already launched a blood pressure monitor in China last year. The product can transfer data from the monitor to a smartphone. Xiaomi is selling it at 189 yuan ($34) at Mi.com.