Xiaomi: From Nowhere to #4
By Shlomo Maital
Xiaomi may be the biggest, bounciest startup many never heard of. It is China’s biggest smartphone seller, 4th largest in the world, founded in 2010 and growing by leaps and bounds. It makes beautiful, cheap, simple smartphones, sold nearly everywhere but in the U.S., and sold only on-line until recently. Xiaomi means, in Mandarin, “millet technology” or “grain technology”. I’m not too sure why they chose that name. But Innovators can learn a lot from its story.
Xiaomi was founded by 8 entrepreneurs, Hong Feng, Zhou Guangping, Li Wanqiang, Huang Jiangji, Lin Bin, Liu De, Wang Chuan, and Lei Jun, with the latter as the driving force. It is based in Beijing.
It now employs some 8,000 and has annual revenues of some $20 b. It is widely regarded as the high-tech startup with the highest current market value.
An HBR Ideacast podcast by Clay Shirky reveals some of its break-the-rules innovations.
* Simplicity: Xiaomi smartphones are beautifully simple. Why? Android-based, Xiaomi chose 100 sophisticated smartphone users and interviewed them intensively, realizing that the company itself could never fully test ALL the permutations and combinations that smartphones enable, but users could and did.
* Customer-focus: Many companies claim that, but few really do it. Xiaomi does. Fully one-third of Xiaomi new features on their phones come from their users. They truly do practice ‘open innovation’.
* Samsung, once market leader in China, has very short battery life. Xiaomi found ways to lengthen battery life, and thus replace Samsung as China’s market leader.
* Xiaomi is now expanding from Internet sales, to open its own retail stores, somewhat like Apple.
But the main lesson from Xiaomi: China’s 5-Year Plan, “Made and Invented in China”, is no dream. Xiaomi has proved capable of competing head-to-head with giants like Samsung, LG and even Apple, both designing and manufacturing in China. And it is now aggressively invading the Indian market, which is huge.
We all knew Apple was vulnerable in the low-end smartphone market. Xiaomi saw that early on, and moved quickly to capture it.