You May Never Get to Use Xiaomi's Phones, But They'll Probably Change Your Life Anyway

It's a hardware company. No, it's a software company.  It's both - and it doesnt much care for labels.

Xiaomi is the smartphone manufacturer/internet giant/connectivity maven that has every other tech company looking over its shoulder.

It's very good at what it does - most of its leaders began their careers at companies like Google, Microsoft, et al. Then they started their own enterprise, perceiving their was a 'niche' they could fill. The word niche is in parentheses because China-sized niches tend to be rather sizable. Xiaomi is now the third largest smartphone producer after Apple and Samsung - and it's gaining on Samsung.

It can compete on price, functionality and design. It may or may not enter the US market because it doesnt want to become distracted by the inevitable legal challenges that every competitor new to the US faces in tech these days (fairly or unfairly).

It has figured out the home networking opportunity and its moving on multiple tracks. It will change your life because others will be forced to copy them or go out of business. Which means that if you look now at what Xiaomi is doing, you may get a sense of where your personal technology is heading. JL

Marcus Wohlsen reports in Wired:

As part of its unique hardware-plus-services synthesis, the company may be better positioned than any other to make a connected hardware ecosystem that includes TVs, WiFi routers, and an air purifier, offering a glimpse of what the world might have looked like if Apple rather than Google had bought Nest.
Even the invitation was anticlimactic. Executives from Xiaomi, the world’s hottest mobile phone company, were coming to the US to brief reporters. But they would definitely not be announcing that Xiaomi’s phones would be coming to the US anytime soon.
That didn’t stop Xiaomi President Lin Bin and his deputy, former Android chief Hugo Barra, from unspooling a two-hour-long presentation on Thursday detailing why and how the company had in four short years become the world’s third-largest smartphone maker. By the time they were done, two things were clear. Xiaomi could become a genuine rival to Apple even without coming to the US. But even if it doesn’t, it could force changes in how smartphones work for everyone.
The most common comparison made by Americans who encounter Xiaomi’s MiUI operating system for the first time is Apple. That’s because the Android-based interface looks a lot like iOS, right down to the silhouette in the Contacts app icon. The company’s charismatic CEO Lei Jun is compared to Steve Jobs; its product launches are Apple-style spectacles; and the company has a sharp, consistent design aesthetic that has helped drive its success.
But beyond these superficial comparisons, the analogy breaks down. Most importantly, Xiaomi does not see itself as a hardware company. Everything Apple does as a business ultimately centers on persuading consumers to buy its devices, which it sells at a high margin for astronomical profits. Xiaomi, by contrast, may build hardware that resembles Apple’s, but it sees its business more like Google’s. “We are an internet company,” Barra said.

The Service Layer

At the heart of Xioami’s offering as an internet company is its MiUI, which as Barra describes it isn’t so much a fork of Android but a service layer the company bakes into Android to lock users into its array of offerings. The MiUI has an app store. It has cloud storage and syncing. It has photos, music, and mail. But that’s just the start.
For users in China, Barra says, the location-aware system offers everything from Uber-style ride-summoning to train ticket purchases, medical appointment bookings to movie tickets. Xiaomi also has a focused e-commerce operation offering fewer than 1,000 items along with 11 Amazon-style fulfillment centers that serves as both a funnel for its own hardware and yet another way to lock users into its brand.
Even then, use of the MiUI isn’t limited to Xiaomi’s own phones and other devices. According to Barra, the MiUI is being used on 347 different handset models from different brands. “Our ultimate vision for what we want the UI to be is an internet services platform with a number of integrated services built into it,” Barra said.

A Xiaomi Mi Note, right, and a Xiaomi Mi 4. Jeff Chiu/AP

And yet the Google analogy doesn’t quite work either. After more than 15 years in existence, Google has yet to realize any meaningful success in the hardware business, a failing to which the company seemingly admitted once and for all with the sale of its Motorola smartphone division to Lenovo. Xiaomi, on the other hand, sold 61.1 million phones last year, more than tripling its total from the year before. Only Apple and Samsung sold more.
Xiaomi’s hardware gives it a vertically integrated edge that appears to have generated an intensely loyal following, a following that Xiaomi has cultivated with a marketing strategy that couldn’t be more different from Apple’s. Apple famously keeps itself closed off from consumers and the press. Its hardware and software updates emerge from its Cupertino headquarters like royal edicts.
Meanwhile, Bin bragged about the 40 million members of its Xiaomi user forums, whom he says the company constantly consults and polls when deciding on new features for its weekly operating system updates that come out every Friday—224 so far. Xiaomi fans vote on the “popcorn award” handed out to company employees responsible for a favorite feature or update. Fans also attend “popcorn events,” rock concert-style marketing fetes with karaoke-style performances and cheesy competitions. The vibe is friendly, even goofy—as far removed as possible from Sir Jony Ive in his v-neck t-shirt.

Unsaturated Markets

Still, behind the approachable facade is a ruthless strategy aimed at exploiting an exploding market at just the right time in just the right way. “None of the modern operating systems available at the time were designed with the needs of the Chinese user in mind,” Barra says of the company’s 2010 founding. Its eight co-founders—average age 45, Bin says—were seasoned veterans with decades of combined experience at companies such as Google, Microsoft, and Motorola. They saw and seized an opportunity to meet surging demand with a model that incorporated lessons from the past two decades of mobile and online business.
And now it hopes to replicate that success in China elsewhere. India and Brazil are its next big targets, and in India in particular its popularity is rising quickly. Yet that popularity is exactly why Xiaomi doesn’t need to include the US among its priorities. The news at Thursday’s event in San Francisco, such as it was, is that Xiaomi plans to sell a limited number of accessories online in the US, such as headphones, battery packs, and fitness bands. But the US is kind of all wrong for how Xiaomi approaches its business, as described by Bin.

Xiaomi’s user base is expanding around the world. It doesn’t have a pressing need to come to the US. But the US may soon have to come to it.

The company’s success is predicated on having hundreds of millions of consumers seeking what may well be their first smartphone. The US market is already saturated. And Xiaomi competes aggressively on price, a strategy that doesn’t mean much in the US, where carriers subsidize smartphone prices to gain subscribers. The question was also raised—which Bing didn’t address head-on—of whether Xiaomi might face intellectual property problems coming to the US for designs that some rivals might see as cutting a little too close to their own.
Rather than face that headache, Xiaomi may well get to look on as US companies try to catch up. As part of its unique hardware-plus-services synthesis, the company may be better positioned than any other to make the “smart home” an everyday reality for consumers. Xiaomi is quickly building a connected hardware ecosystem that includes TVs, WiFi routers, and an air purifier, offering a glimpse of what the world might have looked like if Apple rather than Google had bought Nest.
Anchored by its phones and MiUI, Xiaomi offers a model of an integrated system where consumers don’t have to puzzle through how to connect up the various devices in their homes. Everything just connects up to the platform already at the center of their lives.
What’s more, as Xiaomi rises, it closes in on Samsung as the dominant platform for Android (having the guy who led Android for Google doesn’t hurt). As it gains leverage in defining the favored approach to Android, other handset makers will no doubt try to replicate Xiaomi’s success. In the process, US consumers will likely wind up getting a major dose of Xiaomi in how its Android phones are designed and how they work, even if they aren’t Xiaomi phones themselves. Xiaomi’s user base is expanding around the world. It doesn’t have a pressing need to come to the US. But the US may soon have to come to it—or at least its way of thinking about the business of mobile.