ZAIJIAN

Hugo Barra is leaving Xiaomi and going back to Silicon Valley

Obsession
China's Transition
Obsession
China's Transition

Xiaomi’s star hire is gone.

Hugo Barra announced that he is stepping down from his role as global vice-president at the Beijing-based smartphone maker. The announcement marks yet another sign that the company’s best days are behind it.

Working at Xiaomi was “the greatest and most challenging adventure of my life,” Barra wrote in a lengthy Facebook post, but added that years of “living in such a singular environment have taken a huge toll on my life and started affecting my health.” After rounding up the company’s achievements he said he will leave the company in February to start a “new adventure back in Silicon Valley.”

A former star at Google who oversaw the development of Android, the Brazilian native shocked the tech industry when he announced he would join Xiaomi in 2013, then a three-year-old company. At the time, the company was making waves in China for its then innovative model of selling phones online only. Yet the company was barely known outside of Asia. Barra’s hire marked the first high-profile example of a Chinese company poaching talent from Silicon Valley (months later, Coursera founder Andrew Ng would join Chinese search engine Baidu).

Barra’s departure from Xiaomi raises more questions about the company’s future.

At Xiaomi, Barra helped build a team that brought the company’s phones to markets outside of China, namely Southeast Asia and India. Its smartphones never reached the US or other developed western markets, however.

But over the past two years, the company has lost its status as China’s top smartphone vendor—first to Huawei, then to twin-companies Oppo and Vivo—as rival brands followed Xiaomi’s lead and invested in online sales. This year, Xiaomi invested heavily in brick-and-mortar partnerships and offline advertising—two tactics it once shunned.

Meanwhile, other parts of Xiaomi’s business appear to have flopped. The company once claimed it aspired to sell phones and hardware as a means to earn money from “services,” not unlike how Apple earns money from the App Store. Yet to date, the majority of Xiaomi’s revenue continues to stem from hardware. This poses a problem given the fading status of its smartphone, and hardware’s tendency to be commotidized. The company sells other products—smart lightbulbs, smart air-filters, smart scales, hoverboards—most of which compete against rival products that can be found at any electronics market in Asia. Last week, the company announced it had set a revenue target for 2017 of 100 billion yuan ($14.5 billion)—the same target it set for 2015.

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