Hello, Quartz Index readers!
Yesterday (May 3), Xiaomi filed to go public in Hong Kong, in what is expected to be the world’s biggest IPO in nearly four years.
How did the Apple copycat—as Xiaomi had often been accused—evolve into Apple’s true competitor, now the world’s fourth-biggest smartphone maker?
The secret of Xiaomi’s success, which won it an expected valuation of $100 billion, is basically an anti-Apple strategy: While Apple has established itself as a premium brand enjoying unmatched pricing power for all kinds of gadgets, Xiaomi sells its products as cheaply as possible and, increasingly, to as many people as possible worldwide.
Founded in 2010, Xiaomi began selling its phone in China at razor-thin profit margins, relying on flash sales and its cult-like fan base to grow into the world’s third-largest smartphone maker by shipments by the third quarter of 2014. When rivals like Huawei and Oppo copied its low-cost strategy, Xiaomi changed its approach by opening retail stores across China and expanding its product range to offer everything from rice cookers to air purifiers to smartphone-controlled toilet seats.
What remains unchanged is that Xiaomi products remain dirt cheap. Xiaomi was second only to Apple in the global wearable market in 2017, with its wearables outselling all others in the second quarter. Xiaomi says its Mi Band is around $25, while competitors’ products are around $50-$100.
The next phase for Xiaomi is to become “an innovation-driven internet company” (pdf) rather than a hardware company. That means future growth will depend much more on lucrative online services—from payments to streaming to gaming—than gadget sales.
In that way, at least, “China’s Apple” will begin to resemble its American rival more than ever before. —Zheping Huang
[qz-index-article id=1269279][/qz-index-article]
[qz-index-article id=1268522][/qz-index-article]
[qz-index-article id=1268434][/qz-index-article]
[qz-index-article id=1267289][/qz-index-article]
[qz-index-article id=1267158][/qz-index-article]
[qz-index-sponsor][/qz-index-sponsor]
[qz-index-article id=1266146][/qz-index-article]
[qz-index-article id=1266101][/qz-index-article]
[qz-index-article id=1264555][/qz-index-article]
[qz-index-article id=1264468][/qz-index-article]