Normally it’s tough for new smartphone makers to stand out in the jam-packed smartphone market. One notable exception is the China-based start-up Xiaomi. Over the past year, Xiaomi has racked up a number of superlatives and accolades for its stylish, reasonably-priced phones and innovative business model.
Though Xiaomi didn’t ship its first smartphone until August 2011 and only sells smartphones within greater Asia, it is currently:
- The world’s most highly-valued technology start-up
- The world’s fastest-growing smartphone maker
- The leading smartphone seller in China
Xiaomi is also a top-5 smartphone seller globally. Market researcher Gartner recently ranked Xiaomi No. 5 in global smartphone sales (after Apple, Samsung, Lenovo and Huawei) while market researcher IDC placed Xiaomi at No. 3 globally.
Xiaomi’s quick ascent is the subject of much fascination within the smartphone industry. So much so that VisionMobile analyst Michael Vakulenko and I were inspired to write a piece about the Xiaomi phenomenon. In the article, which was published today on the Swedish mobile-tech news site Mobilbusiness, we posit that Xiaomi is disrupting the smartphone industry at a fundamental level that may be on par with Apple’s 2007 introduction of the iPhone and Google’s 2008 launch of Android.
Our article also discusses the power Xiaomi derives from its “tribal” brand; its somewhat stealthy plans to create a broad, profitable Internet of Things ecosystem; and the reasons why smartphone companies that (try to) copy Xiaomi’s business model will fail.
This last point is one of our key messages. Since market forces (including Xiaomi’s rise) are rendering the classic smartphone manufacturing business model unsustainable, some smartphone makers are attempting to replicate what they see as Xiaomi’s secret sauce. However, we believe these companies are only looking at part of the picture. As a result, they are only imitating a portion of Xiaomi’s market strategy rather than Xiaomi’s full, integrated approach. (In the article, we liken this slipup to the Indian parable, “The Blind Men and the Elephant.”)
That doesn’t mean that these more traditionally structured smartphone makers should ignore Xiaomi’s success. Instead, in our article, we offer a new plan of action they can follow. The plan should help these companies weather Xiaomi’s third wave of disruption/innovation.
I think this is a fresh way of viewing Xiaomi and its significance to the smartphone industry. I should note that Michael, my co-author on the article, is a very smart analyst on all things mobile-related. I interviewed him for my book, The Smartphone, and learned much from him during that process. In fact, I believe I quoted him more times in my book than any other interviewee. If you are interested in his industry commentary, you can find his thoughts on Medium.