Founded in 2010 as a lean startup to sell smartphones at cheap prices over the internet, in merely 4 years, Xiaomi overtook Samsung by volume and became the largest smartphone vendor in China. In 2014, it was considered as the top three unicorns in China along with Didi and Uber, according to CB Insights. Despite the fierce competition in China\u2019s low-price mobile phone market, Xiaomi maintained its strong position and surpassed its sales target by 18% in 2017.<\/p>\n
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I think the most critical reason to Xiaomi\u2019s amazing success is its great alignment between value creation and value capture through an effective operating model.<\/p>\n
1) Sell smartphone with high quality, but at low prices<\/strong><\/p>\n Many might wonder how Xiaomi manages to sell high-end phones at rock-bottom prices, which it claims to be just above cost. What Xiaomi has done, is as follows:<\/p>\n By ensuring the effective reduction of costs, Xiaomi was able to maintain a competitive price, typically at 20%-30% of the price of a Samsung or Apple smartphone with similar specifications.<\/p>\n By delivering high-quality products to its buyers, it has won over a legion of loyal fans to test new features and drum up enthusiasm for the company. Hence, Xiaomi was able to keep each model\u00a0on the market only up to 18 months, while it makes money by charging for services and accessories that accompany each new model.<\/p>\n <\/p>\n 2) Offer superior software system, comparing to typical low-priced smartphone competitors<\/strong><\/p>\n Xiaomi powers their phones through a customized android operating system called MIUI. Unlike other companies, Xiaomi lets users help make decisions on\u00a0the customization and additional features that will go into the next MIUI release. Unlike other Chinese mobile manufactures, Xiaomi spared no R&D expense on upgrading its software system, in order to provide better customer experience.<\/p>\n <\/p>\n 3) Emphasis on digital presence<\/strong><\/p>\n Xiaomi does not have a single factory or physical store, a radical departure from the traditional operating model utilized by other major manufacturers in the smartphone space. Xiaomi employs a unique model that differentiates itself in every phase of the customer journey. Unlike a traditional company that relies on brand and product marketing to build awareness, Xiaomi uses the power of crowd sourcing and online communities to create awareness of its products and at the same time ensuring that the products built are what customers really want. Also, xiaomi solely conducts its sales through its e-commerce site. At the same time, it puts only limited quantity of phones for sale. In a sense, all new models are sold in limited volumes as \u201cbatch sales\u201d, which strongly drives consumer fervor and inculcates built-up demand.<\/p>\n <\/p>\n 4) More than a smartphone<\/strong><\/p>\n Xiaomi has gradually moved into a new era of technological innovation. They make products ranging from power banks to wearables to air and water purifiers. With hundreds of products sold on its e-commerce website, it is helping create a connected lifestyle for consumers.<\/p>\n More importantly, Xiaomi sees its smart devices as gateaways\u00a0for mobile entertainment services, which would represent recurring revenues in the future.\u00a0Xiaomi wants to create an ecosystem of apps available from its smartphones.\u00a0 Therefore, Xiaomi decided to\u00a0invest in video content development by taking a participation in Youku Tudou (online streaming company).<\/p>\n <\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Xiaomi\u2019s long-anticipated IPO is expected to be valued at $100 billion \u2013 quadruple of Alibaba\u2019s record breaking offering of $25 billion three years ago. What\u2019s Xiaomi\u2019s secret to success?<\/p>\n","protected":false},"author":10570,"featured_media":0,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-6588","hck-submission","type-hck-submission","status-publish","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/digital-winners-losers-2018\/","yoast_head":"\n\n