AH Primetime: Xiaomi's Smartphone Business Is Just The Tip Of The Iceberg

Xiaomi has been the talk of the town for a while now. This Chinese smartphone manufacturer was founded back in 2010, it sold 19 million smartphones in 2013, and 61 million in 2014. The growth-rate of this company is staggering, they intend to sell 100 million devices this year and they really did start this year with a bang, they've announced a bunch of devices already, like the Redmi 2, Mi Note, Mi Note Pro, Mi Headphones and the Mi Box Mini. That's not all, Xiaomi is the most valuable tech startup in the world, they acquired $1.1 billion in funding and are said to be worth $45 billion. How is this even possible considering Xiaomi turned only $56 million in profit in 2013? Well, let's find out.

Investors are throwing money at Xiaomi's feet it seems, and some of you might wonder why that is considering Xiaomi is not turning that much of a profit by selling smartphones. Xiaomi plans go far beyond the smartphone business though, they don't sell devices to earn a ton of cash from them, but "seed competitive e-commerce business that goes far beyond mobile," as VisionMobile said, and I tend to agree with that statement. Xiaomi basically pulls consumers their way and by doing that creates a sort of fan base, and they do that by using the online-only approach. They sell their devices online and use internet-age marketing methods to do their business, which is a completely different approach compared to the companies out west. Social media networks are a big part of Xiaomi's business model, engaging consumers directly is a part of Xiaomi's "charm".

Xiaomi's community of fans is becoming bigger and bigger by the day, the growth-rate is incredible, as I already mentioned. Smartphones are not Xiaomi's only business though, this company has entered the "Smart Home" business a while ago, they also sell Wi-Fi routers, media centers, smart TVs, lightbulbs, air purifiers, webcams, fitness bands, headphones, blood pressure monitors and of course tablets. About two months ago, Xiaomi invested $203 million in Chinese home appliances maker Midea Group, which only further shows their appetite in this area. That's not all though, Xiaomi has invested in a handful of other companies in the past year in order to ensure that the growth-rate is right on track.

One of Xiaomi's investors, Yuri Milner, actually said that the company's valuation could easily double and go well over $100 million. Smartphones are Xiaomi's distribution channel in a way, not really a source of profit, even though they do earn some cash from selling them, of course. This company has a huge appetite for success, they plan all sorts of expansions this year and will announce their plans this month. You can expect them to expand further into India, the second biggest smartphone market in the world, as well as Brazil and quite probably the rest of Latin America from there. Expanding further into South-East Asia was also mentioned a while back, as well as Russia. We'll get see what else Xiaomi will announce this month, but one thing is for sure, this company has great ambition and it will be interesting to see if they can keep this up. They will face significant challenges in other markets considering they'll have to adapt their business model in order to succeed.

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About the Author
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Kristijan has been writing for Android Headlines since 2014 and is an editor for the site. He has worked as a writer for several outlets before joining Android Headlines, and has a background in writing about Android and technology in general. He is a smartphone enthusiast that specializes in Android applications, and that platform in general. Contact him at Kristijan. [email protected]
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