SWOT Analysis of Xiaomi| How Does Xiaomi Makes Money| How is the Business Model of Xiaomi
1. What is Xiaomi?
Xiaomi is a global internet company that designs, develops, and sells smartphones, mobile apps, and other smart devices.
It was founded in April of 2010 by Lei Jun, one of Xiaomi’s co-founders and currently the company’s CEO.
The headquarters is located in Beijing, China. Xiaomi is the 4th largest smartphone company (as of 2021) with a market share of 18%.
The main target of Xiaomi is to produce high-quality smartphones at affordable prices. It targets the mid-range market segment.
2. How is the Business Model of Xiaomi?
Xiaomi’s Smartphone Business
Xiaomi’s business model is based on selling smartphones and related digital content. The company competes in the smartphone market with other companies such as Huawei, ZTE, and Samsung.
Xiaomi’s Internet of Things and Lifestyle Products Business
Xiaomi entered the consumer lifestyle market by releasing products such as Mi Band, Mi Smart Scale, Mi Bluetooth Speaker, Mi Hybrid Earphones and Mi Water Purifier and so on.
Xiaomi also offers smart home and smart energy products and Internet of Things (IoT) solutions, all of which are designed to help users manage their everyday life efficiently.
Xiaomi provides consumer technology products for online shopping, mobile payments services, music streaming services, games, and daily life.
Xiaomi’s Internet Services Business
Xiaomi started to establish its own online services in 2016. Xiaomi shop is a consumer lifestyle application that allows customers to share their experience with products, including the dynamic online shop on which Xiaomi offers products through third parties on the market.
Xiaomi’s Research and Development Business
Xiaomi has developed its own product design and technology by setting up its own Research and Development department.
The company continues to grow rapidly in terms of sales revenue, market share, and valuation.
3. How Does Xiaomi Makes Money?
a) Advertisement: Xiaomi has more than 4 million MIUI users and more than 30 million flagship smartphone users.
Xiaomi displays ads on its devices, thus engaging consumers and sharing information with partners.
Xiaomi users can also download apps from third-party sellers such as Taobao and Tmall, which also display ads on the device to engage consumers and share information with partners.
b) Subscription Service: Xiaomi has globally incorporated Qualcomm’s Snapdragon Mobile Platform, which is based on the company’s leading premium tier Snapdragon processor platform.
Xiaomi offers subscriptions for users to access premium services such as Mi Cloud and Mi Music.
c) Revenue Sharing Model: Xiaomi partners with content providers, developers, and device manufacturers to distribute their content to Xiaomi users. These revenue-sharing models are similar to Google’s advertising model, where content partners are rewarded for their contribution once consumers use these services or purchase-related hardware.
d) Hardware Revenue Model: Xiaomi has established its own smart TV business under the Xiaomi brand, which features smart TV powered by the Android operating system.
Xiaomi also launched a Bluetooth headset that is compatible with most mobile phones on the market.
e) Smart Home Products: Xiaomi’s smart home solution includes products such as smart light bulbs, water purifiers, air purifiers, and more.
f) Retail Revenue Model: Xiaomi’s retail business is mainly active in the Chinese market. The company also sells MIJIA smart devices through offline channels, including Mi Home Stores and Xiaomi Store.
4. Xiaomi Revenue and Financials
Following the Chinese technology giant’s significant increase in smartphone market share internationally, Xiaomi posted a second-quarter net income of $1.28 billion on revenue of $13.56 billion.
Xiaomi stated its sales increased by 64% year over year in the second quarter of this year, while its net income increased by over 80% compared to the same period last year.
Xiaomi Corporation’s yearly income from 2015 through 2020. Xiaomi, a Chinese electronics business, made around 245.87 billion yuan in sales in 2020.
Xiaomi’s sales from the Internet of Things and lifestyle goods segment increased by 36% to $3.2 billion.
Shortly after releasing its profits, the firm announced that it will purchase Deep motion, a four-year-old autonomous driving technology start-up, for $77.3 million.
The investment comes on the heels of Xiaomi’s ambitious promise to invest $10 billion in electric vehicles over the next decade.
Xiaomi’s revenue increased in 2020 to $43.36 billion with operating income increased to $3.68 billion and the total assets increased to $38.83 billion. Additionally, the company increase the equity to $18.98 billion in 2019.
5. Xiaomi Partners
Xiaomi has a global partnership network with other leading electronic companies including;
a) Taboola: Taboola is the leading content discovery platform that delivers personalized, relevant content to internet users across desktop, mobile, and tablet devices.
b) Criteo: Criteo is the world’s leading performance marketing platform dedicated to connecting the world’s largest brands with its millions of daily active users.
c) Microsoft: Microsoft is the world’s leading platform and productivity company for the mobile-first, cloud-first world. Microsoft has resources to help Xiaomi develop its business in the Internet of Things sector.
Xiaomi collaborates with Microsoft to jointly promote Internet of Things (IoT) technology development to build a smart home ecosystem.
d) Qualcomm: Qualcomm partners with Xiaomi on both hardware and software technology fronts.
e) Huawei Technologies Co., Ltd.: Huawei is the premier telecom equipment provider, aiming to build a smarter world.
f) Samsung Electronics Co., Ltd.: The Company is the leading maker of consumer electronics in the world, fuelled by its human investment in Research and Development, its highly-efficient global supply chain, and innovative industry standards.
CSR maintains strong relationships with Xiaomi to exchange technology and strengthen communication.
6. Xiaomi Competitors
Xiaomi is the world’s number one smartphone company. As China’s largest Internet Company, Xiaomi also competes with;
a) Apple: Apple is the world’s leading technology company. Apple has the ability to pay high wages and provide employees with great incentives to work there.
b) Oppo: Oppo is the Chinese dominant smartphone maker and a competitor of Xiaomi.
c) Huawei: Huawei is a high technology company that makes smartphones and other high technology products.
d) Samsung: Samsung is a leading technology company that produces and sells electronic equipment and appliances.
e) Vivo: Vivo is a smartphone manufacturer that was founded in 2010 in India and started to make smartphones in 2013 with inexpensive phones.
f) LG Electronics: LG Electronics is a South Korean technology company that makes household appliances, telecommunications devices, and electronic devices.
g) Lenovo: Lenovo Group Ltd., a Fortune 500 company in the world, is the second-largest computer hardware manufacturer in China, behind HP.
Xiaomi’s new Mi Pad 3 tablet has been met with some negative reviews suggesting that OnePlus – another Chinese handset manufacturer – was closely involved in developing the product.
7. Xiaomi Business and Marketing Strategies
Xiaomi’s marketing strategy targets a wide range of users;
a) Marketing and Advertising: The Company also placed advertisements for its products on YouTube and Facebook, which have been linked to examples of ad campaigns violating Google’s advertising policies. In addition, Xiaomi has used a variety of social media channels to communicate with international consumers, including Weibo and WeChat.
b) Asia-Pacific Expansion: Xiaomi has made an effort to accelerate its business in the Asia-Pacific region, especially in Indonesia, hoping to establish a strong position. The company will expand its product offering to include more Asian brands next year, including non-phone products such as smart home devices.
c) Merchandising Strategy: To increase product popularity, the firm has partnered with retailers to provide smartphone accessories for consumers.
d) Bespoke Products: To create products that fit the needs of individual customers, the firm has created custom-made products for consumers in over 100,000 stores in China.
e) Trade Leads: To increase sales volume, Xiaomi has forged strategic partnerships with manufacturers in China and overseas markets to provide online orders.
f) Community Management: The Company strongly engages with Chinese users on social networks to improve its international presence.
g) Sales and Marketing: To improve product efficiency and service quality, the firm has focused on the supply chain and product quality management.
h) Investment: Xiaomi has made a decisive effort to expand its international business. It has invested heavily in research and development and expanded its product range and customer base.
i) E-Commerce Strategy: In the early days of its growth, Xiaomi relied on flash sales to build a fan base and generate revenue from customers who wanted to secure a new product before they were available. The firm also employed online platforms such as Taobao and Tmall to sell directly to customers.
8. SWOT Analysis of Xiaomi
· Strengths of Xiaomi
a) Dynamic Company Culture: the company’s culture is an important strength. The company incorporates Western business practices including clear work objectives, organizational structure, professional management of human resources, employee performance evaluations, and merit-based rewards.
This has helped Xiaomi to attract highly talented employees who are responsible for the firm’s success.
b) Highly Efficient Supply Chain: Xiaomi is able to use its efficient supply chain to quickly ship products to meet consumer demand, with minimal inventory costs.
c) Strong Research and Development Capability: Xiaomi is a strong research and development company that is able to develop a broad range of products in a short time.
d) Competition: The firm has positioned itself to compete in the smartphone market with the market leader Apple, and with other firms such as Huawei.
c) Expansion of Markets: The firm’s global expansion strategies have led to a steady increase in revenues and a large user base.
e) High revenue: Xiaomi generates a lot of revenue as it has built a large customer base and as the company’s products are priced at an affordable rate.
f) Community Management: Xiaomi incorporates strong community management practices, through which it identifies consumers’ needs and responds to those needs quickly. It also uses social media platforms to communicate with its customers and potential customers and to develop a positive image of the firm and its products.
· Weaknesses of Xiaomi
a) Lack of International Recognition: Xiaomi’s rapid growth is not yet recognized by many foreign media outlets.
b) Weak Brand Name: the firm’s brand name is not as recognizable as those of other leading brand names such as Apple and Samsung.
c) High Production Costs: Xiaomi has high production costs as it continues to invest heavily in research and development. This ultimately makes the firm’s products expensive for consumers, which may limit its attractiveness as a smartphone manufacturer.
d) No Retail Sales: Xiaomi has yet to set up retail stores outside of China, though it is developing an international customer service operation to meet the growing demand for its products.
e) Limited Product Lines: Although Xiaomi has developed a variety of products, its lack of retail outlets and its slow international expansion may restrict its product lines. This could make it difficult for the firm to capture a large market share in future years.
f) Over-reliance on Google’s Android: Over-reliance on Google’s Android risks exposing the company to lawsuits and patent infringement claims.
g) Low Image and Brand Associations: the Company’s image and brand associations may be low as a result of its early focus on online sales.
h) Lack of Solidified Brand Strategy: The firm’s lack of a clear brand strategy may hamper the development of its international business.
i) No Distinctive Static Identifiers: Apple and Samsung have different static identifiers, which provide a visible and unforgettable image for their brands.
· Opportunities of Xiaomi
a) Potential for Rapid Growth: Xiaomi has high growth potential as it is focusing on rapid growth by building a solid base of loyal customers.
b) Competitive Advantages: Xiaomi’s relatively low production costs, diverse product lines, and strong Research and Development capabilities provide the firm with competitive advantages in the smartphone market.
c) Products with Potential for Rapid Expansion: Xiaomi has developed a number of different smartphone models that have good market prospects.
d) Expanding International Market: As Xiaomi expands internationally, it may find opportunities to enter new markets and achieve high growth rates.
e) Strong Community Management: Xiaomi has a strong community management strategy and is developing an online and offline presence around the world.
f) Partnership with Retailers: The firm’s partnership with retailers provides it with opportunities to expand its business model and enhance its brand awareness among consumers.
g) Technology Partnerships: Xiaomi’s partnerships with technology companies such as Microsoft and Facebook provide the firm with opportunities for product development and market penetration.
h) Global Expansion: As the firm expands globally, it will open up new markets and become involved in international technological collaborations. This will provide the company with new opportunities for growth.
i) Inter-Firm Cooperation: Xiaomi is involved in a number of international technological collaborations, which provide it with opportunities for research and development and high growth.
j) Product Development Cooperation: Xiaomi has made efforts to develop its own technologies to compete against established brands such as Apple. The firm is also establishing technological alliances to enhance its product portfolio.
k) Social Media Use: The firm’s social media strategy has helped it grow internationally and to establish itself as a leading technology brand.
· Threats of Xiaomi
a) Increasing Competition: Xiaomi may face increasing competition as it expands in various markets. It may be able to maintain its competitive advantage by developing its own technologies.
b) Patent Infringement Claims: Xiaomi’s partnerships with technology companies may expose the company to patent infringement claims.
c) Increased Use of Intellectual Property Rights: The firm may face increased use of intellectual property rights due to possible patent infringements. This will limit its ability to develop new products and compete with established brands in the smartphone market.
d) Prosecution for Violation of Intellectual Property Rights: The firm may face prosecution for violation of intellectual property rights.
e) Unfamiliarity with International Trade Law: Xiaomi’s lack of knowledge of international trade law could expose the firm to legal issues in some markets.
f) Inconsistent Data on Growth: Xiaomi may have inflated growth figures due to its early focus on online sales, which have been taken more seriously by traditional media outlets. Its more recent growth figures may be more accurate.
g) Irrational Trajectory: Xiaomi’s rapid increase in sales and market share may lead to heightened economic and financial risks. This could affect the firm’s ability to maintain its growth rate and results in higher business losses.
h) Expansion out of Control: As the firm expands overseas, it may become involved with questionable operations such as bribery or money laundering.
i) Use of Subsidies: The firm may find itself involved in government-subsidized industries, which may lead to corruption and illegal activities.
j) Poor Corporate Governance: Xiaomi’s lack of a formal corporate governance structure may hamper its governance and expose it to greater risks.
k) Poor Management Practices: Xiaomi has been accused of having an inefficient management style that may damage the company’s reputation.
l) Poor Manpower Quality: Xiaomi has suffered from low levels of employee morale, which may impair the firm’s ability to maintain its growth rate.
9. FAQs of Xiaomi
What is Xiaomi?.
Xiaomi is a popular electronics manufacturer in China that produces smartphones, tablets, applications, and lifestyle products.
The company is said to be bringing in more revenues than Apple, HTC, Google, Lenovo, LG, Panasonic, Sony, Sharp, and TCL combined in Q3 of 2018.
So, what are the secrets to Xiaomi’s success? Xiaomi’s founder Lei Jun is credited with being seen as a Steve Jobs-like figure in China.
Lei Jun believes that technology should be available to everyone which is why he is selling his devices for significantly lower prices than most other companies in the industry.
Xiaomi is a hardware company that was founded in China in 2010.
They have spent the last 7 years creating affordable but high-quality devices that are deemed as one-half of the leading Chinese electronics company, after producing or investing in over 50 products.
Products like these stores include televisions, air purifiers, laptops, and even USB headphones
Who is the CEO of Xiaomi?
The CEO of Xiaomi is Lei Jun.
How many phones does Xiaomi sell a year?
Xiaomi has sold more than 60 million smartphones a year. Protected by a patent, the Mi series smartphone has been widely recognized by people from different walks of life.
In addition, it also sells smart TV, fitness tracker, and tablet PC.
This shows that it has been making efforts to keep up with the pace of changing times and to provide consumers with sufficient choices.
Does Xiaomi produce all its own products?
Xiaomi does not manufacture all of its own products. Alone it can only supply 4% of the total global sold smartphones. 99% are manufactured by other companies.
What is the relationship between Xiaomi and Huawei?
Xiaomi’s cooperation with Huawei is based on mutual trust. In addition to cooperating with Huawei, Xiaomi will also continue to develop independently. This will allow it to become more competitive in the global market.
How to buy a Xiaomi Phone?
In order to buy a Xiaomi phone, one must have an ID that is registered in mainland China. After that, they can go to the official website of Xiaomi and purchase the phone which they want.
What is the meaning of “Mi”?
The meaning of “Mi” in Chinese is “small”, “petite”, or “cute”.
What are the differences between Xiaomi Phone and other phones?
The main difference is that the Mi phone uses its own smart operating system, which means it will not be affected by the ban on Android.
The second thing is that it offers a lot of choices to consumers. Their phones can also be customized according to what you want.
What is the difference between Xiaomi Phone and another phone?
First, Xiaomi phones have a large screen, which makes it easy to use. Second, Xiaomi phones have a lot of functions that can be customized. Third, they provide a lot of choices for consumers.
Is the price of the Xiaomi Phone reasonable?
This question can be answered by everyone, whether they are using a mobile phone. The price of Xiaomi phones is much lower than other smartphones such as iPhone and Samsung.
Therefore, people think that the price of the Xiaomi Phone is totally reasonable.
How to know if my phone is fake or original?
Only buy from authorized dealers or on the official website, do not buy it from other places. It will have a warranty card, factory seal sticker attached to it.
What are the Weaknesses?
Xiaomi focuses on the competitive market of China which leaves little space for global competition. The company also has a very limited presence in overseas markets.
They mainly focus on the digital arena and hence have low brand recognition in offline markets. It also tends to create competing products of other companies instead of creating their own new products.
In terms of broadening its reach, Xiaomi lacks strong marketing capabilities, which makes it difficult for the company to expand its business globally.
What are the Strengths of Xiaomi?
They have attained success by being an innovative company that provides quality products at competitive prices.
They are also positioning themselves as a key player in the internet-of-things industry because they offer devices with great specs at affordable rates.
How long has the Company been known?
Xiaomi was founded in 2010 by Lei Jun, one of the three co-founders.
Where is the headquarters located?
The company’s headquarters is located in Beijing, China.
How the Global Smartphone Market is Evolving?
The smartphone market has gone through constant evolution since its founding in 2008. Along with the introduction of new models every year, smartphones now incorporate many additional features.
How do Smartphones help the Company to achieve its Goals?
Smartphones help in achieving the goals of the company by enabling the users to perform different functions like listening to songs, watching videos and making video calls.
Why Xiaomi was the Best Company in 2014?
Due to its unique concept of personalized products, Xiaomi was named the Best Company of 2014. This award is given to the best companies in different fields.
Are Xiaomi Products Compatible with Other Devices?
Xiaomi devices are only compatible with other devices through the company’s MIUI software, which is already pre-installed on all its products.
The MIUI software ensures that the users receive technical support for any problems they might encounter during their use of the products.
Is there a Future for Xiaomi in the Smartphone Market?
Xiaomi is one of the most exciting new companies to emerge in recent years.