Courtesy of Xiaomi

As mobile phone sales growth slows, Xiaomi looks for new options

By Scott Cendrowski
March 29, 2016
March 29, 2016

Once the world’s highest valued startup, the fastest growing smartphone maker, and still a curiosity across the world, the $45-billion Xiaomi spent a solid half an hour today talking about its new pressurized rice cooker.

Rice cooker.

The new product was unveiled as part of a new branding for the dozens of companies Xiaomi has invested in, or plain created.

Observers have always called them part of Xiaomi’s “ecosystem.” Today Xiaomi newly branded it as that: the Mi Ecosystem.

Ever since Xiaomi raised money valuing the startup at $45 billion in late 2014, the company’s executives have presented Xiaomi as an Internet services firm, not just a maker of smartphones.

The ecosystem is a large part of that: a universe of devices, connecting back to Xiaomi, which include a miniture Segway, power strip, air purifier, water purifier, portable battery charger, electric bicycle, among others. Xiaomi has created twenty-nine companies over the past two years and twenty of them now produce products, it said. Seven have annual sales over 100 million yuan ($15.5 million), and two have sales over 1 billion ($150 million). “We not only make excellent products, we make excellent startups as well,” founder and CEO Lei Jun said.

The company today outlined its focus for those disparate devices. The message: Xiaomi wants to create a smart home.

At a press conference, CEO and founder Lei Jun spent a half an hour on Xiaomi’s power strip and battery charger. He detailed the battery charger’s beautiful brushed aluminum—and how a group of Chinese brands had already copied it.

Another executive exhaustively detailed ricecookers.

China’s failure to produce its own high quality rice cooker is almost a national embarrassment. The state press has highlighted Chinese tourists traveling back from Japan grasping Japanese brands costing several hundred dollars. Xiaomi’s costs $150 and can be controlled via Xiaomi’s App.

The key to undertanding Xiaomi’s focus for its ‘ecosystem’ lies in the Chinese name, which is different from the English.

The Chinese name, Mi Jia, is a shortened form of Xiaomi Smart Home. Since almost everything Xiaomi makes is only sold in China, the Chinese name carries more meaning. (Left unsaid at the event: why Xiaomi sells the vast majority of its products in China. Intellectual property concerns remain a hindrance to expansion.)

As Xiaomi’s smartphone growth slows down—IDC says Xiaomi phones sales grew 23% last year, to 71 million, about the same growth rate as Apple, which sold 232 million phones—its ecosystem will become more important.

‘Ecosystem’ sales increased by 220% last year over 2014, though the total amount is still estimated to be small: less than 10% of Xiaomi’s total revenues.

The question now is: can Xiaomi be the first company ever to create a connected home?

It’s trying.

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