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Xiaomi Takes Aim at World

Autor:   •  April 27, 2016  •  Case Study  •  1,903 Words (8 Pages)  •  623 Views

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Xiaomi Takes Aim at World

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Xiaomi launched its smartphone in India last April and sold 40,000 phones in 15 seconds online. The five year old company is one of the fastest growing companies and most valuable startups with a valuation of 46 billion by some estimates. As of first quarter of 2015, it already has 13.7% of China’s market share. In just a short span of time, Xiaomi has become a force to be reckoned with in China and has successfully challenged bigger-name rivals like Apple and Samsung. What is the story behind Xiaomi's success? To what extent has it changed the smartphone industry to prove that it is a truly an innovative company? How can Xiaomi translate its local success to the global market to make it a megatrend?

Xiaomi and Innovation

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Xiaomi is a Chinese mobile phone company founded by Lei Jun in 2010. Mi phone was the first Smartphone Xiaomi Tech developed and launched to market in September 2011. Xiaomi sells most smartphones online, in limited quantities and in small batches. This company is the world’s 3rd largest smart phone distributor and it designs, develops and sells smartphones, mobiles applications and consumer electronics.

True innovation is characterized not just by being new but by creating value and additional benefit to the consumers. Xiaomi introduced its product in a different way, by selling it online at near cost, eliminating the added costs for advertising, profit margin for retailers, engineering expenses, etc.. Thus, it can charge much lower prices for high-quality smart phones and create value for its consumers. If we are going to apply the 4 litmus tests of true innovation to Xiaomi's products, the company appears to pass all criteria: 1) It was able to create a valued product which is the low-cost smartphone; 2) The process of value creation is also transparent not just to the consumers but also to its competitors as evident in its increasing market share; 3) The products the company is selling and even the processes involved in creating such solutions are easy to understand; 4) Finally, Xiaomi was able to commercialize the products and successfully introduced them to the market.

Review

Xiaomi's success is attributed to a lot of new and unique factors in the smart phone business. Analysts believe that in the smartphone world, there is no one comparable in Xiaomi's business model. It's like a new-age smartphone company.

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Market Pull

Xiaomi is a company that uses Market Pull on specific markets' needs on technology products like smartphones. Xiaomi believed that high quality technology doesn’t need to cost a fortune and the tagline “just for fans” was the company’s driving force since. Xiaomi filled in the gap between markets that are willing to pay for expensive smartphones and those markets that are settling for cheap Chinese knockoffs. As a result, the company was able to tread on a new market base- that of  price-constrained but status-conscious individuals particularly the young, savvy mobile phone users.

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