Analysis, Business, Hardware, Mobile Computing

Xiaomi’s Goals For 2015: 100 Million Handset Sales, Expansion to the West

After becoming the third largest smartphone vendor in the world in 2014, Xiaomi is looking to continue the momentum by setting itself a sales target of 100 million units. To do so, Xiaomi will focus more on its home market as well as India — which the vendor mentioned as its largest overseas market — before setting its sights on the West.

With devices like the Mi 3, Redmi Note and Mi 4, Xiaomi managed sales of 61.1 million in 2014. One of the main reasons for Xiaomi’s success was the remarkably low pricing of its handsets, which were sold at near manufacturing cost. Xiaomi’s global VP Hugo Barra mentioned that the Chinese brand was able to do so as it does not have any significant overhead in terms of marketing and advertising. All Xiaomi products are sold online in a flash sale model, and advertising for the brand is done solely through social media. The model seems to be working very well for the vendor, as it has over 10,50,000 fans on China’s Weibo microblogging service.

Xiaomi hits 100 million sales

Xiaomi will be looking to improve upon its sales numbers with the likes of the Mi Note and Mi Note Pro. Unveiled last month in China, both handsets are a departure from Xiaomi’s previous handsets in that they both feature glass backs. The 2.5D curved glass at the front and 3D glass surface at the back are both protected by Corning’s Gorilla Glass 3, with the bezel at the front a mere 3.0mm. While the resolution of the 5.7-inch Mi Note is at full-HD, Xiaomi has mentioned that the panel used for the device offers adaptive dynamic contrast as well as a night mode that reduces glare in low-light conditions.

In terms of hardware, the Mi Note offers a quad-core 2.5 GHz Snapdragon 801 SoC that features an Adreno 330 GPU, 3GB RAM, 16/64GB internal storage, dual-SIM connectivity, 24-bit/192KHz lossless audio playback, 13MP camera (IMX214) with OIS, 4MP front camera and a 3,000mAh battery.

The Mi Note Pro — as the name suggests — is the beefier of the two, and features a 5.7-inch 2K (2560 x 1440) display, 64-bit octa-core Snapdragon 810 SoC, an astounding 4GB LPDDR4 RAM, 64GB internal memory based on the eMMC 5.0 standard, 13MP rear camera, 4MP front camera and LTE Category 9 connectivity along with a 3,000mAh battery.

The Mi Note is available for sale in China with prices starting at $370, while the Mi Note Pro will go on sale later this month at $530. During the initial months of a device’s launch, Xiaomi does not make a significant amount of money from sales, but as the lifecycle of the handset wears on and the cost of the components used comes down, the vendor manages to eke out a small margin. This is why all of Xiaomi’s handsets are manufactured have a limited production run as that decreases overall cost incurred.

Going after Apple in China

After targeting the likes of Samsung (KRX: 005930) and Lenovo (HKG: 0992) in its home markets, Xiaomi has raised the bar and is now setting its sights squarely on Apple, and the iPhone 6 Plus. Apple’s (NASDAQ: APPL) larger iPhone debuted in China to great success, with demand for the device far greater than supply.

Xiaomi called out Apple on several occasions during the launch of its latest handsets, making a reference to how the camera sensor on the Mi Note sits flush on the body, unlike the iPhone 6 Plus and iPhone 6. Xiaomi also revealed how it was able to fit a screen that’s 0.2mm larger than what is on offer with the iPhone 6 Plus in a body that is thinner by 0.15mm.

The first few flash sales of the Mi Note have concluded, with the device selling out in mere minutes, which is essentially what is to be expected of a Xiaomi flash sale these days. A device’s success does not depend only on the hardware, however, and in terms of software, Xiaomi is looking to step up its efforts.

Both the Mi Note and Mi Note Pro come with the latest version of Xiaomi’s operating system, MIUI 6. With over 100 million global users, MIUI began life as a custom Android ROM, and is installed as standard on all Xiaomi devices. The latest iteration bears a slight resemblance to iOS 7, but there is a wide chasm when comparing the experience offered by the two operating systems. MIUI 6 offers a combination of settings and functionality that is geared at novice users as well as power users. The plethora of settings that allow users to customize all facets of the operating system are cleverly hidden away so as not to overwhelm new users to the ecosystem.  Xiaomi offers its own suite of software services, and with the Play Store banned in China, these are the main gateway for Chinese consumers to access mobile services.

Building a lifestyle brand

Xiaomi is known for its handsets, but the brand wants to be much more than that. By offering TVs, routers, smart home products and even air purifiers, Xiaomi is looking to become a lifestyle brand, with Barra stating as much during his MWC keynote. Xiaomi is looking to build an ecosystem of services and products that integrate with the vendor’s software offering, MIUI. Doing so will prove to be a challenge, but given Xiaomi’s loyal fanbase, most of whom are in their mid-twenties, as well as the brand recognition it commands in China, venturing into the IoT market as well as exploring new territories.

At a media event held in San Francisco on February 12, Xiaomi has announced that it will be launching its Mi.com store in the US later this year, through which the vendor will offer accessories such as the $15 Mi Band fitness tracker, Mi piston headphones and the Mi power banks. At Mobile World Congress in Barcelona, Xiaomi announced that it would be launching the accessory store in Europe as well. The goal behind making accessories available to customers in Westerns countries is to get feedback from a wider audience base and generate interest in Xiaomi as a brand.

With stellar handsets and a move into wearables, action cameras and smart home products, Xiaomi is trying for the first time this year to achieve vertical integration: tie in different products with a single software experience.