Xiaomi is one of the newest consumer electronics to hit the world. Even though Xiaomi has been there for a relatively short period, they have secured a dominating role in the industry. That’s because Xiaomi offers a variety of consumer electronic products to the market at affordable prices. Offering the best quality consumer electronics at reasonable prices is the main reason behind the popularity of Xiaomi.
History of Xiaomi
Xiaomi started its business operations back in the year 2010. There were many established companies or brands that catered to the consumer electronics market by that time. Apple and Samsung were some of the leading players out them. However, Xiaomi wanted to compete with these giants. That’s where Xiaomi started offering its consumer electronics products to people at a lower price tag. Even though the products provided by Xiaomi were priced at lower price tags, they didn’t compromise the quality. Instead, they got the best out of cheap labor that was available in China. This helped the company make its products and services extremely popular worldwide within a short period.
Xiaomi is the fourth-largest smartphone manufacturer that you can find out there in the world. On the other hand, it is the most significant smartphone player that you can find in China. The company had to go through some struggles back in the year 2016. That’s because many other low-cost players from China came forward and challenged the brand. That’s where Xiaomi thought of diversifying the business instead of sticking only to the manufacture of smartphones.
As of now, you will be able to see Xiaomi offering a variety of products. They include smart televisions, speakers, Wi-Fi routers, water purifiers, air purifiers, and even smart home hubs. This is a unique marketing and product strategy that Xiaomi came up with to deliver an enhanced experience to their customers and get more people to purchase what they offer. Along with that, Xiaomi could easily overcome the competition they had to face from other low-cost service providers based in China.
Revenue of Xiaomi
Since Xiaomi is offering its products at a lower price tag, you must be interested in knowing more about the revenue that Xiaomi is making. Even if the effects of Xiaomi are being sold in the market for lower prices, they are making billions of dollars in terms of revenue. That’s because Xiaomi is offering a large volume of products to the market.
According to the stats of 2018, Xiaomi has earned a total revenue of $18 billion. This is a 67% increase when compared to the previous year. This hike clearly shows that Xiaomi is growing along with time. This revenue comes from both the products as well as services offered under the brand.
The business model of Xiaomi
Xiaomi has got a triathlon business model. This is a unique and one-of-a-kind business model that can deliver outstanding results in today’s world. Xiaomi went ahead and created an ecosystem where they combined internet services along with hardware. To get the job done, Xiaomi partnered with some of the leading startups out there as well.
Due to the same reason, Xiaomi was called an unfocused company back in the day. The company also failed to justify its mission back in the day. However, the strategy worked for them. As a result, they could bag success without experiencing a lot of negative consequences.
It is worthy to deep dive and takes a look at the triathlon business model offered by Xiaomi. It is combined with new retain, internet services, and hardware.
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Net retail
Xiaomi introduced a new retail business model. The key proposition of this new retail business model was to create reasonable pricing.
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Internet services
Internet services reflect the excellent internet-based services that Xiaomi came up with.
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Hardware
Xiaomi was able to create high-quality, innovative, and well-designed hardware products. These hardware products were designed to deliver the best possible customer experience as well.
These were three individual business units. When combined, these three separate business units are in a position to deliver outstanding performance. That’s what contributed to the success of Xiaomi at the end of the day.
Along with these unique business models, Xiaomi can release the highest quality smartphones to the market at reasonable prices. These smartphones come along with a variety of features as well. On the other hand, Xiaomi is working a lot Internet of Things (IoT). They can help people to make their lives easy with day-to-day lifestyles. Alongside, Xiaomi is offering a large number of internet services as well.
Risks that Xiaomi has to face
Due to the unique business model, Xiaomi is facing a variety of risks as well. One of the most significant risks that Xiaomi has to face is reducing smartphone sales in the future. As mentioned earlier, Xiaomi came into the world as smartphone manufacture. Xiaomi is still focusing on its smartphone sales. A considerable percentage of the revenue generated by Xiaomi comes through their sale of smartphones.
However, Xiaomi is experiencing a significant reduction in smartphone sales over time. This is a massive risk that the company has to address. The Chinese market is rapidly getting saturated with smartphones. Therefore, Xiaomi is forced to take a look at diversifying its products.
On the other hand, Xiaomi is facing the risk of replacement and replication as well. That’s mainly because Xiaomi lacks Intellectual Property rights or IP rights. When you look at the other leading tech giants, you will be able to see them having IP rights on many products. However, Xiaomi doesn’t have such IP rights. Hence, the products offered by Xiaomi can easily get replaced or imitated.