Nov 6, 2014

Xiaomi is the hottest smartphone maker

Everybody raves about Xiaomis success - with low cost smartphones in "developing" markets. The English article linked below describes their business, but misses one point that the excellent German article reveals: Slower update periods for phone models. Xiaomi goes in with a very low price point, but keeps its models for 2 years. Their flash sales are only cycle-stretching activities to keep the phones hip during that long period (Apple and Samsung launch new products in less than a year on average). With a stable consumer price, Xiaomi will earn good margins during the two years once the component prices fall. And they are falling rapidly. So a few cent margin on a phone during its introduction may become a serious market when the phone is at the end of its lifecycle. Smart business.

English:
https://gigaom.com/2014/11/05/why-is-chinese-smartphone-startup-xiaomi-reportedly-worth-13-times-as-much-as-motorola/

German:
http://www.harvardbusinessmanager.de/blogs/wie-xiaomi-der-smartphone-konkurrenz-das-fuerchten-lehrt-a-1000038.html