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Xiaomi Tops Chinese Smartphone Market
- Thread starter yellowarse
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Spot-on. Four of my staff and my mother have bought Redmi in the past year. No problem whatsoever. At $199 the 5.5" screen Note is a steal compared to its competitors.
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Sure or not? When si kapo has problems, it was none other than photoshop.
Of course sure. Why do you think Xiaomi's competitors are running scared? Now it's Ericsson's turn to attempt to extort some money.
Xiaomi Ready To Talk Patents With Ericsson After Sales Ban In India
Chinese phone company Xiaomi has said it is ready to open talks with Ericsson after a temporary ban was slapped on its smartphone business in India following its first patent spat.
Indian authorities have mounted a credible bid to own the tech news cycle this week. Fresh from a ban on Uber and then other unlicensed taxi apps in New Delhi, the city’s high court issued an injunction that prevents Xiaomi from importing and selling some of its smartphones in the country.
The high court granted an ‘ex parte’ injunction against the Chinese company following a patent complaint from telecom firm Ericsson, as Spicy IP first reported. Officials have been ordered to visit Xiaomi India’s office to ensure it does not sell, advertise, manufacture or import devices that infringe the patents in question.
Xiaomi sells its Mi3, Redmi and Redmi Note phablet in India, but it is not clear which models are affected by this ruling.
In a statement provided to TechCrunch, Ericsson described Xiaomi’s use of its Standard, Essential Patents (SEPs) as “unfair.” It said its action is “a last resort” after Xiaomi ignored more than three years of communication requests:
Ericsson’s commitment to the global support of technology and innovation is undisputed. It is unfair for Xiaomi to benefit from our substantial R&D investment without paying a reasonable licensee fee for our technology.
After more than 3 years of attempts to engage in a licensing conversation in good faith, for products compliant with the GSM, EDGE, and UMTS/WCDMA standards Xiaomi continues to refuse to respond in any way regarding a fair license to Ericsson’s intellectual property on fair, reasonable and non-discriminatory (FRAND) terms. Ericsson, as a last resort, had to take legal action.
To continue investing in research and enabling the development of new ideas, new standards and new platforms to the industry, we must obtain a fair return on our R&D investments. We look forward to working with Xiaomi to reach a mutually fair and reasonable conclusion, just as we do with all of our licensees.
Xiaomi — which began selling devices in India in July — claimed it had not received correspondence from the high court, but it did state its willingness to discuss the issue with Ericsson:
We haven’t received an official note from the Delhi High Court. However, our legal team is currently evaluating the situation based on the information we have.
India is a very important market for Xiaomi and we will respond promptly as needed and in full compliance with India laws. Moreover, we are open to working with Ericsson to resolve this matter amicably.
India is a very important market for Xiaomi and we will respond promptly as needed and in full compliance with India laws. Moreover, we are open to working with Ericsson to resolve this matter amicably.
Ericsson is said to be negotiating compensation for patents with a number of Indian smartphone makers, and it could be that its dispute with Xiaomi goes the same way.
Xiaomi’s Hugo Barra said in October that the company assesses how its online sales model will work in new markets when deciding on expansions. Barra told the Wall Street Journal that litigation risks were not a factor, although critics have argued that possible patent infringement suits could affect it in the West.
Xiaomi is on track to sell 60 million smartphones this year and it is currently present in seven countries in Asia, having moved beyond its native China more than a year ago.
The company recently said it is easing back on new market launches, however, in order to focus on a number of key countries, including India and Indonesia. But it is widely expected to increase its presence in Southeast Asia and enter Latin America with its next wave of expansions in 2015. It’s not clear when, or indeed if ever, it will sell its products in the U.S. market.
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A good article in AWJ today
Chinese Phone Makers’ Global Ambitions Face Obstacles
Patent Disputes Loom for Xiaomi and Others as They Seek to Replicate Domestic Success Abroad
By Gillian Wong and Juro Osawa
China’s rising smartphone star, Xiaomi Inc., has hit a legal wall in India, in a development that underscores the obstacles Chinese phone makers face as they try to replicate their domestic success abroad.
The High Court of Delhi issued a temporary injunction this week on the sale and import of Xiaomi handsets in India while it waited to hear a patent complaint against Xiaomi by Swedish telecom equipment maker Ericsson. Ericsson alleges that the Chinese firm is using its technology but refusing to pay royalties.
The ban throws a wrench into Xiaomi’s business plans in India, where the Chinese company has already taken a 1.5% market share in the third quarter after it started sales there in July, according to market research firm Counterpoint Research. Xiaomi said it hasn’t yet received the court order and declined to comment on Ericsson’s allegations and the potential financial impact of the ban.
“India is a very important market for Xiaomi and we will respond promptly as needed,” Xiaomi’s head of India operations, Manu Jain, said in a statement Thursday.
The injunction shows why global domination won’t be so easy for Chinese smartphone makers, which have become some of the top vendors in the world on the back of strong domestic sales, and are now looking to topple brands like Samsung and Apple abroad. Led by Xiaomi, half of the world’s top 10 smartphone vendors by shipments are Chinese, versus only two—Huawei Technologies Co. and ZTE Corp. —three years ago, data from Strategy Analytics shows. But to succeed outside of China, the companies must tackle a host of hurdles they didn’t face at home: looming patent expenses, user concerns over cyberspying and poor brand recognition.
“Many Chinese vendors have to think twice before they make the investment to expand” overseas, said Lixin Cheng, head of ZTE’s U.S. operations. “If you are not innovative, you are running a high risk of violating others’ intellectual properties.”
Xiaomi’s success is rooted in selling phones with features rivaling high-end Samsung and Apple models but at around a third of the price, saving costs by marketing through social media and selling handsets online. This year, Xiaomi expanded in Southeast Asia and India and expects to sell 60 million units globally, up from 18.7 million in 2013.
Patent disputes are quite common in the high-tech industry. A single smartphone encompasses about 200,000 patents, intellectual property experts say. To get rights to use those technologies in each country, handset makers typically have to sign cross-licensing agreements, buy patents or pay royalties. Markets with robust intellectual-property protections, such as the U.S., U.K. and Germany, are more challenging for newcomers like Xiaomi than emerging markets where IP protections are weak, executives say.
“Our situation when it comes to patents is the same as everyone else,” said Hugo Barra, Xiaomi’s global vice president, at the WSJD Live Global Technology Conference in October. He noted that his company files for a significant number of patents in China and strikes licensing deals abroad. Litigation risk “is not a determining factor” in deciding the best markets for Xiaomi’s international expansion, he said.
Kwang Jun Kim, chief intellectual property officer at Samsung Display Co., who previously worked on litigation for affiliate Samsung Electronics Co., said as Chinese companies expand abroad they will have to address legal challenges in the global market.
“The U.S. is by far the most intense legal battlefield for global technology firms,” Mr. Kim said.
Access to patents was a key factor behind Lenovo’s recent $2.91 billion acquisition of Motorola Mobility. By selling Motorola-branded smartphones in the U.S., Lenovo can take advantage of the U.S. firm’s intellectual property as well as its brand recognition, executives said.
ZTE paid about $17.4 billion to U.S. companies to license and purchase their technologies and products over the past four years, Mr. Cheng said. ZTE last year posted revenue of 75.2 billion yuan ($12.2 billion).
Chinese firms will also need to distance themselves from concerns about digital surveillance by their government, often accused by the West of cyberespionage. Beijing has said it opposes cyberattacks.
This fall, Taiwan’s regulator began studying data collection by smartphone makers after allegations that Xiaomi collected user information without notifying consumers. The regulator concluded that all 12 smartphone makers it studied were equally culpable.
Authorities in Singapore and India have also been looking into whether data on Xiaomi phones are safe.
In August, F-Secure, a Finnish computer security firm, said it tested a Xiaomi phone and found it was sending unencrypted data back to servers in Beijing. In response, Xiaomi has said the data traffic was part of its cloud messaging service and issued a software update to encrypt the data. It also began in recent months to move servers out of China for data on its international users.
“China still has a very poor image globally,” said co-founder Carl Pei of OnePlus, a Chinese handset startup. It used to be about product quality woes, “now, increasingly, it’s because of cyberwarfare between different countries.”
OnePlus, which ships handsets to the U.S. and Canada, says it stores its global data on Amazon.com ’s U.S. servers. (Read more about OnePlus in a Q&A with Mr. Pei.)
Many Chinese smartphone makers also continue to grapple with being virtually unknown outside China. Interbrand’s Best 100 Global Brands ranking this year included just one Chinese brand: Huawei, at No. 94. Industry executives say brand awareness is crucial even for low-cost players, as cheap handsets proliferate.
When ZTE conducted a consumer survey early last year in Houston, it found almost no one there knew its name. It became the Houston Rockets basketball team’s sponsor in October 2013 and designed its marketing around the team, including making Rockets-edition smartphones. This summer, 16% of those in Houston surveyed said they knew ZTE, a sharp increase from 2013, but still not a household name. ZTE added sponsorships with two other basketball teams—the New York Knicks and Golden State Warriors—this October. It is now the fourth-largest smartphone vendor in the U.S. after Apple Inc., Samsung and LG Electronics Inc. Its U.S. smartphone market share rose to 6.3% in the third quarter from just 0.9% three years ago, according to Strategy Analytics.
Chinese Phone Makers’ Global Ambitions Face Obstacles
Patent Disputes Loom for Xiaomi and Others as They Seek to Replicate Domestic Success Abroad
By Gillian Wong and Juro Osawa
China’s rising smartphone star, Xiaomi Inc., has hit a legal wall in India, in a development that underscores the obstacles Chinese phone makers face as they try to replicate their domestic success abroad.
The High Court of Delhi issued a temporary injunction this week on the sale and import of Xiaomi handsets in India while it waited to hear a patent complaint against Xiaomi by Swedish telecom equipment maker Ericsson. Ericsson alleges that the Chinese firm is using its technology but refusing to pay royalties.
The ban throws a wrench into Xiaomi’s business plans in India, where the Chinese company has already taken a 1.5% market share in the third quarter after it started sales there in July, according to market research firm Counterpoint Research. Xiaomi said it hasn’t yet received the court order and declined to comment on Ericsson’s allegations and the potential financial impact of the ban.
“India is a very important market for Xiaomi and we will respond promptly as needed,” Xiaomi’s head of India operations, Manu Jain, said in a statement Thursday.
The injunction shows why global domination won’t be so easy for Chinese smartphone makers, which have become some of the top vendors in the world on the back of strong domestic sales, and are now looking to topple brands like Samsung and Apple abroad. Led by Xiaomi, half of the world’s top 10 smartphone vendors by shipments are Chinese, versus only two—Huawei Technologies Co. and ZTE Corp. —three years ago, data from Strategy Analytics shows. But to succeed outside of China, the companies must tackle a host of hurdles they didn’t face at home: looming patent expenses, user concerns over cyberspying and poor brand recognition.
“Many Chinese vendors have to think twice before they make the investment to expand” overseas, said Lixin Cheng, head of ZTE’s U.S. operations. “If you are not innovative, you are running a high risk of violating others’ intellectual properties.”
Xiaomi’s success is rooted in selling phones with features rivaling high-end Samsung and Apple models but at around a third of the price, saving costs by marketing through social media and selling handsets online. This year, Xiaomi expanded in Southeast Asia and India and expects to sell 60 million units globally, up from 18.7 million in 2013.
Patent disputes are quite common in the high-tech industry. A single smartphone encompasses about 200,000 patents, intellectual property experts say. To get rights to use those technologies in each country, handset makers typically have to sign cross-licensing agreements, buy patents or pay royalties. Markets with robust intellectual-property protections, such as the U.S., U.K. and Germany, are more challenging for newcomers like Xiaomi than emerging markets where IP protections are weak, executives say.
“Our situation when it comes to patents is the same as everyone else,” said Hugo Barra, Xiaomi’s global vice president, at the WSJD Live Global Technology Conference in October. He noted that his company files for a significant number of patents in China and strikes licensing deals abroad. Litigation risk “is not a determining factor” in deciding the best markets for Xiaomi’s international expansion, he said.
Kwang Jun Kim, chief intellectual property officer at Samsung Display Co., who previously worked on litigation for affiliate Samsung Electronics Co., said as Chinese companies expand abroad they will have to address legal challenges in the global market.
“The U.S. is by far the most intense legal battlefield for global technology firms,” Mr. Kim said.
Access to patents was a key factor behind Lenovo’s recent $2.91 billion acquisition of Motorola Mobility. By selling Motorola-branded smartphones in the U.S., Lenovo can take advantage of the U.S. firm’s intellectual property as well as its brand recognition, executives said.
ZTE paid about $17.4 billion to U.S. companies to license and purchase their technologies and products over the past four years, Mr. Cheng said. ZTE last year posted revenue of 75.2 billion yuan ($12.2 billion).
Chinese firms will also need to distance themselves from concerns about digital surveillance by their government, often accused by the West of cyberespionage. Beijing has said it opposes cyberattacks.
This fall, Taiwan’s regulator began studying data collection by smartphone makers after allegations that Xiaomi collected user information without notifying consumers. The regulator concluded that all 12 smartphone makers it studied were equally culpable.
Authorities in Singapore and India have also been looking into whether data on Xiaomi phones are safe.
In August, F-Secure, a Finnish computer security firm, said it tested a Xiaomi phone and found it was sending unencrypted data back to servers in Beijing. In response, Xiaomi has said the data traffic was part of its cloud messaging service and issued a software update to encrypt the data. It also began in recent months to move servers out of China for data on its international users.
“China still has a very poor image globally,” said co-founder Carl Pei of OnePlus, a Chinese handset startup. It used to be about product quality woes, “now, increasingly, it’s because of cyberwarfare between different countries.”
OnePlus, which ships handsets to the U.S. and Canada, says it stores its global data on Amazon.com ’s U.S. servers. (Read more about OnePlus in a Q&A with Mr. Pei.)
Many Chinese smartphone makers also continue to grapple with being virtually unknown outside China. Interbrand’s Best 100 Global Brands ranking this year included just one Chinese brand: Huawei, at No. 94. Industry executives say brand awareness is crucial even for low-cost players, as cheap handsets proliferate.
When ZTE conducted a consumer survey early last year in Houston, it found almost no one there knew its name. It became the Houston Rockets basketball team’s sponsor in October 2013 and designed its marketing around the team, including making Rockets-edition smartphones. This summer, 16% of those in Houston surveyed said they knew ZTE, a sharp increase from 2013, but still not a household name. ZTE added sponsorships with two other basketball teams—the New York Knicks and Golden State Warriors—this October. It is now the fourth-largest smartphone vendor in the U.S. after Apple Inc., Samsung and LG Electronics Inc. Its U.S. smartphone market share rose to 6.3% in the third quarter from just 0.9% three years ago, according to Strategy Analytics.
From going to extremes of photoshopping the Apple brand logo and registering clones just to bash America and her allies while bending down for America's enemies, u are insulting readers intelligence to deny.
http://www.singsupplies.com/member.php?29628-俺操汝地娘
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A very good analysis.
Here’s why Xiaomi is China’s most important tech company
Anh-Minh Do
9 hours ago
I can see why Lei Jun doesn’t want to be called the Steve Jobs of China. If you look at his history, he’s more like a quasi-Bill Gates with a hint of Jeff Bezos, with Marc Andreesen tendencies, and only a soupçon of Steve Jobs.
Look at his history:
Given what we know of Lei Jun’s history and numbers, you would be hard pressed to make a deeper comparison of Lei Jun and Steve Jobs that goes beyond black shirts, blue jeans, and smartphone icons. Instead of chiding over the fact that Lei Jun ripped off Steve Jobs during his Xiaomi product launches, pause for a moment and consider the idea that he (and his entire PR and marketing team) wants you to think that he’s ripping off Steve Jobs. After all, it’s the single most important point about Xiaomi that the press talks about. And the fact that he goes out and says he doesn’t like the comparison, while the Xiaomi Weibo account mocked his death, make it all the more damning.
Remember, reading about Steve Jobs is what got him into being a tech entrepreneur in the first place. I would not be surprised if his team reverse engineered Steve Jobs’ identity and career and are now replicating it in Xiaomi fashion. That’s what makes Lei Jun a compelling and polarizing figure. He’s calculating.
Don’t forget Lei Jun’s connections too. Tencent, progenitor of WeChat, invested in Kingsoft. Alibaba acquired UCWeb. Robin Li, CEO of Baidu, is a personal friend. These are the big three of China. For Valley heads out there, that would be like a founder getting investment from Facebook for his first startup, getting one of his web projects acquired by Amazon, and then being chummy with Larry Page of Google. Lei Jun is arguably the most well connected entrepreneur in China. So, the recent PR hullaballoo around an air purifier that Jack Ma teased Lei Jun about is only something Lei Jun can do. Think about him in the context of the surrounding ecosystem that he is in (and that he creates). A case in point is WiWide.com, a startup that Xiaomi funded, and which got funding from Tencent last week.
Lei Jun is more than just a Chinese Steve Jobs, he actually looks more like every single Silicon Valley hero all wrapped into one. Maybe that’s what makes him worth US$9.1 billion. Or, as our own Paul Bischoff notes, he might be worth even more than Jack Ma.
Lei Jun’s numbers
When you follow the money, you really start to see the whole story of what makes Lei Jun tick. User numbers, revenues, and investments show an evolution.
First, Kingsoft. Lei Jun joined in 1992 after university. He began as an engineer but rose up to CEO in six years. Within Kingsoft, from 2000 to 2004, Lei Jun built up Joyo and sold it to Amazon for US$75 million. After that, he spent years bringing Kingsoft to its IPO in 2007, after which he resigned. He came back to Kingsoft in 2011. The return is often paralleled to Steve Jobs’ second coming to Apple. Here’s Kingsoft’s revenue numbers since IPO in 2007:
From 2008 to 2011, Kingsoft’s revenue stagnated. Upon Lei Jun’s return in 2011, Kingsoft aggressively pursued a mobile and cloud strategy (Nadella anyone?). As revenues indicate, this was the right play.
Lei Jun’s taste for mobile success continued when he joined UCWeb, China’s now top mobile browser, as Chairman. UCWeb dominated the mobile browser market share and was eventually acquired by Alibaba, which valued the company at a record-breaking US$3.8 billion. UCWeb’s first year after release saw 200 million new users and within four years it already hit 500 million users. Gaining 200 million users in one year is staggering.
With UCWeb’s solid rise and Kingsoft’s second coming, it seems Lei Jun stumbled on a formula for growing Chinese businesses. By 2011, Lei Jun invested in over 20 companies in China. In total, his portfolio raised over US$1 billion from venture capitalists. He continues to invest today via the Shunwei Fund. Shunwei invests in Lei Jun’s three favorite categories: ecommerce, social networking, and mobile. All of his accumulated investments over the years set him up perfectly to found Xiaomi and succeed with it.
Only Xiaomi
On the Daring Fireball blog, John Gruber’s Only Apple essay makes the point that weaving software, services, and hardware seamlessly en masse is something only Apple can do. This got me pondering, what are the things that only Xiaomi could do? Upon closer look, Xiaomi pursues an Amazon strategy with Apple tactics and skin.
That last point requires the most elucidation. There’s more to these three aspects of Xiaomi than meets the eye. Latest leaked profit reports indicate that Xiaomi only made US$56 million in profit in 2013. But if you’ve been watching Xiaomi, you’ll find this unsurprising. Since inception, Lei Jun has been harping on a point about his company:
If people really want to compare Xiaomi to a foreign company, you can say it looks a bit like Apple. But it’s really more like Amazon with some elements of Google. So take these three companies together and it’s easier to clearly understand what kind of company Xiaomi is. Xiaomi selling mobile phones is like Amazon selling Kindles. So you can understand why we sell them for so cheap.
Benedict Evans, in his post on why Amazon has no profits and why it works analyzes Amazon’s cashflow in-depth. His point is Amazon is a loss leader that constantly reinvests into its own market which snowballs into massive growth. For that reason, Amazon has very low and sometimes negative profits. Xiaomi is the same. Look at Xiaomi’s smartphone sales, revenue, and funding transposed.
Since 2010, Xiaomi’s growth has been explosive. Every year, it has doubled its revenue. And in 2014, if the second half of the year matches its first half, it will have tripled its smartphone sales. But despite this growth, it is likely Xiaomi’s profits will not dazzle. Xiaomi is on an investment and acquisition warpath. As the CornerPlay blog notes, Xiaomi’s revenues come overwhelmingly from its smartphone sales. It’s a key argument against Xiaomi’s claim that it resembles Amazon since it makes no money on services, but it misses Xiaomi’s incoming empire.
The below chart only lists 17 companies that Xiaomi acquired or invested in. Xiaomi claims it has 25 companies already plugged into its ecosystem. Since 2012, Xiaomi has participated in deals amounting to over US$3 billion (mainly involving the companies in the chart below). It plans to invest US$1 billion into smart TV content and another US$1 billion into cloud services. In many of these deals, Xiaomi leads the investment or acquires the companies outright. This four-year-old smartphone startup already has dominion over a multi-billion dollar empire. And the amassing will not abate. This is quintessentially Amazonian.
Amazon applies the majority of its profits to expanding its fulfillment capacity, servers, and areas that generally expand Amazon’s business. Likewise, Xiaomi acquires and invests in software companies in key areas, with the purpose of expanding its future business. It also plans to invest or participate in incubating over 100 hardware companies in China. This even includes Silicon Valley companies like Misfit.
But all of this is only the beginning for Xiaomi. As Robin Chan, investor in Xiaomi, notes:
Xiaomi is an extension of the Lei Jun ecosystem.
Xiaomi tomorrow
Leveraging its Amazon-esque business model, an Apple face, and a burgeoning startup ecosystem, Xiaomi seeks to do multiple things at once:
Becoming China’s number one smartphone manufacturer will be the easiest goal Xiaomi has right now. It just needs to continue with its current tactics of flash sales, incrementally improving its phones, increasing its operations, and acquiring content and software services that can be served on the Xiaomi platform. And as Xiaomi invests in multiple categories of hardware from tablets to air purifiers to wearables, it can slowly solidify as a recognizable lifestyle brand.
Achieving the top spot for global smartphone brands will be difficult. Xiaomi is fraught with intellectual property issues and doesn’t have a strong stock of patents. Its recent ban in India, caused by a patent dispute with Ericsson, shows the risk involved in each expansion. This will likely drive Xiaomi’s margins down or phone prices up. It will attempt to apply the Chinese strategy of acquiring services and content startups in local markets to create localized empires. Hugo Barra has already confirmed that Xiaomi will start doing just that in India, starting next year.
In terms of competition, Xiaomi will also have to deal with the waning goliath that is Samsung, and the robust innovator that is Apple. It’s highly unlikely that Xiaomi will, in the next decade, achieve profits anywhere near what Apple sees today. But profit is not what interests Xiaomi.
Uniting China is probably the most interesting and understated goal of Xiaomi. At Xiaomi’s 2012 launch event, Lei Jun stood on stage and said this to companies that were copying Xiaomi phones:
We truly hope that these copy cats can please be more supportive to domestic brands. They should keep focusing only on [copying] iPhone, Samsung, HTC, and Nokia.
Although this seems facetious at first, it’s imbued with nationalism. It comes from a place that is entreating the ecosystem to support local domestic brands. Even the name, Xiaomi, is a nationalist reference. Thus, Xiaomi is in a profoundly unique place to unite China’s tech ecosystem with its links to the big three, its diverse investments, and its product platform. With that at its core, there is really nothing to stop Xiaomi from becoming a US$100 billion company in China alone. And if it succeeds in its global plan in the next decade, US$100 billion in revenue will not be far off.
All of this can only come from a Chinese man who is a jack-of-all-trades, from Steve Jobs to Bill Gates. And it looks like he is not stopping there. With the release of the air purifier, his company attempts to emulate Tony Faddell’s Nest. With rumors of an electric car, Xiaomi might even want to be part-Tesla. Elon Musk, eat your heart out.
And Xiaomi does all this, as its slogan reminds, “just for fans”.
Editing by Steven Millward
Here’s why Xiaomi is China’s most important tech company
Anh-Minh Do
9 hours ago
I can see why Lei Jun doesn’t want to be called the Steve Jobs of China. If you look at his history, he’s more like a quasi-Bill Gates with a hint of Jeff Bezos, with Marc Andreesen tendencies, and only a soupçon of Steve Jobs.
Look at his history:
- 1992 to 2007: he joined as an engineer and rose to president and CEO of Kingsoft in six years. This is a company that does word processing and antivirus software, gaming distribution, and even ecommerce. That’s the quasi-Bill Gates.
- 2000 to 2004: Lei Jun founds Joyo.com, an online bookstore, within Kingsoft, and eventually sells it to Amazon.com. That’s the Bezos connection.
- 2008: Having resigned Kingsoft in 2007, Lei Jun becomes chairman of UCWeb. It’s a mobile browser that now has over 500 million users and was recently acquired by Alibaba. Sound like a mobile Netscape?
- 2007 to 2010: Lei Jun oversees over 70 funding rounds for his portfolio companies. Surely, that rings of Marc Andreesen’s Andreesen Horowitz.
- 2010: He founds the now world-famous smartphone manufacturer Xiaomi, which may be raising funds at a US$40 billion valuation next year. Lastly, Xiaomi is constantly compared to Apple.
Given what we know of Lei Jun’s history and numbers, you would be hard pressed to make a deeper comparison of Lei Jun and Steve Jobs that goes beyond black shirts, blue jeans, and smartphone icons. Instead of chiding over the fact that Lei Jun ripped off Steve Jobs during his Xiaomi product launches, pause for a moment and consider the idea that he (and his entire PR and marketing team) wants you to think that he’s ripping off Steve Jobs. After all, it’s the single most important point about Xiaomi that the press talks about. And the fact that he goes out and says he doesn’t like the comparison, while the Xiaomi Weibo account mocked his death, make it all the more damning.
Remember, reading about Steve Jobs is what got him into being a tech entrepreneur in the first place. I would not be surprised if his team reverse engineered Steve Jobs’ identity and career and are now replicating it in Xiaomi fashion. That’s what makes Lei Jun a compelling and polarizing figure. He’s calculating.
Don’t forget Lei Jun’s connections too. Tencent, progenitor of WeChat, invested in Kingsoft. Alibaba acquired UCWeb. Robin Li, CEO of Baidu, is a personal friend. These are the big three of China. For Valley heads out there, that would be like a founder getting investment from Facebook for his first startup, getting one of his web projects acquired by Amazon, and then being chummy with Larry Page of Google. Lei Jun is arguably the most well connected entrepreneur in China. So, the recent PR hullaballoo around an air purifier that Jack Ma teased Lei Jun about is only something Lei Jun can do. Think about him in the context of the surrounding ecosystem that he is in (and that he creates). A case in point is WiWide.com, a startup that Xiaomi funded, and which got funding from Tencent last week.
Lei Jun is more than just a Chinese Steve Jobs, he actually looks more like every single Silicon Valley hero all wrapped into one. Maybe that’s what makes him worth US$9.1 billion. Or, as our own Paul Bischoff notes, he might be worth even more than Jack Ma.
Lei Jun’s numbers
When you follow the money, you really start to see the whole story of what makes Lei Jun tick. User numbers, revenues, and investments show an evolution.
First, Kingsoft. Lei Jun joined in 1992 after university. He began as an engineer but rose up to CEO in six years. Within Kingsoft, from 2000 to 2004, Lei Jun built up Joyo and sold it to Amazon for US$75 million. After that, he spent years bringing Kingsoft to its IPO in 2007, after which he resigned. He came back to Kingsoft in 2011. The return is often paralleled to Steve Jobs’ second coming to Apple. Here’s Kingsoft’s revenue numbers since IPO in 2007:
From 2008 to 2011, Kingsoft’s revenue stagnated. Upon Lei Jun’s return in 2011, Kingsoft aggressively pursued a mobile and cloud strategy (Nadella anyone?). As revenues indicate, this was the right play.
Lei Jun’s taste for mobile success continued when he joined UCWeb, China’s now top mobile browser, as Chairman. UCWeb dominated the mobile browser market share and was eventually acquired by Alibaba, which valued the company at a record-breaking US$3.8 billion. UCWeb’s first year after release saw 200 million new users and within four years it already hit 500 million users. Gaining 200 million users in one year is staggering.
With UCWeb’s solid rise and Kingsoft’s second coming, it seems Lei Jun stumbled on a formula for growing Chinese businesses. By 2011, Lei Jun invested in over 20 companies in China. In total, his portfolio raised over US$1 billion from venture capitalists. He continues to invest today via the Shunwei Fund. Shunwei invests in Lei Jun’s three favorite categories: ecommerce, social networking, and mobile. All of his accumulated investments over the years set him up perfectly to found Xiaomi and succeed with it.
Only Xiaomi
On the Daring Fireball blog, John Gruber’s Only Apple essay makes the point that weaving software, services, and hardware seamlessly en masse is something only Apple can do. This got me pondering, what are the things that only Xiaomi could do? Upon closer look, Xiaomi pursues an Amazon strategy with Apple tactics and skin.
- Apple skin: Lei Jun wears a black shirt and blue jeans, quotes “One More Thing”, and mimics Apple icons.
- Apple tactics: Xiaomi uses flash sales to manage inventory, generate hype, and stoke demand. The tactic also shows how Xiaomi wants to do things its own way. Similarly, when Apple released the iPhone exclusively with AT&T, it forced all the carriers to abide by Apple’s rules. And so both Apple and Xiaomi are shifting the dynamic between telco, manufacturer, and consumer.
- Amazon strategy: Loss leadership
That last point requires the most elucidation. There’s more to these three aspects of Xiaomi than meets the eye. Latest leaked profit reports indicate that Xiaomi only made US$56 million in profit in 2013. But if you’ve been watching Xiaomi, you’ll find this unsurprising. Since inception, Lei Jun has been harping on a point about his company:
If people really want to compare Xiaomi to a foreign company, you can say it looks a bit like Apple. But it’s really more like Amazon with some elements of Google. So take these three companies together and it’s easier to clearly understand what kind of company Xiaomi is. Xiaomi selling mobile phones is like Amazon selling Kindles. So you can understand why we sell them for so cheap.
Benedict Evans, in his post on why Amazon has no profits and why it works analyzes Amazon’s cashflow in-depth. His point is Amazon is a loss leader that constantly reinvests into its own market which snowballs into massive growth. For that reason, Amazon has very low and sometimes negative profits. Xiaomi is the same. Look at Xiaomi’s smartphone sales, revenue, and funding transposed.
Since 2010, Xiaomi’s growth has been explosive. Every year, it has doubled its revenue. And in 2014, if the second half of the year matches its first half, it will have tripled its smartphone sales. But despite this growth, it is likely Xiaomi’s profits will not dazzle. Xiaomi is on an investment and acquisition warpath. As the CornerPlay blog notes, Xiaomi’s revenues come overwhelmingly from its smartphone sales. It’s a key argument against Xiaomi’s claim that it resembles Amazon since it makes no money on services, but it misses Xiaomi’s incoming empire.
The below chart only lists 17 companies that Xiaomi acquired or invested in. Xiaomi claims it has 25 companies already plugged into its ecosystem. Since 2012, Xiaomi has participated in deals amounting to over US$3 billion (mainly involving the companies in the chart below). It plans to invest US$1 billion into smart TV content and another US$1 billion into cloud services. In many of these deals, Xiaomi leads the investment or acquires the companies outright. This four-year-old smartphone startup already has dominion over a multi-billion dollar empire. And the amassing will not abate. This is quintessentially Amazonian.
Amazon applies the majority of its profits to expanding its fulfillment capacity, servers, and areas that generally expand Amazon’s business. Likewise, Xiaomi acquires and invests in software companies in key areas, with the purpose of expanding its future business. It also plans to invest or participate in incubating over 100 hardware companies in China. This even includes Silicon Valley companies like Misfit.
But all of this is only the beginning for Xiaomi. As Robin Chan, investor in Xiaomi, notes:
Xiaomi is an extension of the Lei Jun ecosystem.
Xiaomi tomorrow
Leveraging its Amazon-esque business model, an Apple face, and a burgeoning startup ecosystem, Xiaomi seeks to do multiple things at once:
- Dominate China’s smartphone market in sales and market share
- Become China’s most recognizable international lifestyle brand
- Become the number one global smartphone brand
- Unite all of China’s giants and aspiring technology innovators into a contiguous ecosystem (under the Xiaomi umbrella via Lei Jun’s connections
- Hit US$100 billion in valuation and then in revenue (ignoring profits along the way)
Becoming China’s number one smartphone manufacturer will be the easiest goal Xiaomi has right now. It just needs to continue with its current tactics of flash sales, incrementally improving its phones, increasing its operations, and acquiring content and software services that can be served on the Xiaomi platform. And as Xiaomi invests in multiple categories of hardware from tablets to air purifiers to wearables, it can slowly solidify as a recognizable lifestyle brand.
Achieving the top spot for global smartphone brands will be difficult. Xiaomi is fraught with intellectual property issues and doesn’t have a strong stock of patents. Its recent ban in India, caused by a patent dispute with Ericsson, shows the risk involved in each expansion. This will likely drive Xiaomi’s margins down or phone prices up. It will attempt to apply the Chinese strategy of acquiring services and content startups in local markets to create localized empires. Hugo Barra has already confirmed that Xiaomi will start doing just that in India, starting next year.
In terms of competition, Xiaomi will also have to deal with the waning goliath that is Samsung, and the robust innovator that is Apple. It’s highly unlikely that Xiaomi will, in the next decade, achieve profits anywhere near what Apple sees today. But profit is not what interests Xiaomi.
Uniting China is probably the most interesting and understated goal of Xiaomi. At Xiaomi’s 2012 launch event, Lei Jun stood on stage and said this to companies that were copying Xiaomi phones:
We truly hope that these copy cats can please be more supportive to domestic brands. They should keep focusing only on [copying] iPhone, Samsung, HTC, and Nokia.
All of this can only come from a Chinese man who is a jack-of-all-trades, from Steve Jobs to Bill Gates. And it looks like he is not stopping there. With the release of the air purifier, his company attempts to emulate Tony Faddell’s Nest. With rumors of an electric car, Xiaomi might even want to be part-Tesla. Elon Musk, eat your heart out.
And Xiaomi does all this, as its slogan reminds, “just for fans”.
Editing by Steven Millward
Last edited:
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That's one of the reasons to avoid a Xiaomi phone (and other China phones e.g. Lenovo). I do not want apps of China's ecosystem preinstalled on my phone e.g. Youku app, Baidu browser.
Get a HTC, Samsung or Sony phone if you want an Android phone.
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Yup, a major bugbear with Samsung is its bloated software taking up precious memory space, and the fact that the pre-installed apps cannot be un-installed.
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Why not Apple too?
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I've still not encountered this problem you mentioned with my 3 month old Redmi Note, did you personally face this problem with your China Android loaded smartphone? Please share.
sorry, i meant phone bought directly in china, non export version.
i have friend who bought china based android, can instal play store but cannot open.
when i purchase mine, i make sure it is preloaded with google based apps.
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Perhaps there's a difference between export and domestic models.
From going to extremes of photoshopping the Apple brand logo and registering clones just to bash America and her allies while bending down for America's enemies, u are insulting readers intelligence to deny.
http://www.singsupplies.com/member.php?29628-俺操汝地娘
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