Chinese smartphone maker Xiaomi is now one of the most valuable tech companies in the world after raising $US1.1 billion at a $US45 billion valuation.
It’s been a spectacular rise for Xiaomi, which became the fourth-largest smartphone vendor in the world in about three years, according to some estimates (it was third-largest until Huawei moved past Xiaomi in December). And it’s the top smartphone vendor in China, ahead of Samsung, Apple, and Lenovo.
Xiaomi sells really nice Android phones that are just as good as phones from Samsung, HTC, and Motorola, but cost about half as much.
Xiaomi is often called “The Apple Of China,” not just because it has a wild and passionate fan base, but also because its CEO and founder, Lei Jun, has ripped a lot of pages straight out of the playbook of Steve Jobs.
During product announcements, Jun wears black shirts, light blue jeans, and sneakers, just like Jobs did. Xiaomi customers worship him. Company events feel more like rock concerts with screaming fans than product launches.
And this summer, when Jun introduced Xiaomi’s latest flagship phone, the Mi4, he included a “One more thing…” kicker at the end of the presentation, a tactic Jobs was famous for when he had a surprise announcement.
No wonder why Jun is often called “The Steve Jobs Of China.”
According to a profile of Xiaomi by Businessweek earlier this year, Jun, now 45, got his start in tech shortly after college when he joined Kingsoft, a Chinese software company that mimicked Microsoft. Kingsoft made productivity software that was very similar to Microsoft Office. If Xiaomi is now “The Apple of China,” then Kingsoft was the “Microsoft of China” in the 90s and early 2000s.
Jun eventually worked his way up to become CEO of Kingsoft and took the company public in 2007, but resigned a few months after that, Businessweek’s story said. He was a VC for a few years, but then decided to start Xiaomi in 2010 with an ex-Google China executive. By then, he was already very rich. Forbes estimates Jun is currently the eighth-richest person in China, and is worth $US9.9 billion.
But despite all the similarities to Apple, Xiaomi products are made a bit differently. Its product development relies heavily on input from customers, whereas Apple likes to decide on its own what’s best.
In a 2012 profile in The New York Times, Jun called Apple’s method for developing products “conceited.”
Still, Xiaomi phones and tablets are often criticised for looking a lot like the iPhone, both on the software and hardware level. In October, Apple’s design boss Jony Ive called it “theft” when companies like Xiaomi copy iPhone designs.
The customer-first philosophy has made Xiaomi and Jun wildly popular in China. Xiaomi’s phones are mostly sold online, and often sell out within a few minutes.
The company spends very little on traditional marketing and instead spreads the word on social media channels like Weibo, a Chinese social network that’s similar to Twitter. Those cost savings are passed to the customer.
Xiaomi’s best phone, the Mi4, costs a little over $US300 unlocked. But its specs are on par with Samsung, Apple, and Lenovo’s best phones, which usually start at $US650 or more unlocked. Xiaomi phones are sold in China, India, Brazil, and a few other emerging markets. There aren’t any immediate plans to move into Western markets like the US and Europe.
Xiaomi makes other stuff too, including a tablet (which looks almost exactly like an iPad mini), a streaming set-top box, and external USB battery packs.
Xiaomi’s rise is also eating into Samsung’s profits. Last quarter, Samsung reported a 60% drop in profits, largely blaming competition from cheaper smartphone makers like Xiaomi. Samsung is still very profitable and the top smartphone vendor in the world, but it’s declining rapidly.
With its fresh $US1.1 billion in new funds, Xiaomi has a lot more cash to fuel its rapid growth.