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e-Commerce, Electronics
September 4, 2012 | 1 Comments

Mi too: China’s homegrown smartphone goes forth

Xiaomi M2.

Xiaomi M2.

Earlier this month, Chinese tech company Xiaomi launched its highly anticipated new smartphone, the M2, along with an upgrade for its first generation handset, the M1-S. In a diverse market ranging from shanzhai knockoffs to top of the line smartphones, Xiaomi stands out for its online sales model and rabid fans. Xiaomi released its first handset in 2011 to 3.5 million units sold. With a combination of high performance/low price, the M2 and M1-S will put pressure on both low cost domestic rivals and global hi-tech giants but also illustrate the challenges of Xiaomi’s unique position in the marketplace. 

We expect Xiaomi’s latest models to sell well. On screen resolution, download speeds and customizable features, the M2 aims to outclass older models from well regarded manufacturers like Samsung and HTC. With savings from online distribution, Xiaomi also undercuts high-end models on price. To wit: the iPhone 4S sells for a cool RMB 5,000 in mainland China and Samsung’s Galaxy SIII at 4,000, but the M2 is only RMB 2,000. Don’t expect the millions of “mi fen” (Chinese for “Xiaomi fan”) who buy Xiaomi handsets in 2012 to easily switch allegiances when global manufactures lower prices in the more competitive marketplace of tomorrow.

And Xiaomi has an even cheaper model. So far, the release of the M2 has hogged most of the attention, but the real story may be the M1-S. With slightly less RAM and overall speed than the original M1, the M1-S is the company’s “youth” model, targeting China’s savvy students. At only RMB 1,500, MI1-S complements the new M2 by providing a tool against low performance domestic rivals like Meizu and Shanda. The M1-S is also an interesting sleight of hand for consumers looking to upgrade. If Xiaomi released the M2 alone, it would send signals that the M1 was outdated. By releasing the M2 and M1-S together, Xiaomi has maintained a cool edge for its cheaper alternative instead of simply leaving the M1 on (digital) store shelves.

With new models comes a new global vision for Xiaomi. The company’s planned expansion, first to Taiwan and eventually Europe, won’t be easy. Xiaomi’s distinct image - cultivated on Chinese micro blogs and BBS forums – will be harder to replicate outside the Mainland, especially with bad press garnered abroad by Chinese telecoms  ZTE and Huawei. Profitability is another challenge: Each new M2 is produced at a 300 RMB loss. Before Xiaomi goes out and conquers the globe, the company must earn a kuai or two at home, and once it does, its model will still depends on alliances which will be harder to set up in foreign markets. Xiaomi’s CEO Lei Jun declared that the company will focus on R&D – as opposed to profit – over the next few years. Apart from operating systems and snazzy devices, we hope the company is also developing a viable strategy.

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  1. Still there are a lot of problems with Xiaomi Phone, The online news says the company is selling the returned phones. That`s what Chinese businessmen like to do. For profit.