Will Xiaomi Beat Apple Globally?

Aug. 21, 2015

Just did it once again in China.

In the recent years, many Chinese smartphone brands managed to step out of the shadows of simply being copycats and gradually established a global reputation. Thanks to the huge domestic market, where consumers have been rapidly integrating mobile communication into their everyday lives, they managed to develop solid fan bases and made moves to expand outside of China.

One of the most sought-after Chinese mobile brand is Xiaomi. The company is only 5 years old and in 2014 became the 3rd biggest smartphone manufacturer in the world. According to the research firm IDC, Xiaomi has sold more than 61 million handsets, most of them in mainland China. In H1 2015, Xiaomi beat Apple as top vendor in China, even though China has been clearly Apple’s main focus and managed to double its iPhone related YoY revenues in the greater China region. Xiaomi is often compared to Apple for a number of reasons and in the West it is still considered as a blatant Apple copycat. The company puts significant efforts into distinguishing themselves from Cupertino’s giant, but the CEO Lei Jun’s Steve Jobs impersonation is still difficult to forget.

The question is: will the “Apple of China” beat Apple on the global market? Xiaomi’s chances are good and they clearly earned a global reputation without entering the US and EU markets. Apart from some of the external features and cliches, the two companies’ business model and their target markets are completely different. iPhones are premium level phones targeted towards developed markets and more affluent classes in emerging economies. Apple puts a big margin on its flagship product and maintains fancy physical stores around the globe. Xiaomi, on the other hand, likes to think different. They are targeting a younger crowd who is technically inclined, demands good quality products and services, but can’t afford high-end brands like Samsung or Apple. Xiaomi’s main source of revenue is coming from selling digital content. The company’s CEO likes to compare themselves to Amazon, saying that they sell their devices for low price to establish a big market place for their digital content platform.

Apple’s and Xiaomi’s global ambitions are gradually colliding and while demand might be higher for Xiaomi’s budget phones in developing markets, Apple has a stronger foothold in the EU and the US. Xiaomi’s app store is sporting impressive figures, it has recently reached 20 billion downloads and is quickly closing the gap with the IOS app store, which has recently surpassed 25 billion downloads. Xiaomi might seem unstoppable and the competition between the two is getting fiercer, but we shouldn’t forget that Apple has incredible resources and they sit on a pile of cash that could pay off the entire national debt of Greece.

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