Aug 30 AT 11:22 AM Nick Gray 13 Comments

Hugo Barra, Xiaomi and the plan for global dominance

xiaomi-logo

Whenever there’s a change at Google regarding the Android team, we’re always intrigued as to how it will affect the ecosystem we all love. Fortunately, Hugo Barra’s departure from Google shouldn’t have much of an effect on the ecosystem as a whole, but the story doesn’t end there. Barra has left his post at Google for a new job at Xiaomi, a move which has the potential of turning the entire smartphone industry on its heels.

Xiaomi and its history

To give you a little background, Xiaomi is a Chinese company that was founded in the summer of 2010. Lei Jun, the company’s CEO, actually worked at Google before starting Xiaomi. While most media outlets are referring to Xiaomi as a smartphone manufacturer, Android users who are into the modding scene probably know Xiaomi as the developers of MIUI, a custom build of Android that can be installed on dozens of different Android phones. In 2012, Xiaomi sold 7 million phones and is on track to sell 15 million this year. But the company has no plans to make much of a profit from selling those devices. The reason Xiaomi has been so successful in China is because each of ts phones is sold at-cost directly through its website–something Google has been doing lately as well. This strategy has allowed Xiaomi to garner a huge number of loyal followers, culminating with the sale of 100,000 Xiaomi Red Rice phones in a mere 90 seconds.

xiaomi-accessories

Xiaomi is also enjoying new success in Taiwan where the Mi-2 is currently the third best-selling phone (behind the HTC One and Samsung Galaxy S 4) on one of the country’s largest service providers.

So how does Xiaomi make its money? Accessories and software services. Since the company sells all of its phones through its website, it allows them to cross sell dozens of accessories to customers who seem more than eager to pick up custom cases, headphones, chargers and even Xiaomi’s plush rabbit mascot to complement their phone. Xiaomi also leverages its MIUI software as a way to pull in cash for the company. MIUI offers hundreds of custom themes for the phones, many of which can be purchased for a small fee. While the company’s strategy has allowed for incredible growth since 2010, Lei Jun isn’t satisfied with the fact that his company is limited to China and a few other Asian markets.

What Hugo Barra’s move means for Xiaomi

This is where Hugo Barra steps into the picture. Lei Jun wants to take Xiaomi global and go head-to-head with Samsung, Apple and all the other major players in the smartphone space. So, he needs some with enough credibility as Hugo Barra to drive the company’s global expansion. On its own, Xiaomi would be able to negotiate deals with service providers in Europe and North America, but it takes years to develop the strong relationships that Xiaomi needs–time that could stifle the company’s unprecedented growth.

Hugo Barra’s product manager role at Google should have given him some exposure to how agreements are structured with large service providers like Verizon, T-Mobile and Sprint, but we suspect Hugo’s presence at Xiaomi will be used for much more. Since Barra was a public face for Android for several years, his move to Xiaomi will give MIUI an incredible boost, essentially validating that Xiaomi’s custom Android build is on the right track. But we also see Barra as the first piece to a very large puzzle that will come together over the next 6-12 months. If Lei Jun was able to convince Barra to quit his job at Google and join a company in China that most people in the western hemisphere have never heard of, we have a feeling there will be others that follow. We’re not saying that Xiaomi will be luring in more talent from Google, but we may see managers from Samsung, HTC, Sony and other big players take up positions at Xiaomi to help lead the company global expansion strategy.

Wrap up

Expanding Xiaomi’s market presence from Asia to the rest of the world may seem like a daunting task, but it’s not impossible. As more consumers start to realize the amount of money they can save by not buying on-contract phones, flagship phones that sell for half of what an HTC One or Samsung Galaxy S 4 sell for will become extremely popular.

Nick is a tech enthusiast who has a soft spot for HTC and its devices. He started HTCsource.com (the first HTC blog) back in 2007 and later joined the Android and Me family in the summer of 2010.

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  • http://technicquill.com Jess Blanchard

    I want plush rabbit and those accessories that look like Ninja stars. Whatever they do, I’m sure I need that functionality in my life.

  • http://htcsource.com Nick Gray

    The ninja star is used to organize your headphone cables. The one accessory I;ve wanted for a long time is the headless cow smartphone stand. http://www.xiaomi.com/goods/1956

  • sere83

    As an owner of the original M1 and seeing first hand the growth of MIUI and xiaomi, I for one am absolutely loving the fact that they are getting ready to go global stick it to all these main stream android manufacturers putting out rubbish overpriced handsets with laggy/buggy skins.

    MIUI is amazing, with weekly rom updates and blazing performance, it kills any other main stream manufacturer rom out there. Xiaomi make solid hardware at great prices too.

    I suspect they will hit the global market like a typhoon and eat up market share like its going out of fahsion. Go Lei Jun!

  • Arthur

    For most of Europe that are much more accustomed to buying phones off-contract for full price, introducing a new OEM to that mix won’t be anything new for them or keeping that same method of purchasing phones.

    But the US, because of how long the American carriers have trained their customers that a contract based system is how things works, upgrading your phone every year or 2 years, paying your $199 and being set for the next 2 years, rinse and repeat system, it will take a long time to change that mentality.

    The Nexus 4 for instance now being $199 off-contract, even that isn’t enough to get as many sales as you would thing among the general population of phone buyers. Why? Because a good amount of them are on VZW, and VZW as we all know is strictly CDMA within the US. And for those who praise VZW on their network and network coverage have a hard time trying a month to month no-contract service from someone like Tmo where they will save money month over month and get a phone, like the Nexus 4, for the same price as one on-contract through VZW.

    Until this habit can be changed in a large number of people, no matter who the OEM is selling the device, especially the smaller ones, partnering up with a carrier in the US is usually the only way into the US market.

    There is a recipe that might have a slight chance of getting you recognized without a carrier:

    1. ALOT of marketing, Samsung like marketing in many ways. TV, Print, Internet.
    2. Obviously a product priced under $250 if you want to even get noticed.
    3. The device has to be a great value for money, something Nokia has been doing well lately with their low to mid-range Lumia phones. Great design, good build quality, reliable.

    If even one of these fails, you can kiss the whole operate goodbye.

    • http://htcsource.com Nick Gray

      You raise some good points, but let’s not forget that Xiaomi may try something different in the US market. Just because they sell their phones off-contract in china doesn’t mean they will do the same in other markets. They are testing carrier partnerships in Taiwan, which means we could see the same thing happen over here.

      If a flagship Xiaomo phone like the Mi-2 is $250 off contract, it’s easily a free of $50 phone on-contract, something that carrier partners should market the crap out of since all other flagship phones are priced at $200 or more. Xiaomi has seen massive growth in the past three years, but they will need to adapt their strategy to fit new markets if they truly want to compete with the big boys.

  • ashok pai

    yay! power to xiaomi ! their strategy is good – make money off accessories. even samsung does the same, but they make gobs of money selling phones too. taking down samsung will need a multi pronged approach – attacking niches. I wish they’d come to india, xiaomi handsets look superb!

  • Chuong Luong

    Not sure if it is a good idea or not but I do concern about privacy when using chinese product. You may have heard about Lenovo spying your usage on Thinkpad and may hear st about this next on your mobile? Just a question for discussion :)

    • SGB101

      Almost everything is a Chinese product.

      Plus to be fair, what the hell would the Chinese want with your info, you want to be more concerned with your own countries government spying on you. Whether that be US, UK, or China.

      • Eben1277

        Exactly. The Chinese MIGHT be spying on us through these phones, but the NSA is DEFINITELY spying on us through our Androids, iPhones, Windows Phones, Macs,PCs,Gmail,Outlook… am I forgetting anything?

  • cuorekid

    Nice … waiting to get one,
    currently i using Mi2 :D ,
    i like Miui bcoz is can buy hi-spec phone on affortable price
    and the ROM is smooth

  • donger

    Yup.