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 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.
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.