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Essay: Xiaomi Corporation analysis (year by year)

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Market Research
Founded in April 2010, Xiaomi Corporation, a Chinese electronics manufacturer, has carved quite a name for itself in its respective niche. According to IDC, it became the 4th largest manufacturer in the world in Q4 of 2017, shipping 28.1 million units worldwide.
With a now-established existence in Asia and a growing presence in the rest of the world, Xiaomi has definitely settled itself as one of the top providers of mobile handsets. This market analysis digs a little deeper into the Xiaomi success story to determine how it got here, where does it plan to go, and if it actually has what it takes to achieve its ambitious goals.
Quick Stats
Stock Type:         Public
Stocks Circulating:    2.18 billion shares
Market Cap:        Around $54 billion
Xiaomi was co-founded by Lei Jun, a serial investor who held multiple businesses; Lin Bin, a technical engineer who helmed Google’s regional operations; and Li Wanqiang, a software designer who launched several successful projects.
After the company was launched on April 6, 2010, it expressed its aim to become one of the leaders in mobile handsets and mobile software development, and the very first iteration of its words coming to tangible results was brought about in the form of its first Android-based “MI” user-interface, which debuted on August 16, 2010.
Even though it seemed like a combination of Apple’s iOS as well as Samsung’s evolving TouchWiz Android OS, the MIUI was impressive for its time in terms of smooth operations and potential for growth, which is why it started doing the rounds of various market sectors in the then-changing cellphone industry, and eventually landed a collective investment of $41 million in the company’s Series A round of seed funding.
The funds were used to supplement the production of Xiaomi’s first flagship smartphone, the Xiaomi Mi 1. Using MIUI, the phone was announced in August 2011 and released a few days later. The Xiaomi Mi 1 saw massive success and received more than 300,000 pre-orders in the first 34 hours upon its availability.
Riding on the successful launch of its first ever smartphone, Xiaomi raised even more funding in the Series B of its seed round in December 2011, where the company made off with $90 million in investment by various parties.
The round was followed by a Series C funding in June 2012, in which Xiaomi saw the highest investment that it had received to date, collecting around $216 million in collective funds.
The investment was once again put to good use, where Xiaomi announced the Xiaomi Mi 2 in August 2012, releasing the model in November 2012. As compared to its predecessor, the Xiaomi Mi 1, the Mi 2 sported a larger display of 4.3 inch and was also the first model to use Qualcomm’s Snapdragon S4 Pro APQ8064, which came with 1.5 GHz of quad-core Krait chip power. The phone used Android 4.1 (Jelly Bean).
The Mi 2 met with similar success as Mi 1, and it further established Xiaomi’s reputation as an emerging brand that could go places with the right products and outreach.
Capitalizing on the successful launch of not one but two phones, Xiaomi went ahead with announced the launch of Xiaomi Mi 3 in September 2013, with the phone being released in December 2013 with its original OS being Android 4.3 (Jelly Bean).
In Mi 3, the company went ahead with bolder steps to meet the increasing demands of cellphone users especially those pertaining to screen size, and gave the new release a significant upgrade of 5.0 inches of IPS LCD screen, which was more noticeable when compared with the modest 4.3 inches of Mi 2.
Other notable differences included the addition of protective Corning Gorilla Glass 3, with the chipset being upgraded to Qualcomm’s Snapdragon 800 MSM8274AB, which came with 2.3 GHz Quad-core Krait 400, and an Adreno 330 GPU to boot. While the RAM remained the same at 2 GB, the phone’s memory was upgraded, where it now offered two versions of 16 and 64 GB as compared to Mi 2’s limit that ended on 32 GB.
With the growing outreach of its phones came the demand for timely service delivery in order to resolve performance issues. While Xiaomi had been initially slow at this front, it decided to shed its inhibitions and announced its plans to open its first service center in Beijing in order to facilitate its customers in the best manner possible. The service center concept came to life in September 2013, which was followed by 18 other service centers scattered throughout China.
2014 began with a bang for Xiaomi, where it announced some major updates during the first quarter of the year in itself.
In February 2014, the cellphone manufacturer announced that it will be expanding its operations to Singapore as a part of its global expansion plan. While many of its handsets had already been making their way internationally by the hands of first hand consumers, this was the first time that official expansion was announced outside of China, Hong Kong and Taiwan, which is why it opened doors to a world of possibilities.
A month later, Xiaomi also announced its plans to delve into the phablet market. It seemed like a ripe yet competitive time for Xiaomi to make such a claim, especially with Apple and Samsung already dominating the space with their iPad and Galaxy Note lineups, respectively. However, that did not stop Xiaomi from going ahead with its plans and launching its first phablet by the name of Xiaomi Redmi Note in March 2014.
The Redmi Note came with an IPS LCD capacitive touchscreen and an 8GB memory with 1 or 2 GB of RAM. It contained Octa-core 1.4/1.7 GHz Cortex A-7 chipset with Mali-450MP4 as its GPU. Overall, the Redmi Note under-delivered in terms of performance, and while it was justified by its price point, it still was not enough to compete with high-end products offered by established competitors, Apple and Samsung.
The handset came packed with support for Android 4.2 (Jelly Bean).
In July 2014, Xiaomi also announced its next flagship phone by the name of Xiaomi Mi 4, which was released a month later in August 2014, with its base OS being Android 4.4.3 (KitKat).
However, despite the name change, the phone did not have any massive upgrades as compared to its predecessor, the Mi 3. It sported the same screen size of 5 inches, the same MIUI version 5.0, and the same GPU of Adreno 330 along with minor differences in the same 13 MP camera.
The differences that were present were not that significant either, since the chipset was upgraded to the next available version with Qualcomm’s Snapdragon 801 MSM8974AC. The same case was noted in its CPU, which saw an upgrade of 2.5 GHz Krait 400 – basically the same set as Mi 3 with 0.2 GHz of more power.
However, the upgrade did come with the option of choosing a 3 GB RAM with the already available choices of 16/64 GB of memory.
All in all, the handset was a powerhouse of performance when it was seen as a standalone product, but it left a lot to be desired by those who were looking at substantial upgrades to the Mi 3.
Xiaomi then ended the year on a positive note by running a successful round of equity financing, raising over $1 billion. The round was led by technology fund All-Stars Investment Limited.
In January 2015, Xiaomi announced and released the Xiaomi Redmi 2, which came with a 4.7 inch IPS LCD capacitive touchscreen and sported Qualcomm’s Snapdragon 410 MSM8916, along with Quad-core Cortex-A53 which clocked at 1.2 GHz, and an Adreno 306 GPU.
In April 2015, Xiaomi announced its expansion to India and for the first time expressed its intention to have its products available for sale through offline retailers as well. The move was met positively by the Indian market, which was an emerging gold-mine of new users waiting to tap into smartphone technology at an economical price.
The move was followed by another expansion announcement in June 2015, with Xiaomi now setting up shop in Brazil, another country with all the potential to become the next technological leader in the future.
The expansion into Brazil also came with the announcement of Xiaomi Redmi 2 being manufactured in Brazil, which marked the very first time when a Xiaomi handset was to be manufactured outside of China and in a country where it was to be sold right away.
The Xiaomi Redmi 2 shipped with Android 4.4.4 (KitKat).
Then in August 2015, came the announcement and subsequent launch of Xiaomi Redmi Note 2, the follow-up to Xiaomi’s first phablet. The handset was packed with features with an IPS LCD capacitive touchscreen of 5.5 inches, complete with 2 GB RAM, and 16 and 32 GB memory for Redmi Note 2 (Standard) and Redmi Note 2 Prime, respectively.
The other differences between the Standard and Prime model was the speed of the processor. For Redmi Note 2, it used an octa-core 2.0 GHz Cortex A-53, while for Redmi Note 2 Prime, it used an octa-core 2.2 GHz Cortex A-53. Both handsets used the same GPU, a PowerVR G6200. The chipset, a Mediatek MT6795 Helio X10, was also the same across both models.
Both models used Android 5.0 (Lollipop) out of the box.
Xiaomi started the product launches in 2016 with the Xiaomi Redmi 3, which was announced and released in January 2016, with support for Android 5.1 (Lollipop).
Sporting an aluminum body and an increased screen size of 5 inches, the Redmi 3 was a definite visual upgrade to the Redmi 2 released a year ago. It was technically just as ahead, since it had its chipset in Qualcomm’s Snapdragon 616 MSM8939v2, its CPU in octa-core 4×1.5 GHz Cortex-A53 and 4×1.2 GHz Cortex-A53, and its GPU in Adreno 405.
The 2 GB RAM remained the same as the Redmi 2, but Xiaomi did upgrade on its memory, which jumped to be 16 GB.
Another upgrade in Redmi 3 was its camera, which went to 13 MP rear and 5 MP front from Redmi 2’s modest 8 MP and 2 MP, respectively.
The Xiaomi Redmi Note 3 was announced the same month and released in February 2016, which was a significant development as it did not leave more than 6 months between its release and that of its predecessor.
The 5.5 inch IPS LCD Redmi Note 2 brought massive upgrades along with it, with its usage of Qualcomm’s Snapdragon 650 MSM8956 as the handset’s chipset, a hexa-core CPU in 4×1.4 GHz Cortex-A53 and 2×1.8 GHz Cortex-A72, as well as Adreno 510 as its GPU. The high/special version of the handset also offered a 3 GB RAM option instead of the normal 2 GB.
The handset also featured a fingerprint sensor for the first time, and it was rear-mounted to stay up to date with the evolving industry standards of competition. It also came with Android 5.1.1 (Lollipop).
Another flagship phone that was announced in January 2016 and released in February 2016 was the Xiaomi Mi 5, with the phone being released in different versions with variations in specifications.
While the screen size, GPU, and Chipset all remained the same at 5.15 inches, as Adreno 530 and as Qualcomm’s Snapdragon 820 MSM8996, respectively; the differences between the standard and the Prime and Pro versions came about in the CPU.
For the Standard version, the CPU got to be Quad-core 2×1.8 GHz Kryo and 2×1.36 GHz Kryo; while for the Prime and Pro versions, it clocked at being Quad-core 2×2.15 GHz Kryo and 2×1.6 GHz Kryo.
Other notable differences came in the RAM size. The Standard edition offered 32 GB memory MORY with 3 GB RAM; the Prime edition offered 64 GB memory with 3 GB RAM; and the Pro edition took the cake with 128 GB of memory and 4 GB of RAM.
The upgraded versions of Android 6.0 (Marshmallow) were used across all iterations of the handset.
The end of the year noted the release of Xiaomi Redmi 4 in China (also known as the Redmi 4 Standard). The phone was announced and released in November 2016.
The specifications of this flagship were a mix of upgrades and stagnancy as compared to its predecessor. While the screen size, CPU, memory and RAM remained the same, the chipset was changed to Qualcomm’s Snapdragon 430 MSM8937, with the GPU upgraded to be Adreno 505.
A rear-mounted fingerprint sensor was also added to the handset and as always, it saw an upgrade to the Android OS, going from Android 5.1 of Redmi 2 to Android 6.0.1 (Marshmallow) of its own.
The year kicked off with Xiaomi Redmi Note 4, which was announced and released in January 2017. The phone was launched with Android 6.0 (Marshmallow).
Having a front glass and fully aluminum body, the phone had a screen size of 5.5 inches and had Qualcomm’s Snapdragon 625 MSM8953 as its chipset. The CPU was octa-core 2.0 GHz Snapdragon 625, with its GPU being Adreno 506.
The handset came in two variations, with 64 GB memory and 4 GB RAM or 32 GB memory and 3 GB RAM. It also came with a rear-mounted fingerprint sensor, while having a 13 MP and 5 MP rear and front camera, respectively.
The other flagship release was seen in Xiaomi Mi 6, which was announced and released in April 2017, with the phone having a stainless steel frame along with front and back glass in order to compete with the flashier Samsung Galax line of products.
Along with having a Qualcomm’s Snapdragon 835 MSM8998 chipset and octa-core CPUs in 4×2.45 GHz Kryo and 4×1.9 GHz Kryo, the handset also had Adreno 540 as its GPU. It also had the options of 64/128 GB memory with 6 GB RAM, or 64 GB memory with 4 GB RAM. By far, the Mi 6 was the handset that was set to compete with iPhone and Samsung Galaxy directly – sporting Android 7.1.1 (Nougat).
The third flagship release of the year came in the form of Xiaomi Redmi 5, continuing the newfound tradition of aluminum body with font and back glass. The screen size went to 5.7 inches, with Qualcomm’s Snapdragon 450 SDM450, octa-core 1.8 GHz Cortex-A53, and Adreno 506 as the handset’s chipset, CPU and GPU, respectively.
The memory options were modest yet functional, standing at 16 GB memory with 2 GB RAM and 32 GB memory with 3/4 GB RAM. It also came with a fingerprint sensor that was rear mounted, and had 12 MP rear and 5 MP front cameras.
The Xiaomi Redmi Note 5 was the first major release of the year, with it being announced and released in February 2018. The handset came with support for Android 7.1.2 (Nougat).
Since 2017 remained to be a year of innovation in terms of visual aesthetics, Xiaomi chose to stick to the same themes and released the phone with an aluminum frame and back, but with no back glass this time.
In terms of specifications, the handset boasted of a 5.99 inches IPS LCD Capacitive touchscreen, Qualcomm’s Snapdragon 625 MSM8935 as its chipset, with its CPU being octa-core 2.0 GHz Cortex-A53. For the GPU, it went for Adreno 506.
Whereas, the handset comes with two preset options in terms of memory and RAM: a 32 GB memory with 3 GB RAM or a 64 GB memory with 4 GB RAM.
The cameras are 12 MP rear and 5 MP front, with the fingerprint sensor still being rear-mounted.
The next flagship came in the form of Xiaomi Mi 8.
That is correct, pulling a move like Samsung, the company decided to skip its Mi 7 and instead went straight for Mi 8 in order to keep the chronology up to date with year-by-year releases.
The Mi 8 once again stood out as the one handset with the most juice, sporting a 6.21 inches Super AMOLED touchscreen, with Corning Gorilla Glass 5 (other handsets from Xiaomi usually have an unspecified version of Gorilla Glass). The fingerprint scanner is rear-mounted.
The phone also has Qualcomm’s Snapdragon 845 SDM845 chipset, octa-core 4×2.8 GHz Kryo 385 Gold & 4×1.8 GHz Kryo 385 Silver CPU, and Adreno 630 chipset.
The memory for the phone stands to be at 64/128/256 GB, with 6 GB of RAM. The Mi 8 has dual 12 MP rear cameras, and a 20 MP front camera for better selfie quality.
All in all, the Mi 8, once again showed the potential to stand out in the crowd due to its superb specs and its support for Android 8.1 (Oreo) right of the box.
But that prospect didn’t kill the Redmi line, since the Xiaomi Redmi 6 made its debut in June 2018 as well.
The handset has an IPS LCD Capacitive touchscreen of 5.45 inches and a Mediatek chipset in its MT6762 Helio P22, along with octa-core 2.0 GHz Cortex-A53 CPU and PowerVR GE8320 as its GPU.
The Redmi 6 is available in 2 versions, with one in 32 GB memory with 3 GB RAM and the other in 64 GB memory with 4 GB RAM.
The fingerprint scanner is rear-mounted, whereas the handset sports the capability of dual cameras, having two 12 MP lenses on its back and a 5 MP camera on its front. The handset shipped with Android 8.1 (Oreo).
Almost all flagships by Xiaomi get to be released with different variations with slight differences in pricing and specifications. However, the handsets mentioned here correspond to each of the three flagship lines of the company and their main models that are released globally – out of which the variable models are then derived.
As of June 2018, the company has its operations running in the countries mentioned above, as well as additional territories such as Malaysia, Philippines, and Indonesia. Its handsets are sold in additional countries as well, even if its fully-fledged operations are not launched in those unnamed regions.
Founders and the current Leadership team
Xiaomi is still being helmed by Lei Jun, who serves as the company’s CEO and Chairman.
Lei has led KingSoft and Joyo.com in the past, which were software development and e-commerce companies, respectively. While KingSoft is still going strong, Lei took the decision to sell Joyo.com to Amazon China once the company took interest in the operation of the online marketplace.
With his extensive experience in business operations as well as financial acumen, the company has been thriving under his leadership save for a few design and update issues here and there – which it seems to have recovered from with its new line of handsets in 2018.
Lin Bin serves as Xiaomi’s President, and that position allows him to employ his experience from working in technical settings, since he holds experience in working at Microsoft for its research and development for Windows Vista and Internet Explorer 8, and by working for Google from 2006 as the Vice President of the Google China Institute of Engineering and the Engineering Director of Google Global.
At Google, Lin supervised Google China’s Mobile Search division as well as its Android App Localization department. He left the company right before he was to join Xiaomi.
As Xiaomi’s Chief Brand Officer, Li Wanqiang has been integral to the process of developing the MIUI as well as looking after the day to day processes of design and development of the Xiaomi and Mi brands.
He is touted as being one of the pioneers of UI interface design in China, and at Xiaomi, utilizes his experience that is derived from developing famous solutions such as the Kingsoft Antivirus, Kingsoft Dictionary and WPS Office.
Future Significant Events
Xiaomi plans to slowly and gradually bring its flagship line of products to the forefront, something which it has set into motion with its focus on developing the Mi line of phones to be directly competitive with the specs offered by cellphone giants Apple and Samsung’s flagship products.
It is also planning to delve into the U.S. market soon in order to tap into the Apple customer-base who may want to try something new at a cheaper price before bidding adieu to their beloved iPhones, as well as those Android faithfuls who are looking for cheaper alternatives to the same solutions that they have come to expect from the likes of Samsung without paying a steep price for them, especially when Samsung has been under-delivering in terms of innovation and even safety in the past few years (think of the Note 7 explosion debacle).
In order to breach into the competitive U.S. market and have enough capital to back up special offers as well as funding various operational requirements, Xiaomi had been planning since a long time to hold the IPO which took place in June 2018. During the IPO, it had planned to raise at least $10 billion to supplement the next phase of its development and growth.
However, Xiaomi’s plans to meet that goal fell short, and it only raise around $4.7 billion during the IPO, which is less than half of what it had been aiming to do according to a Wall Street Journal report which shared these updates with the world.
This would make things difficult for Xiaomi, but if it goes on the same path of resilience and perseverance that it has shown until now, then it might just achieve that goal of being a truly global cellphone manufacturer.
Stock Valuation Analysis
According to sources, each of the 2.8 billion shares that were recently offered at Xiaomi’s IPO had been priced at HK$17, where the company also offered them at up to HK$22 each. This breakdown means that Xiaomi is valued at around $54 billion, which is just about half of what it had been expecting to be valued at originally, since it had been eyeing the sum of $80 billion to $100 billion before its IPO.
The valuation was reportedly affected due to Xiaomi’s approach of providing world-class hardware at minimal profits, which affect the returns for the company and its investors, accordingly.
Experts have said that Xiaomi’s approach to invest more in its cellphone’s hardware gets to be risky if it doesn’t have the ecosystem to support its sales and its after sales services, which is where it needs to invest significantly.
Investment Risks
Taking notes from the aforementioned line of thinking, putting funds in Xiaomi makes an investor think twice because of the company’s plans of further enhancing the powerful hardware of its handsets to keep up with pricey competitors without actually adjusting its prices to not just keep itself afloat but also to support ancillary operations such as the ones mentioned above, the sectors belonging to pre-sale and post-sale services.
Since its next big plan is to launch in the U.S. on which it is reportedly basing all of its future actions, it needs to have a backup plan in case the volatility of the current U.S. government gets in the way of letting a Chinese company into the homes of its citizens, even if the company means no harm and is trying to do its business just like entities from other nations.
This was noticed prevalently in the case of Huawei and ZTE, which despite reaching the U.S. market faced backlash from various government and intelligence agencies, which reported that the companies might be spying on U.S. citizens.
That is why, Xiaomi does not only need to have a backup plan to fall back on if the U.S. market does not work out for it, but also needs to have a fully laid out strategy that tells it exactly where to go and which steps to take in order to ensure that it keeps its operations transparent to the U.S. government branches as well as its citizens, so that it does not get affected by any reports of breaching the security and privacy of its users especially in a day and age where the discussions around these aspects seem to be a hot topic.
Market Analysis
Xiaomi has been opening various support centers in markets where its services are delivered on a hand to hand basis, but it needs to do more in order to reach that customer base in markets like India where people do not believe in online shopping as much as the thrill of visiting a store and buying a product physically.
In addition to that, since Apple is synonymous of being used by celebrities and Samsung has been making appearances in award shows and major events all over the world, Xiaomi also needs to put aside substantial market budget that does not only target cell phone aficionados but the wider public in general.
It had been reported that Xiaomi is going to invest $1 billion for television content building, but those efforts have not really been translated in the markets where Xiaomi is currently offering its products on an official basis.
It is imperative that these factors and the ones mentioned above are looked into, since Xiaomi has been focusing intensively on hardware and hardware alone by the looks of it, but it now needs to expand its horizons and take a leaf out of other companies’ books in order to not disappear into shadows like just another Nokia or HTC, two brands which once ruled their respective markets but could not stand the test of time.

Xiaomi Sets Singapore Launch Date As It Prepares For Global Expansion

The findings and analysis reported here are based upon observations and opinions from various sources. While these have been put together to the best of our ability, the purpose of this report is not to spread fear, uncertainty and doubt about Xiaomi or its future, but only to report the current developments in light of its IPO conducted in June 2018.

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