Xiaomi Technology Co. Ltd. will likely be the one of the hottest initial public offerings (IPOs) if it decides to go public. Xiaomi is a Beijing-based Chinese electronics company. Its core business is making smartphones.
Xiaomi Ranked Third in the World
According to a research report by IDC, Xiaomi is now the world’s third-largest smartphone maker. It is only behind Samsung and Apple. The company sold more than 60 million phones in 2014. (Source: IDC, last accessed May 13, 2015; TechCrunch, last accessed May 13, 2015.)
Another IDC report suggests that Xiaomi has surpassed Samsung in China to become the country’s largest smartphone vendor. (Source: IDC, last accessed May 13, 2015.)
The name “xiaomi” in Chinese means “millet”. But there is more to it: “xiao” means “small.” And, according to the company’s CEO Lei Jun, “mi” is an acronym for “mobile Internet.”
Related Article: Xiaomi IPO: Why it May Be the Most Highly Anticipated IPO in 2015
Defying the Odds; Low Pricing and High Quality
In its early days, Xiaomi was selling smartphones at very low prices—marginally above their actual cost. Its strategy was to make money from selling content after consumers purchased the phone. To further reduce costs, Xiaomi smartphones are only available online. There are no physical stores that carry the company’s products.
However, low prices do not mean poor quality. Xiaomi has put in a tremendous amount of effort to improve user experience. The company even developed its own firmware—“MIUI”—despite being based on “Android.”
Xiaomi’s efforts paid off. Combining low starting price and good user experience, the company has become extremely popular in China. Not only has the younger, tech-savvy generation warmed up to its products, but they also buy Xiaomi smartphones for their parents and grandparents.
After its initial success, Xiaomi started to offer pricier phones and move into new areas. The “Xiaomi Mi 4,” one of the company’s high-end smartphones that was released last year, has received positive response from the market. One reviewer said, “Xiaomi’s Mi 4 offers almost everything you want in a high-end flagship smartphone—beautiful design and snappy performance at a price that’s just too good to pass up.” (Source: CNET, last accessed May 13, 2015.)
Thanks to the company’s popularity and fan base, Xiaomi is also launching accessory products like “MiWifi,” a network router; “MiTV,” a smart TV; and “MiBox,” a set-top box for televisions.
Most Valuable Tech Start-up to Do an IPO in the U.S.?
In December of last year, Xiaomi raised $1.1 billion in its latest round of funding and was valued at more than $45.0 billion. This makes Xiaomi the most valuable tech start-up in the world.
Investors are enthusiastic about the company, but Xiaomi has yet to announce when it will go public. I suspect its IPO will likely take place in North America. Chinese companies like AlibabaGroup Holding Limited and JD.com, Inc. have raised billions of dollars through their IPOs in the U.S. last year. I wouldn’t be surprised if Lei decides to join them in the near future.