Xiaomi Mi3: The Chinese understand the Indian Market, better than Indians.

All about Xiaomi & Mi3: 

• What's the buzz all about? Why the company is so much popular? 
• Why Xiaomi Mi3 was sold out from Flipkart in few seconds and The sale even crashed the website? 
• How it became world's 5th largest smartphone manufacturer in just 3 years? 
• Why it is known as "Apple of China" ? 
• What is the business model of Xiaomi? Why the phones are so cheap, yet quality rich?

The Buzz and The Introduction: On its debut in India, Xiaomi's Mi 3 got off the shelves in meager 40 minutes, in the second sale the handset got sold out in 5 seconds, in the third sale with 15,000 units on the stake the phone was out of stock in just 2 seconds, and continuing the legacy of breaking its own records, in the 4th sale with 20,000 units on sale, the phone got sold out as soon as the sale started on the e-commerce giant Flipkart.com. 

It's hard to believe, that in a country like India, where it takes 2 seconds on an average to load a page, how can a cell phone be sold out in nanoseconds. But this is not the first time the company has made headlines with its flash sales, its just new for Indians. When the Mi 3 initially went on sale in October 2013 in China, the first batch of 1,00,000 units sold out in less than two minutes. 

Xiaomi Incorporated is a Chinese electronics company, the company develops and sells smartphones, mobile apps, 3-D Tv, Mi Pad, Earphones, Powerbanks and Cases. The company is headquartered in Beijing, China and released its first smart phone in August, 2011 and it has the majority of its business in China, Malaysia, Singapore, Indonesia and India. 

Xiaomi is nicknamed as "Apple of China" as the company sells iPhone like gear at a third of the price of Apple products. The company has recently acquired much fame as it passed out well established giants like Samsung and Apple in the Chinese market with a market share of 5% in comparison with 4.8% of Apple in just 3 years. Also, the company has recently risen to become the world's 5th largest smart phone maker with a market share of 5.1% that too in just 3 years. The company gathered much of fame and news in India due to its business model and the record breaking flash sales. Mi3's sale at Flikart gathered so much traffic that for the first time it even caused the website to crash several times during the sale.

The Core Team and the Fundamentals: Company's success formula lies in its simple yet effective business model. It has 8 co-founders and all of them have strong technical backgrounds and hefty experience. Bin Lin, Xiaomi's co-founder and president, has backgrounds in Microsoft and Google's Android team. Guangping Zhou, also a co-founder and a vice president, has an experience of 14 years as the chief of hardware R&D at Motorola. Xiaomi's Chairman and CEO Jun Lei was part of the founding team at Kingsoft, a Chinese software company. Some of the senior most executives in Xiaomi have worked with Google's Android team, hence they know the Operating System inside out. In September, 2013, the company hired Hugo Barra, who was the face of Android at Google, he introduced all the new versions of Android between 2012 to 2013, which include all the versions of Jellybean. 

Qualcomm is an investor in the company, so it is able to procure components easily and probably it is also able to optimize the OS properly for Qualcomm chipsets. Here comes the interesting part, the company has people who know any and everything about the Android operating system, maybe they are the best team in the world when it comes to modify Android in its own way, and the company has the hardware giant Qualcomm as their primary investor, Hence, when they buy the processor, they are totally aware with the build of the processor hence they can easily modify the hardware and the software to work in the most efficient way. Not like the other companies. 

When it comes to design, Xiaomi's products are wildly customizable and simplistic, two traits that rarely go hand in hand. Xiaomi is simply a combination of both Google and Apple. From Google, Xiaomi has adopted an open operating platform that can well engage the customers. From Apple, Xiaomi has learned how to master the brand buzz. It has also learned how to compete on innovation and master the elegance in design. And most importantly, all of this is offered at a prize of nearly one-third of the products of Apple. 

For example its Mi3, that's being widely sold in India and around the world. It has a 1080p IPS 5-inch screen sourced from JDI and Sharp, the same people source iPhone's screens also. It has a Qualcomm Snapdragon 800 quad-core chipset at 2.5GHz, this is the same chipset that powered the LG G2, the Sony Xperia Z1 and the international version of the Samsung Galaxy Note 3. It has 2GB RAM and 16GB of internal memory procured from SanDisk. Its rear camera uses a 13-megapixel sensor from Sony and an LED flash from Philips and all of this is power packed with a 3,050mAh battery which is either sourced from LG or Sony, offering a marvelous 21 hours of 3G internet usage. Interestingly, despite the Mi3 is almost a year old in terms of hardware, it's able to beat new phones like the Samsung Galaxy S5 on benchmarks, Nexus 5 on benchmarks, surprisingly at half of their price. 

Effective Business Model: The above mentioned are the simple and clearly visible reasons, screaming about the success of Xiaomi Mi3. Now the question arises, How is it possible ? The reasons are that, Xiaomi follows an online distribution and sales network. It collaborates with different e-commerce websites and sell their products. This way they save 25 to 30% of the distribution and management cost. No outlets, no front desk executives and store boys, no consumption of electricity, rents, transportation or anything else. 

Apart from this, the company never exceeds its supply, i.e. it manufactures a limited number of products, making sure there are no left out or extra ones lying on the shelves, which always keeps the company as a buzz among the customers as there are very limited number of units available. But an obvious drawback of this type of network is that, eager customers have to wait a lot to get the product, they often return empty handed as we have seen in case of Flipkart's sale, when 1,50,000 registrations were there and there were just 20,000 units on sale, this often results in lost sales. 

Xiaomi reduces much of the dealer's cost and other commission agents by offering phone directly to the customers, the model is very friendly in a country like India where users are more and more cost sensitive. Also, the company doesn't spend a single penny on advertisements, no Tv or internet ads, no printed ads in newspapers or magazines, just mouth to mouth and online social networking based advertisement. 

Xiamoi always keeps the profit margin very low as copared to other Brands like Samsung, Apple, Nokia, htc OR Sony. Xiaomi’s elegant yet beautiful looking phones and precise marketing campaigns convince people to buy their phones, and the phones, of course, direct their users to Xiaomi’s app store. Xiaomi also makes much of its revenue through its app store as Google Playstore is banned in China. In many ways, this is the classic internet business model of building a user base with a nice product, and then monetizing it later with add-ons. Xiaomi’s monthly revenue from its app store doubled from April 2013 to August 2013.

Wiped off The "Chinese Brand" Tag: Chinese companies have always been criticized for their hardwares and are not trusted at all. In terms of Xiamoi the hardware is very strong, supportive and sustainable. Yet Xiamoi has tried its level best to wipe out the tag of "A Chinese Brand". Mi3, when first launched on Flipkart, was being sold as "Xiamoi Mi3". But soon the word "Xiaomi" was removed from everywhere. Even now the website is selling the cellphone as "Mi". Even physically, "Xiaomi" is not printed anywhere on the phone, it's being marketed, distributed and sold just as "Mi". Also, Xiaomi recently purchased a new domain - mi.com for a record $3.6 million. Due to this, Mi.com becomes the most expensive domain name ever bought in China. Mi.com replaces xiaomi.com as the official website domain of Xiaomi.

Few Drawbacks: Flipkart had already sold 55,000 units of Xiaomi Mi3 in India. Next sale starts on 19th August, for which registrations are open till 18th August midnight, with 20,000 more units on the sale. However, there are few drawbacks which could hold you from buying Mi3's Indian version. First of all, it has just 13.3 GB of user available memory which cannot be further extended as there is no slot for a MicroSD card. Secondly, you will just get a USB cable and the plug point with Mi3. i.e. no earphones or cases, even company's original accessories are yet not being sold in the country and will be soon available by Flipkart itself. But I guess this can be easily compensated with your regular earphone. "After Service" will not be a problem, according to me, as the company has launched two Mi3 exclusive service centers in Bangalore and New Delhi and a few more service centers in Bangalore, Mumbai, New Delhi, Chennai, Hyderabad, Pune, Gurgaon, Kolkata, Ahmedabad, Chandigarh, Coimbatore, Jaipur, Thane, Thiruvananthapuram, Noida, Bhubaneswar, Surat, Faridabad, Nagpur, and Indore. This would be enough for now as even Flipkart's sales do not cover the whole of the country and the major cities are included. 

After all this research and analysis I can confidently say that Xiamoi has a perfect business model for a country like India and also the few customizations that they have featured exclusively for Indian customers are also working well. 

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