A year ago, Chinese smartphone maker Xiaomi changed from unicorns, the world's highest-valued unicorns, to unicorns, the gradually declining unicorns.) 2016 shipments Decline, so that millet from China's largest smart phone maker reduced to the fifth in the market.In the global smart phone industry, the hostile battle, no company has been able to recover from a serious trauma.
Today, millet has been called the "Chinese phenomenon." In the past year, the company's growth rate is extremely rapid.Market research firm Strategy Analytics expects millet in 2018 is expected to surpass Apple, Huawei and Oppo, becoming The world's second-largest maker of smartphones, second only to Samsung Electronics, reports that millet executives are currently considering allowing the company to go public next year, making it one of the largest initial public offering ever.
With the resurgence of millet, the company has become an example of a vibrant start-up in China, with more than 10,000 newly established companies in China every day, meaning seven start-ups will be born every minute. In sharp contrast, The number of new start-ups in the United States is shrinking, with the number of new startups in the United States having dropped 36% in the past decade to about 1,000 a day. China is no longer a "cottage country," and is currently at The key scientific and technological fields such as mobile payment are far ahead of the United States, and their competitiveness in advanced microchip, artificial intelligence and other fields is becoming stronger and stronger. Xiaomi is the best example of China's entrepreneurial vitality.
What is the reason for millet unprecedented turning point? The success of the company to restore a sustainable development, or the relentless profit pressure of mobile phone business will make it dying? Xiaomi can do other Chinese smart phone manufacturers can not do To the thing - to successfully conquer the U.S. market?
If you want to know the answers to these questions, you must first understand the defeat Xiaomi suffered from 2015 to 2016. In 2016, Xiaomi's smart phone shipments dropped to 41 million, much lower than the 70 million in 2015. Lei Jun, the founder of millet called "China's Steve Jobs," once blamed the plunge in millet shipments as a problem between the rapid growth of the company and the supply chain, forcing Millet to withdraw from other countries, including Brazil and Indonesia Several oversea markets Xiaomi also poses some organizational issues at the same time, pushing the company to ample its smartphone hardware, R & D, supply chain and quality management team, but perhaps the biggest problem with Xiaomi at the time may be over-reliance on online sales, So that the company can not reach hundreds of millions of small cities in China and rural areas do not understand the technology of consumers Oppo and Vivo by consolidating the relationship with these regional sales partners to fill the gaps in this market millet .
However, Millet used its near-fatal failure to create a brand new business model, which became a classic case of 'a turning point.' As millet sales rebound, the company began to expand globally, it is worth looking at this difference The inner workings of an unusual model, and how it helps to drive Millet's extraordinary recovery.
Like many businesses in the Internet age, Millet initially relied on dual-business models for selling hardware products and online services, and most of the company's revenues come from the sale of smartphones and smart TVs that consumers can accept, which are also millet Online service platform.As millet hardware products are extremely meager profits, so the vast majority of profits come from online services, including providing users with hundreds of thousands of hours of TV dramas and movies, games and other content.Micom even with the help of The sophisticated artificial intelligence engine helps to assess credit and runs a lucrative online microfinance service that lends to millet mobile phone users.
Ecosphere strategy
After Millet suffered setbacks, executives thought they needed a third-legged business model, offline retailers, but they wanted the retail store not to rely solely on sales of mobile phones
Build sustainable ties with consumers by creating an ecosystem of more than 100 start-up companies that act as partners in providing Xiaomi with other Internet-connected home and technology products to attract consumers to millet Retail store
Wang Xiang, Xiaomi's senior vice president who served as senior vice president and president of Greater China at Qualcomm, explained in his office how Xiaomi's ecosystem strategy can attract traffic. "Buying a mobile phone or TV is a low-frequency activity. Do not need to return to the retail store several times, but the situation will be different if consumers also need a Bluetooth speaker, a networked rice cooker, or an affordable air purifier. It's not the best product to sell, but the price is much cheaper than the best products available, and our ecosystem even lets consumers know something they have never seen before. So they often visit Millet's House See what new products we've released. '
Wang Xiang said Millet's strategy aims to reduce the "pain points" for Chinese consumers, pointing out that air pollution is a serious problem in China and that high-quality air purifiers are priced at about $ 500. Therefore, Investing in start-up companies founded by pollution experts and providing the company with design and manufacturing help, assessing the supply chain, and how to reduce operating costs led to the launch of the Mi Air Purifier, which costs just $ 105 2. The device can be connected to a smartphone, allowing the user to monitor the air in the home via a cellphone and receive an alert when the filter needs to be replaced. The result is a hot air purifier in the market. "In less than two In the middle of the month, we have become a leader in the Chinese air purifier market, "said Wang Xiang." That's how we solved the pain point of the air purifier market. "
Millet also adopted a similar approach on the health bracelet, the company designed a health bracelet battery life of nearly 60 days to solve the health bracelet every few days need to charge the 'pain point'. Millet at present Is the world's largest sales of health bracelet manufacturers, ahead of Fitbit and Apple.
All eco-circle products from millet, whether pillows, air cleaners, or rice cookers, Bluetooth 4.0 speakers, are designed to solve the consumer's similar price point of pain. "Although millet products are not expensive, but by no means Cheap design or manufacture of products. Xiaomi's products have won more than 100 international design awards.
This strategy has also attracted criticism 'When we started this new model, many people do not criticize We are a focused company, "Wang Xiang said,' They criticize us are like supermarkets - sales too product is no longer focused. 'you are a smart phone manufacturers,' they argue, 'Why do you want to manufacture rice cooker? Why should producing a battery, pen or luggage? you crazy?' and we Do not think this approach is too crazy, on the contrary, it is very suitable for us.
Some analysts remain skeptical of this view Bloomberg columnist, Tim millet skepticism loyal fans - Ku Erpan (Tim Culpan) pointed out: 'Public Relations Manager millet seems to tell a story of the company's major product catalog , which includes a health bracelet, air purifier and so on. they talked about the ecosystem effects not prove millet equipment manufacturers another one. I will not buy millet products. the 'networking' word is added to a series of home appliances Is not a smart home - even Apple did not get out of this trick.
Considering the millet is still a private company, it is difficult to get this company specific sales data. Strategy Analytics predicted in the report, millet in the third quarter smartphone shipments surged 91%, while the global market over the same period increased by only 5%. Market analysts also estimate that millet sales this year will reach 110 billion yuan, or about 17 billion U.S. dollars.
Millet 'pain points' resolve products in China and overseas built up a huge fan of the team. On the millet phone is equipped with a user interface MIUI, now has 300 million activated users. Millet users spend nearly five hours on the phone every day time, Enough to explain the current fanatic millet global fans extent.
Millet is using its own fan base to support the business.For example, millet requires users to suggest what new features to launch, and then users to vote on a weekly basis to decide which features are implanted into the operating system.Each Friday's Beijing time At 17:00, millet will release the new MIUI with the most popular features.
Millet way
Last year, a millet user said at night because of drunkenness, he was unable to open the flashlight application on the phone.Mix can embed this application into the fingerprint sensor, allowing users to press the fingerprint sensor to open the flashlight application.Other millet fans like this It has become one of MIUI's features nowadays, and the round-trip change in this system seems to be just a small change in Xiaomi's global business, but it makes users feel like investing in Xiaomi just as the company belongs to them.
'Millet's Way' is a democratic, grassroots business model that relies on enthusiastic user fans to design a mobile user interface and develop a Gospel product from a startup partner network. For Millet executives to do this The result is user-loyalty and brand stickiness that are as good as the market.
Despite the unprecedented success of Xiaomi in the past year, some people still worry about the already meager hardware profit margin of Xiaomi, its long-term sustainability in the fierce competition in China and the global market, and whether it can provide financial support for other businesses of the company .
'Xiaomi is able to expand the size of its cell phones and other products but it can not make too much profit,' said a venture capital firm who had invested in several Chinese start-ups. 'Xiaomi's business is fiercely competitive , Although it is no longer a low-cost smartphone maker, it is still questionable whether it can truly become an innovation leader. "He said that millet may be on its way to becoming the world's most profitable company," but first Companies must make profits to support their valuations. '
Wang Xiang, senior vice president of millet, also acknowledged that millet is facing many challenges, the first one is the global expansion, especially into the high-risk US market.Wang Xiang believes that millet may enter the US market before the end of 2019. However, there are People think that millet will soon enter this market. 'The US market is very attractive to us and my ultimate goal is to become one of the major players in the US smartphone market.'
Wang Xiang understands that American consumers have high expectations for service, and the vast majority of handsets in the United States are sold through operators, and Xiaomi has no experience in this regard. "Of course, we certainly need to work with at least one operator, of course We work as far as possible with all US carriers. "For millet, which has about 14,000 employees, this means a lot of technical resources are needed, and each operator in the United States has different requirements for the handset to enter the network. ' Perhaps we first have to finalize an operator to get the product to succeed first, then the operator will naturally contact us and we will devote more resources to meeting their needs.
It may not be the first company in China to sell mobile phones in the US Huawei has confirmed last week that it plans to sell mobile phones in the United States next year and that it has expanded in Western Europe just before testing the US market. Start selling mobile phones in Spain.
As Xiaomi continues to expand in overseas markets, the company now has access to 60 countries around the world.After investing a total of 4 billion U.S. dollars in a Chinese partner ecosystem, Xiaomi now said it will set up similar operations with 100 startups in India And will invest one billion U.S. dollars.India is currently the second largest market for Xiaomi after China, and last month Xiaomi also announced a strategic partnership with Baidu to jointly develop artificial intelligence products for the Internet of Things market. According to the plan of millet, by 2019 millet home in the global market will number more than 2000.
No one in Millet believes that the company's success is guaranteed. 'This is by no means a relaxing market,' says Wang Xiang. 'The competition is so fierce that you can not rest at all, and even in a nap, you find yourself Business has suffered a loss. '