Xiaomi: A Fresh Face In Smartphones　　小米：智能手机新面孔

By newsdoug on December 21, 2011

Xiaomi's big test looms with Unicom tie-up A start-up smartphone maker named Xiaomi has been bubbling up regularly in the headlines since launching its inaugural low-cost, high-performance Android smartphone in August, but what finally caught my attention were some numbers that look impressive in terms of both investment and sales. The company, clearly looking to inject some buzz into its flagship product, held a press conference this week, where CEO Lei Jun told the world that Xiaomi has sold nearly 400,000 of its MI-ONE phones so far, and hinted that China Unicom (HKEx: 762), the country’s second biggest mobile carrier, has placed orders for more than 1 million more. (Chinese article) The MI-ONE looks interesting for a number of reasons, including its relatively low price of around $300 for what reviewers are saying is a very high performance smartphone that can finally take advantage of Unicom’s 3G service, China’s fastest network which is also highly underutilized due to numerous internal problems at the carrier. (previous post) Xiaomi is also taking the interesting tack of using its product to try and build up its Miliao mobile instant messaging service, which the company says now has more than 1 million active users and could be a future revenue source. The company’s prospects have attracted some big names, with big names, with IDG, Temasek and Qualcomm (Nasdaq: QCOM) all among an investor group that recently handed Xiaomi, whose name means “little rice” in Chinese, a hearty $90 million in new funding. Clearly Xiaomi has some strong momentum behind it, though the Unicom deal will be crucial as it will show whether Chinese consumers like this product, which in turn could lead to big overseas orders for consumers looking for lower cost alternatives to popular models from Apple (Nasdaq: AAPL), HTC (Taipei: 2498) and others. Xiaomi will still have a tough road ahead, as Unicom is also preparing to roll out Apple’s popular iPhone 4S in January, and is selling many other 3G models as well in a bid to try to gain some momentum in the domestic 3G market. Xiaomi will most likely need another big funding round soon, as its position as a cellphone maker means it will have to spend big bucks on both manufacturing and new product development. But the signs do look promising, at least initially, and if the Unicom partnership goes well this could clearly be a company to watch for an IPO as soon as late next year.

Bottom line: Xiaomi has good potential as a niche maker of relatively low-cost, high-performance smartphones, and will get its first real test from a new partnership with Unicom.

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