NB: This is viewpoint on Xiaomi is by Diego Saez-Gil, CEO of WeHostels.
The media is full of headlines about Apple, Samsung, and Google. Yet travel companies wanting to tap into the Asian market might consider looking past the market leaders of the West and pay attention to a rising star in the East.
I'm thinking of Xiaomi (pronounced shiao-me), a startup that makes China's most popular smartphone, the Mi 2S Android. Xiaomi's platform is growing so quickly in China that travel companies might benefit if they started to build apps for its smartphones today.
Rapid consumer adoption in China
The company's first smartphones are gaining market share at an astounding rate. Xiaomi has already surpassed Samsung, HTC, and Apple in the charts in China. By this December, it is expected to have sold 20 million smartphones.
The company says its MIUI App Store has had already more than one billion downloads in just over a year and that the rate of downloads is 5 million per day.
Not bad for a company that only launched its first product to the market in October 2011.
An OS that developers should study
Travel companies, both big OTAs and startups, could find an unexpected source of growth by developing travel apps for the brand-new MIUI App Store.
Xiaomi's operating system, MIUI (MI-User Interface, pronounced "Me You Eye"), is based in the open-source Android OS. Yet it brings several software innovations, including the ability to customize the system based upon user preferences.
The OS also allows the company to build its own environment of Xiaomi services, including cloud services, paid themes, games and applications and even its own currency.
Being a first mover in the platform could represent not only a way to enter the attractive Asian travel market, but also a way to capture a potential global user base, if the company achieves its big ambitions. Those who were early movers in the Apple’s App Store benefited a lot over the years, and the same could happen in this case if Xiaomi becomes in fact the “next Apple” or the next Amazon.
Of course, entering a new platform and market with really unique characteristics as this one entails significant challenges, but if it is done right it could pay large dividends. (By the way, here's a Guide to Writing Apps for MIUI.)
Plans for international expansion
Today, Xiaomi’s phones are currently sold only in China, Hong Kong, and Taiwan but the company has recently announced its intention of rapid international expansion.
With that goal in mind, the company surprised the industry by hiring Hugo Barra, the former VP of Product Management for Android at Google, as its new VP of Global. Barra is not the only “rock-star” in the team; Xiaomi’s President Lin Bin is the former VP of Google China’s Engineering Research Institute and he has been quietly recruiting top talent from Microsoft, Motorola, Apple, and Google.
From this top-notch team it is expected that not only “cheaper iPhones” will be shipped (the MiPhone 2S is priced at $277, less than half that Apple’s iPhone and Samsung’s S4) but also innovative products will be made.
There are still some question marks regarding Xiaomi’s ability to appeal to international markets from a branding perspective, especially to the western world (notice that even their name is difficult to pronounce in English).
But the same was said about Toyota and the Japanese brands in the ‘80s, and Samsung and the Koreans in the ’90s. As the company continues bringing on American and European executives, its marketing will adapt accordingly.
In the meantime, the company is targeting other emerging markets like India.
Xiaomi is effectively a startup: The privately held company was founded in Beijing by a group of young entrepreneurs.
CEO Lei Jun, heralded by some as the “Steve Jobs of China”, is a 43-year-old who has kickstarted a few successful Internet companies over the past decade, such as Joyo.com, an e-commerce site that was acquired by Amazon and is now Amazon China, and Kingsoft, a “Microsoft Office for China”, which he took public.
Xiaomi is well funded. It is backed by venture capital funds IDG Capital, Qiming Venture Partners, and Temase (a Singaporean government investment vehicle). In its last round, it was valued at $10 billion. (For context, that is more than Nokia’s handset business acquired by Microsoft for $7.2B and two times the value of BlackBerry's $4.7B valuation.)
Jun recently revealed that its strategy is closer to that of Amazon, rather than that of Apple, in that it expects to make profits from the platform and the content more than from the margins of the phones, and therefore their low prices.
Asia's growth rates justify taking risks
We've all heard the statistics about China's astonishing growth. Here's just two:
With mobile growing exponentially and China sending more and more travelers to spend money abroad the interest is high, connecting the dots is not hard. Chinese international travel represents many opportunities and challenges
Developers who take a bet on Chinese startups like Xiaomi could convert talent into wealth-making.
NB: This is a viewpoint by Diego Saez-Gil, CEO of mobile-first site WeHostels. He previously wrote about mobile and the innovator’s dilemma