The World's Most Valuable Start Up

As of Monday, December 29th, 2014, the Chinese smartphone maker Xiaomi has become the world’s most valuable startup. Late in 2014, the company closed its last round of funding, topping off its latest run at $1.1 billion dollars. With that, Xiaomi’s valuation has skyrocketed to $45 billion – past even the controversial pseudo-taxi startup Uber (valued at $40 billion).

If you haven’t heard of Xiaomi before, you are not alone. The company is a giant in China, however, with brick and mortar locations throughout the country. After taking advantage of a void in the Chinese smartphone market, Xiaomi has managed to increase their manufacturing output, and they are now the third largest smartphone manufacturer in the world. In their third quarter report of 2014, Xiaomi sold over 16 million units, an increase above last years’ report by over 3.5 million.

Many people throughout China prefer to purchase Xiaomi phones due to their low-cost. Samsung and Apple are still the power players throughout the world, and they have retained a good deal of the Chinese smartphone market. In the past year, though, sales by these juggernauts have been chipped away by Xiaomi – Samsung’s sales in particular, which has declined by 29 percent in the region. Surprisingly, Xiaomi’s gross sales in China has not come as close to defeating iPhone sales. Apple still retained $25.4 billion in sales in China alone, while Xiaomi only garnered $56 million in sales. 

Some of the controversy surrounding the startup includes a breach of international patents, but these claims have yet to be proven. Though Xiaomi publicly claims to operate under thousands of patents, most cell phone manufacturers own patents in the tens of thousands. And with their tight margins, it is unlikely that they are manufacturing under a series of licensing deals. In any case, the success of their business model is evident: build it cheap, run it with Android-based software, and sell it everywhere (in China). 

Xiaomi has announced that their next step will be to branch out into similar foreign markets, like Brazil and India. While Brazil fits all of the criteria of their business model, India is a bit less likely to embrace it. Historically, India has been wary of Chinese technology, and many consumers fear that the Chinese government will use the devices to spy on Indian citizens. Xiamoi has these and other roadblocks to get past as they expand into the rest of the Asian and potentially the South American market…but ambitions are obviously high.

The upshot for mobile marketing campaign managers is an increased need to cater their strategy to a variety of devices. Mobile marketing tactics that are effective at reaching iPhone users may not have the same impact on Android-based devices. Flexibility and adaptability are the watchwords for 2015, and if Xiamoi's explosive success is anything to go by, the world of mobile marketing and the wider world of tech should expect the unexpected.