Xiaomi is setting itself up as more than just a phone brand.
2017 has been an incredibly rewarding year for Xiaomi: the brand now leads the online space in India and is the second-largest vendor overall, and is making advances into other Asian markets like Indonesia.
The uptick in fortunes is attributable to a strong phone portfolio: Xiaomi has three great value-for-money phones in the Redmi Note 4, Redmi 4, and the Redmi 4A, and the brand recently teamed up with Google to kick off the Android One reboot with the Mi A1. Then there's the Mi 6, which is aimed at the mid-range segment, and the bezel-less Mi Mix 2, which will make its debut later this year outside of China.
While the phone business is the main source of revenue for Xiaomi, the brand is looking to other avenues — particularly the lifestyle segment — as a future growth driver. That includes investing heavily in its Mi Ecosystem label, which sees Xiaomi partnering with a slew of hardware manufacturers to produce everything from rice cookers to humidifiers, walkie-talkies, smart light bulbs, home automation devices, and even electric scooters.
Making the ecosystem play
There are plenty of alternatives when it comes to smart home products in Western markets, but there's not a whole lot of choice when it comes to Asian countries. Xiaomi is positioning itself to take full advantage of that with its lifestyle label. The Chinese manufacturer doesn't want to associate itself as just a phone manufacturer. It instead wants to be a lifestyle brand that sells everything from screwdriver kits to electric scooters.
That's the main driving force behind the Mi Ecosystem, through which Xiaomi is partnering with a host of Chinese startups to offer a wide variety of products. Everyone attending the Mi Mix 2 event in Beijing last month walked away with a screwdriver set from Waji and a thermometer from Mijia, called iHealth.
There are hundreds of products under the lifestyle label, and the key selling point — like its phones — is value for money. For instance, the Mi Robot Vacuum has the same motor as a Roomba 960, but at $300 Xiaomi's offering costs less than half that of the Roomba. The same holds true for the Yeelight bulbs and lightstrip, which sell for roughly a third of their Hue counterparts.
And the list goes on and on: Xiaomi's smart scale retails for just under half that of the Fitbit Aria, and offers a similar functionality. The Yi 4K action camera has the same imaging prowess as a GoPro, but costs just $199.
Xiaomi is using its phones to build out its brand experience, and that's a smart move.
Right now, the main drawback with Xiaomi's ecosystem products is that most of them are limited to China. You can get your hands on the products through resellers, but more often than not, the firmware itself will be in Chinese. That was the case for the Mi Robot, but with the vacuum cleaner heading to more markets, Xiaomi rolled out a much-needed English language pack a few months ago. But for products like the smart home kit and the walkie-talkie, there is no English firmware available. That is set to change over the course of the coming year as Xiaomi brings its ecosystem products to other markets.
A huge part of the lifestyle play revolves around Xiaomi's offline stores, called Mi Home. The brand currently has over 130 stores in China, and is looking to open over 1,000 stores in the country in the next three years. Xiaomi is also bringing its stores to overseas markets, and is planning to build 100 stores in India over the next three years.
Phones are front and centre at Mi Home stores, but you see a range of lifestyle products — everything from Yeelight bulbs to the smart robot vacuum, the smart scale, and even luggage (Xiaomi's suitcases don't have any built-in tech like GPS, but they're great value for money).
In essence, Xiaomi is positioning its phones as a point of entry, and is hoping its customers will eventually pick up its lifestyle accessories. The Chinese manufacturer managed to create a cachet around its brand in a relatively short amount of time — you only have to look at the MIUI forums to see the kind of loyalty it commands — and it is leveraging that to promote its Mi Ecosystem products.