The Android landscape in 2011 wasn't ideal for a buyer who didn't want to spend a lot of money. Some of the most popular phones were HTC Wildfire, Samsung Galaxy Mini and ZTE Blade. Great specs at an affordable price was a dream.
It took a Xiaomi to fix the smartphone price as we know it, and 11 years later, the company's impact on the smartphone industry remains undeniable.
Understanding the extent of Xiaomi's contribution to the smartphone space requires a little historical context.
When the company introduced its first phone in 2011, Nokia was still a dominant player with Symbian as its operating system. Samsung was already releasing the best Android devices and HTC was still in the game. But none of these companies really had exciting, affordable smartphones.
The smartphone industry today, by and large, revolves around the concept of value. There are certainly price extremes, especially if you're looking towards the latest foldable devices.
It all started with the Xiaomi Mi 1, which launched with the (then) powerful Snapdragon S3 chipset, 1GB of RAM and a high-resolution display. Its main competitor was the flagship Samsung Galaxy S2 which was launched with similar specifications, but the Mi 1 was hundreds of dollars cheaper.
By 2014, Xiaomi was ready to go international. With the launch of the Mi 3, Xiaomi had perfected its plan to sell its phones with minimal profit margins through flash sales through online stores. Both strategies helped to reduce dealers' profit margins as well as the cost of holding (storage) large inventories. Xiaomi shipped 18,7 million units of the Mi 3 within the year, and international stocks sold out within minutes.
It didn't take long for Xiaomi to take India by storm, and by 2017, the company had overtaken Samsung as the most popular brand. Today, Xiaomi holds 21% of the smartphone market in India, maintaining its number one position. Globally, Xiaomi ranks third, following Samsung and Apple.
Xiaomi's creation of Redmi and Poco sub-brands aimed at entry-level segments and performance enthusiasts has further helped the company's growth in international markets.
Since then the company has significantly changed its plans and now has new distribution options in the premium area with online and offline stores.
By narrowing its profit margins to just 5% after tax in 2018, Xiaomi further ensured its continued competitiveness. But the company had another ace up its sleeve.
Xiaomi also created the ecosystem space. Today it sells everything from smart light bulbs and robot vacuums to toothbrushes, TVs and even shoes. But the promotion of the ecosystem started from MIUI.
The company invested very early in the software and today it has themes, wallpapers, ringtones, music and more, All of which of course is another important revenue driver. In fact, the company calls itself an Internet company, not a hardware company.
When the company went public in 2018, eight years after it was founded, Xiaomi was valued at around $50 billion, making it the third most valuable smartphone maker in the world. Xiaomi's play in building a software ecosystem on top of hardware was a very smart idea.
Xiaomi's growth through its software has unfortunately also come with a darker side. In its early years, the company became notorious for pushing ads through its software.
Today, even Samsung uses ads.
Today, Xiaomi does not display many ads on its phones. However, it still has the stigma of ad-laden software. In fact, you could say it did permanent damage to the perception of Android itself. Even today, budget Android phones are criticized for this practice.
The Xiaomi of 2022 is noticeably different from the company Lei Jun founded in 2010, but it hasn't changed the basics. MIUI is still the foundation of every Xiaomi phone, and the company's ambitions to create a connected ecosystem have never been higher.
Whether you agree with everything Xiaomi has done over the years or not, it's impossible to deny that the company has established itself in the Android world. Xiaomi set new price standards in the space, even if it used some questionable practices along the way.