On August 16th, Xiaomi (small rice) officially showcased its MIUI-2 phone (RMB1999). Acclaimed as China’s most promising homegrown smart phone, this much anticipated launch did not seem to stir wild excitement. Questions, doubts and suspensions have gradually infiltrated into the news media and most commentators consider the prospect of Xiaom’s success is clouded.

MIUI-2’s major advertising feature is so called “quad-core 8064Qualcomm 1.5GHz”. But when you look around, “Quad-Core processor” smart phone is everywhere. You have expensive ones, RMB3000-4000, from Samsung to HTC. For cheaper ones, you can always check upon those domestic brands:

  • Meizu (RMB2999)
  • K-Touch (RMB 1999)
  • Small Pepper(RMB 999)
  • Of course Lenovo, Huawei, ZTE are already joining this wave

Now days in China, any smart phone brand launches its newest handset must be labeled by those high tech jargons, first starting with “Quad –Core”, then PPI, OGS, TOC, DC-HSPA, earSmart, USB OTG, MHL…otherwise you are not really selling a smart phone, right? So basically in 2012 we are entering the age of “quad-core”, and it looks like the siren of a fierce battle is already on.  

One year ago, Xiaomi’s debut of MIUI-1 phone (RMB1999) galloped like a dark horse, surprisingly achieved some stunning results, sold out over 3 million handsets. However this year the battle field is totally different. Other players already learned few tricks from Xiaomi, including online pre-order, hungry marketing etc. And most scary part is when domestic brands can reach similar tech specs, low price appears to be their only exit.

Before MIUI-2’s launch, I asked a veteran tech man this question “what do you think of the sustainability of Xiaomi?” His answer was an assertive “No”, especially evaluating the fact that extremely cheap smart phone is on the horizon and Xiaomi’s RMB 2000 is losing its pricing edge with no other solid features to stand out of the crowd. Upon hearing it and knowing this man made several convincingarguments, that night I simply could not sleep. Not because I am a huge fan of Xiaomi (in fact I am using ios phone), but because Xiaomi initially did a fantastic branding job for its phone and really should continue such momentum of “Xiaomi cult” while holding onto its small market niche in China.

I discern major buyers for Xiaomi should come from consumer category called "Diaos" in China. The term was coined by younger Chinese who claimed themselves lack of influential family background, no prospect of career advancement, from second or third tier cites etc. They are basically "short, plain, humble", complete opposite of another consumer category so called "tall, handsome, rich" in China. Therefore Xiaomi seemed to become Diaosi's own identity. These mid-end buyers should be the true fans of Xiaomi who would spread its fame and in turn allure more potential buyers.

Pricing strategy aside, constant upgrading of its software and cloud service, perfect after sale service in conjunction with maintaining the viability of Xiaom’s online community might be the key ingredients for its difficult survival in 2012. After all cheapness should not be the only way out, and grasping a specific segment of the targeted consumers may help Xiaomi to keep running a long ride. 

By Cécilia Wu
English & Chinese Editorial Manager