Xiaomi: Balancing Cost and Design

Xiaomi’s products, rising in global popularity

Xiaomi’s products, rising in global popularity

by Huang Shiyang

Xiaomi is an internet company with smartphones and smart hardware connected by an IoT platform at its core. As one of the highly valued startups in China, Xiaomi is the world’s 4th most valuable technology start-up after receiving US$1.1 billion funding from investors - Xiaomi’s valuation is more than US$46 billion.

Xiaomi’s mission as stated on its website :
“Xiaomi is committed to continuous innovation, with an unwavering focus on quality and efficiency.
The company relentlessly builds amazing products with honest prices to let everyone in the world enjoy a better life through innovative technology.”

“Amazing products” with “honest prices”  are the two key things which Xiaomi claims to achieve. Its business model heavily differentiates from existing big players like Samsung and Apple, which charge premium prices for their products. Their game plan, then, is to compete by offering better products at a lower prices. Xiaomi wants to revolutionise the industry by focusing on innovation and quality, and by pursuing cost efficiency.

With game plan in mind

Xiaomi cellphone, similar in branding to Apple and Samsung, but with very different focuses!

Xiaomi cellphone, similar in branding to Apple and Samsung, but with very different focuses!

Xiaomi has to come up with design to fit in the overall game plan for its product. With the criteria of being low cost and amazing product, its only way out is to minimise design. Minimalist design is not just only in terms of design and form factor, but most importantly it is to reduce risk. The risk of having low factory yield is detrimental to Xiaomi as a company. Xiaomi is very different from Apple. Apple’s factory yield can be lower than Xiaomi and it will not matter to them, as they have high profit margin to cover the loss.

Xiaomi’s way of earning is also from selling to mass market like in China & India market. It cannot afford to have a blunder which will eat into it profit a lot if another disaster happens. The negative reviews from huge market would be disastrous for Xiaomi.

Distribution strategy

Xiaomi believes that efficient omni-channel sales strategy enables them to distribute products at accessible price to the largest user base. Since online channels have low distribution cost, Xiaomi has focused on direct online sales of products to maximize efficiency. Xiaomi sells products thorough self-owned e-commerce platforms such as Mi Store and Youpin. Also, they sell through third-party e-commerce platforms such as JD.com, Tmall, Flipkart, TVS Electronics and Amazon to leverage their localized sales and marketing expertise, logistics and payment infrastructure.

All in all, Xiaomi's minimalistic design is heavily influenced by its business strategy, market segmentation and its mission. With these kept in mind, designers and the team can work towards building a product which will be aligned with its company vision.

Screenshot 2019-06-18 at 12.13.24 PM.png