Despite being three years old and having only 3,000 employees, private company Xiaomi could become a disruptive force in the smartphone market, currently dominated by two of the biggest companies in the world: Apple Inc. (NASDAQ:AAPL) and SAMSUNG ELECT LTD(F) (OTCMKTS:SSNLF)
Despite its small scale of operations, Xiaomi is already selling more smartphones in China than Apple. This is very surprising because there's a common belief that a company needs to be big in order to succeed as a smartphone manufacturer. Apple and Samsung dominate the market, while small companies, like BlackBerry Ltd (NASDAQ:BBRY), are struggling to survive. However, Xiaomi has enough competitive advantages to avoid becoming the next BlackBerry. How does this Chinese start-up plan to conquer the fierce smartphone world?
Xiaomi's explosive growth plans Xiaomi seems to have studied BlackBerry very well, as it is avoiding some of the biggest mistakes made by the Canadian manufacturer. Like BlackBerry, Google, and Apple, the company knows that creating a mobile operating system is the best way to promote its own payment ecosystem. However, in a world where Google's Android and Apple's iOS combine for more than 91% of total market share, Xiaomi realized it had to create not only a friendly operating system, but also something compatible with Android or iOS.
This is why, unlike BlackBerry, the company based its MIUI operating system on Android, which has an active open-source community. Therefore, any Android device can run Xiaomi's operating system. So far, more than 20 million users, including many Android users, have downloaded it.
But, Xiaomi's operating system isn't just another Android variation. From a lock screen flashlight to a one-click cache clean up option, the company has added more than 200 new features. It has also given more personalization power to the user.
So, why is Xiaomi promoting its own operating system? The company is selling its devices very cheap, practically at cost price. Therefore, it plans to get profits through its software.
During the development phase, the company tried to remove and replace Google services with its own cloud services, games, paid themes, and apps store. This shows Xiaomi is well aware of the importance that Google Play and iTunes have in Google and Apple's cash flows.
Of course, Xiaomi's apps store is not as rich as iTunes or Google Play, but unlike BlackBerry OS, the company can easily rely on Google Play to offer localized applications and content if it ships overseas.
Notice, however, that despite its size limitations, Xiaomi's app store is performing better than expected. It reached one billion downloads in only 391 days.
In terms of hardware, Xiaomi's flagship product, the Mi3 TD, has nothing to envy in the world. Compared with Apple's iPhone 5s, the Mi3 TD has bigger resolution, a more powerful camera, and larger display. More importantly, the Mi3 TD is equipped with some of the most powerful mobile processors the world has ever seen. Xiaomi's customers can choose between NVIDIA Corporation (NASDAQ:NVDA)'s Tegra 4 quad-core -- the world's first 1.8Ghz quad-core processor -- and QUALCOMM, Inc. (NASDAQ:QCOM)'s Snapdragon 800.