Xiaomi has a lot of work to do before a U.S. launch, and it isn't in any rush
Xiaomi sold more than 50 million phones in 2014, has dozens of engineers and design staff and is followed by a gigantic diehard fan base. But unless you live in China or India, you probably don't know that much about it. Of course the more hardcore Android fans among us may have heard of that hard-to-pronounce smartphone maker, but many still haven't had a chance to see or use one of its phones.
With an invite-only press event Thursday in San Francisco, Xiaomi set out to introduce itself to the U.S. in hopes that it can create some Western interest in the company. After a two hour presentation bringing us up to speed with how Xiaomi operates and its lofty ambitions, the big takeaway for me was that it just isn't ready to break into this market ... yet.
You can easily look at the news that Xiaomi is going to launch a subset of its non-phone products, including headphones and other accessories, in a U.S.-based portal of its Mi.com store and think that it really wants to be here — but considering the position that the company is in, it isn't in any rush to come to the states. It's not that U.S. consumers are less valuable (we certainly have plenty of disposable income), or that Xiaomi is afraid of competition — it's mostly a simple numbers game.
It's clear that as of now, Xiaomi has plenty of work ahead of itself if when it comes to making its products ready for the U.S., even if it were a priority for the company. Its devices, as well as its MIUI software, are very clearly targeted at its current Asian consumers. Xiaomi's weekly software releases, built on feedback from nearly 40 million fans giving feedback in its forums, are focused on tweaking the OS and bringing new features that are even more tailored to the countries it currently operates in. Because of its limited number of markets, many of MIUI's eye-catching features are really only applicable to Asia — Xiaomi hasn't ever needed to think about how its interface would be used and perceived elsewhere.
In order to launch its phones and tablets in the U.S., Xiaomi would need to undertake a massive initiative to completely localize MIUI — and those brand new features released every week — to an entirely different market, and that's no small task. That's all while it seeks approval from the FCC for each of its devices made to run on U.S. networks (minus Verizon and Sprint, we can assume), attempts to go around the carriers with its e-commerce-only model of selling phones direct to consumers, and putting in place a new ordering and customer support system for the West. That's an uphill battle.
Now to put all of that potential cost and time into perspective, think about how big the U.S. really is. To a company that's based in China, the U.S. market just isn't that big. It's an odd thing to think about when we see manufacturers fighting to launch first in the U.S., but Xiaomi has carved out a substantial global market share by simply selling in China and surrounding Asian countries. Its latest major expansion was to India in July 2014, which shares many of the same market qualities as Asia.
China is nowhere near peak smartphone adoption among its nearly 1.4 billion population, and India's 1.25 billion population sits at about 20 percent smartphone penetration. Those two countries alone are huge markets with consumers that are hungry for technology, and in many cases their very first smartphone — a great set of consumers to get hooked on Xiaomi's wide range of products. So why would Xiaomi spend much time (among other resources) trying to launch in the U.S., a heavily-saturated smartphone market a fraction the size of its current addressable markets, when it has more than enough room to grow in Asia and India?
The end result isn't one we necessarily want to hear, but is likely the reality: Xiaomi won't be bringing its phones to the U.S. for some time. Launching Mi.com and selling a small set of inexpensive accessories to get U.S. consumers used to the name Xiaomi makes sense — just don't think that this tiny step into the states means much more than that.