Xiaomi CEO Lei Jun wanted to make one thing clear when he spoke at the Summer Davos event in Tianjin on Monday: “Xiaomi was never meant to be just a smartphone vendor.”
The company, which rocketed to fame through mega-sales of budget smartphones, is now stepping back from its revenue-driving product, amid a stagnating smartphone market and increased competition form other local vendors, including Huawei.
Xiaomi has long maintained that they are selling an ‘ecosystem’ rather than hardware. On Monday Lei Jun hinted at what the future Xiaomi could look like, and it’s not a smartphone vendor.
“We are aiming to offer consumers a wide range of products at affordable prices,” he said. “We need about 40 kinds of electronic products to attract consumers to our online shopping platform and offline retail stores.”
It represents a major pivot in Xiaomi’s strategy. Not only did Lei Jun downplay the future of the company’s smartphone business, he also committed to a definitive offline strategy, something the company is famed for avoiding. During Xiaomi’s meteoric rise between 2012 and 2014, they became well-known for their frenzied online flash sales, which would sell out almost immediately.
The company also utilized multiple rounds of ‘crowdfunding’ as a promotional tool, boosting their online strategy. At the time Lei Jun himself was dubbed the ‘Monkey King’, humorously known for making his monkey subjects act crazy during mass sale events.
Two years later the smartphone market in first tier cities has slumped, and players such as Vivo and Oppo, who have a strong offline presence in China’s untapped smaller cities, are beginning to pull ahead.
In the vision Lei Jun laid out on Monday, Xiaomi will roll out around 1000 experience stores in the next three to four years. He likened the future Xiaomi to Muji, a popular minimalist Japanese variety store selling everything from stationery and kitchenware to clothing. The variety store analogy suggests that the Xiaomi of 2020 could very well marginalize the role of the smartphone. Xiaomi is working with around 50 companies currently, about 30 of which are still in stealth mode.
Lei Jun also noted that he “knew clearly that it would take 15 years for Xiaomi to go public, because the company’s business model is too complicated,” suggesting that the company is making room for some serious changes before planning a listing. Xiaomi was founded in 2010, which means we could be waiting another nine years for an IPO.