Fortune

XIAOMI WHAT YOU’VE GOT

THE RUNAWAY SUCCESS OF XIAOMI’S CHEAP, STYLISH SMARTPHONES HELPED THE CHINESE STARTUP BECOME ONE OF THE WORLD’S MOST VALUABLE PRIVATE COMPANIES. NOW ITS SALES ARE SPUTTERING. CAN XIAOMI’S “ECOSYSTEM” EVER LIVE UP TO ITS $45 BILLION HYPE?
A crowd socializes on Shanghai’s Bund waterfront. Smartphone sales have tailed off in China over the past year, and Xiaomi lost its top spot for market share.

January 15, 2015:

Inside a Beijing convention hall big enough to fit a brigade, Chinese tech upstart Xiaomi is rolling out its newest big-screen phone, the Mi Note. The event has the hype of a Hollywood premiere, and $15 tickets have sold out to this crowd of thousands of buzzing fans.

When CEO Lei Jun takes the stage, in distressed jeans, sneakers, and a blue button-down, he’s confident—cocky, even. You can hardly blame him. Xiaomi, the company Lei founded in 2010, has become the world’s fourth-largest smartphone seller, hawking affordable, stylish phones that cater to China’s immense middle class and its youth culture. Xiaomi has just completed a funding round that made it the world’s most valuable private startup, with an astounding valuation of $45 billion—reflecting investor excitement about not only its phones but also its “ecosystem” of online services and smart-home products, which could turn phone buyers into loyal customers for years to come.

Tech journalists have begun calling Xiaomi the “Apple of China.” The name rankles designers at the actual Apple, who grouse that Xiaomi phones are merely cheap iPhone copies. Lei begs to differ. In fact, he tells the Beijing crowd, his phones are better: “The Mi Note is lighter, thinner, narrower, and shorter than the iPhone 6 Plus, but our screen is larger,” he gushes. Over the next few months customers validate his exuberance, as Xiaomi has its best quarter ever for smartphone sales—while monthly users of its games, apps, and services top 100 million.

A customer peruses the gear at a Xiaomi store in a Shanghai mall. Xiaomi’s smartphone models won early accolades for offering sleek designs at about half the price of comparable iPhones.

Julie Glassberg

May 21, 2016:

Beijing again, but this time at a

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