Business Model

of Xiaomi

Seok Chae Yoon

BUSS259 New Venture Creation and Management

Business Model of Xiaomi

Target

Customer:

Youngsters

Xiaomi

Quality Products

with Affordable Price

Quality Smartphone

Affordable Price

- listens to customer's opinions

- updates MUI every week

- small product portfolio

- longer average selling time per device

- online retail channels

- buzz marketing; lowered marketing cost

Customer Value Proposition

BUSS259 New Venture Creation and Management

Business Model of Xiaomi

Target

Customer

Suppliers

Profit Formula - Where Xiaomi makes sales currently

Xiaomi

Small Portfolio

Longer Selling Time

- Average selling time: 265 days

- Xiaomi: 2 years

- Maintaining same sourcing channels

Lowered component costs

Higher margins

Lowered Price

BUSS259 New Venture Creation and Management

Business Model of Xiaomi

Target

Customer

Xiaomi

"Hardware is just a platform to run services.

It's the services that eventually bring in revenue." 

Agent Pricing Strategy

- Software (MUI)

Profit Formula - What Xiaomi wants eventually

Product

+ "services"

- Internet Services: e-commerce, mobile messanger 

BUSS259 New Venture Creation and Management

Business Model of Xiaomi

Target

Customer

Xiaomi

"MIUI" System

- Loyal customers made by buzz marketing through SNS

Key Resources

Communication Channel

- Users freely communicate with Xiaomi through SNS

BUSS259 New Venture Creation and Management

Business Model of Xiaomi

Target

Customer

Xiaomi

Key Process: Takeaway from Xiaomi's Case

Product

Software

App Store

"Locked-in"

BUSS259 New Venture Creation and Management