Mobile Forward

Interesting Words by Xiaomi CEO Lei Jun

I’m not a fan of Xiaomi but, at one level, it’s been interesting to witness the system of activities the company has assembled to help it compete. (Though with minimal profit, I would add.) And I’m always curious to hear how different leaders speak about competing.

With that in mind, here are some notable excerpts from Li Yuan’s Q&A with Xiaomi CEO Lei Jun, in The Wall Street Journal:

We’ll need to try our best to be successful in a few emerging markets in a big way. […] Our business model isn’t about how many phones we sell. We can’t monetize unless we become a highly influential player in a country or a region. […] we want to sell to 10% to 20% of the population in India and other big countries. Then we’ll have the influence of a huge media organization and the opportunity to monetize in various ways. […]

China’s smartphone industry is in elimination games now. […] It’s unbelievable that there are still a few dozen phone companies in China now. […]

In the past you made a phone, hoping to sell it to billions of users in the world. Now you can’t think in this way. You’ll have to design different phones for different crowds in different scenarios. […]

Almost all our users are young, so we might have influence on 20% to 25% of the young population. They watch TV, listen to music and read books and news. Xiaomi provides all of these. Doesn’t this make Xiaomi a huge content channel? Each day, our users use their phone 115 times and spend four and half hours on their phones. Just imagine what a powerful broadcast platform I have!

It’s thought-provoking to hear Lei Jun speak about Xiaomi’s business model. Note, however, that we hear about Xiaomi’s success in smartphones, but we don’t really hear about any sort of success in content – in terms of Xiaomi innovation or Xiaomi profitability – even though Lei Jun cites content as the ultimate aim of the business model.

By the way, I highlighted his views on “different phones for different crowds” because, as the smartphone market reaches maturity, we are seeing, and will continue to see, attempts to create job-specific or user-specific devices. Apple, as a maker of general-computing devices, has always created smartphones that are asymmetrical to this, because apps and solid all-around hardware allow for a multitude of specialized uses. But other companies, being relatively stronger in hardware than they are in software, find (hope) that this sort of micro-segmentation is a degree of freedom they can exploit.

Thursday Assorted Links

1. Samsung Galaxy S7 to have versions with curved and flat displays  I wouldn’t be surprised if this happens. Usually, when Samsung sees a fork in the road, they take it.

2. Xiaomi fast expanding ecosystem raises concerns, say sources  Concerns about Xiaomi, that is. Jingyue Hsiao, Monica Chen, and Steve Shen, for DigiTimes:

Market watchers have become more conservative about Xiaomi’s development potential because the vendor will constantly need more funds and resources for tapping new markets or product segments, commented the sources.

3. Pebble Is Trying to Run Circles Around Apple

4. The gen-two Moto 360—a beautiful, compact design without much new tech  Ron Amadeo, for Ars Technica:

It doesn’t move the needle much, but design is what really matters in wearables.

5. Bosch invents new electric car battery to double mileage  Always take claims of battery advances with two grains of salt, but FYI.

Xiaomi Launches “Mi Mobile”, Offers 3GB Data for Under $10

Nirave Gondhia, for Android Authority:

Xiaomi has continued its expansion into all-things-consumer with the launch of its MVNO network “Mi Mobile” in China. The first OEM to launch a carrier, Xiaomi’s mobile network is offering 3GB of LTE data for RMB 59 – which is under $10 – if you sign up to a monthly plan.

Xiaomi is “commoditizing its complements”1. It’s likely (re-) selling data at near what it cost to buy it from the carrier (China Unicom). This sort of thing was bound to happen, and it’s no surprise that an OEM that’s focused on smartphone market share above short-term profitability would be the first major OEM to do this. The carrier still gets paid, but other OEMs feel competitive pressure. At least that’s the intent. Let’s see how this fares.

With every ultra-low-margin phone and service Xiaomi launches, the odds that it will excel in any one area (except device unit volume) diminish. How would it fund high performance? One might argue that, with a large installed base, it could profit from selling content and services. The problem, however, is that the quality and demand, and therefore the profitability, of Xiaomi’s content and services remains uncertain. And by “uncertain”, I really mean “average”.

____

1. Thanks to Rene Ritchie for ingraining “commoditize your complements” into my head. And, of course, the author of that line, Joel Spolsky. He coined the idea, and other insights, here. Good read.

Monday Assorted Links

1. Microsoft to launch Surface Pro 4 and new phones at October 6th event Looking forward to this.

2. Microsoft Cortana May Come to Cyanogen

[Cyanogen CEO] McMaster revealed that Cyanogen is working with Microsoft to deeply integrate Cortana into the next version of Cyanogen OS. This is key to catapulting Cyanogen into the mass market, he asserts […].

3. Xiaomi teases upcoming news or products which will “Solve the most important problem in Life”

In the comments for that post, many users are guessing that Xiaomi might be launching “Xiaomi Loans”.

4. Obstacles Xiaomi Needs to Overcome Decent list.

Imitation Doesn’t Lead to Differentiation

Insightful article by Eva Dou, for the WSJ, titled Rivals Try to Reinvent Xiaomi Business Model. I think the use of the word “reinvent” is almost meant to be ironic; you won’t find any hint of reinvention from the executives that Dou interviewed. Some nuggets:

In a hint of how quickly Lenovo has worked to develop a Xiaomi rival, Mr. Chang said his team was still figuring out what the [Lenovo brand] name ZUK stands for.

and

One morning this summer, hundreds of young engineers at Wingtech in blue cubicles and humming research stations were busy designing and testing smartphones for clients. Large clients such as Xiaomi and Huawei were cloistered into private rooms, to avoid secrets leaking to rivals. But testing equipment was shared, cutting costs for all the brands.

After reading these passages, what do you think the odds are that any one company’s business model or product will be different than the others’? Low. One alternative path forward: caring about consumers and the technology it takes to build better product experiences. Don’t recall if the executives interviewed used any variation of either word? They didn’t. And that leads us to the prediction:

IHS iSuppli China Research head Kevin Wang said […] “A lot of these smartphone players are probably going to die.”

Basically, some Chinese OEMs hope imitation can lead to differentiation. It won’t.

Tuesday Assorted Links

1. Samsung Takes Smartwatch Fight to Apple Considering that there’s no release date, price, or launch market specified, I think this headline is 2X the overstatement that it would be anyway. It runs Tizen, by the way. A variant will have a 3G modem. In terms of the modem and call functionality, I’m sincerely looking forward to seeing how that performs and what consumers think.

2. ‘It’s time’: Lenovo sends out invites for a Moto 360 2 unveiling on September 8th

3. Qualcomm’s Snapdragon 820 uses machine learning to fight malware

Instead of relying on a static list of threats to protect you, it’ll actually watch out for suspicious app behavior. […]

“Snapdragon Smart Protect is engineered to look at the actual behavior of device applications in real time and almost instantly detect and classify any application behavior that is considered suspicious or anomalous,” Qualcomm wrote in a blog post. “Suspicious applications are classified into severity levels of malware […].

4. Apple partners with Cisco to boost enterprise business I get uneasy when I read things like this. There’s no meaningful consumer problem to solve here. And for Apple, what’s the worst down-side to *not* doing this? To me, it means X fewer people working on new products or helping existing customers have a meaningfully better experience.

One big problem, Messrs. Cook and Chambers said, is ensuring employees get adequate networking performance in the workplace. Apple and Cisco said they aim to establish a “fast lane” for iOS devices in the corporate world, prioritizing wireless and Web connections so critical business applications aren’t compromised by a streaming cat videos and other nonbusiness fare.

5. Xiaomi said to release notebook in 2016 with help from Inventec and Foxconn Will it use Windows? First Windows device of more to come?

Monday Assorted Links

1. Benedict Evans on How Both Apple and Google Are Winning the Smartphone Wars (Video) Worth watching. Video is embedded below, too.

2. Rumored Xiaomi Mi Edge offers a curved edge on both sides of the screen Xiaomi isn’t shy about integrating newly-available technology into its products, so this rumor in the realm of the possible. And Samsung Display would certainly love for other OEMs to buy its flexible OLED product.

3. LG’s new smart sensor will turn your old appliances into connected gadgets Interesting idea. Simple functions.

Saturday Assorted Links

1. On Amazon’s Plans for a Low Cost Smartphone

At one point, the company planned a stripped-down Fire phone, but Amazon has stretched out its timeline for smartphone development indefinitely, people familiar with the matter said.

2. You can download Cortana for your Android device right now – here’s how Just interesting to see Microsoft’s cross-platform strategy evolve.

3. Xiaomi Will Launch In Africa In Sept Through Distributor

4. Xiaomi to release two chipsets for in-house use next year Focus appears to be cost. See my prior related post.

5. Huawei brings online smartphone brand Honor to Europe “Handsets would be mainly promoted and sold on-line […].”

6. Revealed: the first hydrogen-powered battery that will charge your Apple iPhone for a week Note: most small companies use an iPhone to demonstrate their capability. Primarily because it makes the invention look ready for prime time. And — as you can see — it increases the odds of generating a click-bait headline. Plus, yes, they’re hoping someone at Apple notices and sees “how well it fits in”, so to speak. Or that another potential acquirer thinks “Oh – I wouldn’t want Apple to buy them”.

IDC: Apple Sold 3.6M Apple Watches in 2Q 2015; #2 in Wearable Shipments

IDC estimates for wearable shipments in 2Q 2015:

Mobile Forward 00377 2015-08-27

Source: IDC Worldwide Quarterly Wearable Device Tracker, August 27, 2015

Note that this is analogous to showing Apple’s share of the overall handset market (i.e., not just smartphones); Apple doesn’t sell the most handsets, either. But what really matters is profit share. If IDC or any analyst firm estimated operating profit from wearables, Apple would be in first place. And it’s just getting started, in terms of distributing Apple Watch and, more importantly, in terms of capitalizing on Apple Watch’s hardware and software platforms (you may need to scroll down a bit).

Wednesday Assorted Links

1. Samsung Pay and Apple Pay Are Only Fighting Over 20 Percent of the Smartphone Market Perhaps… but it’s a 20% that likely has ~80% of the most valuable consumers. And it won’t stay 20% for long. Being there first, with a better solution, matters. And, as @eric_analytics points out on Twitter, Apple Pay vs. Google Wallet would have been a better comparison.

2. Qualcomm still supplies modem chips for next iPhone, sources claim

The sources believe that Intel is unlikely to obtain modem chip orders for the upcoming iPhones. However, Intel could win orders for the 2017 iPhone models as Apple is searching for additional modem chip suppliers apart from Qualcomm, the sources noted.

Sparks the question: would an Intel baseband processor appear on the iPhone, Apple’s current core business, before it appears on any other product (e.g., iPad)?

3. Xiaomi Bakes Opera’s Data Compression Tech Into Newest Version Of MIUI Android

4. Apple Working on Large Glass Something or Other, Says Global Equities

  • A device which is 27″ to 50″ Curved Glass somewhat resembling a car windshield or a curved display
  • The whole surface area acts like an HUD (Heads Up Display)
  • The various sensors are built right into the Glass

Impossible to tell how accurate this is, but it is interesting. Dimensions (if accurate) don’t appear large enough for a car windshield. Unless it’s a small prototype. This sort of glass assembly is probably something Apple can’t build in-house (i.e., for a prototype). So, with a supplier involved, the odds of a leak are higher. “Leak” isn’t quite the right word, though, since it implies a certainty that this information is accurate.

Monday Assorted Links

1. On recent rumors of an Apple MVNO: two thoughts, from John Gruber and Jean-Louis Gassée, sum up the reality perfectly, in my view:

Apple is a partner with all the carriers around the world that support iPhone. They can’t compete against them while partnering with them. (link to Gruber’s post)

“[Apple’s] one and only goal is selling devices. Everything else is in support of that goal. Would [an Apple wireless carrier] sell twice as many iPhones? Probably not.” (link to Gassée’s post)

2. Samsung Invents another Round of Concepts for future Smartphones with Multiple Displays. Exciting. Glad to see someone tackling this problem. This is one of many patents Samsung has filed. The specifics of this one don’t matter as much as the notion that Samsung (and others) are working to make this a reality. Someday.

3. Xiaomi ties up with Taiwan’s Foxconn to assemble smartphones in India. This aligns with Xiaomi’s focus on cost reduction (because it sells at razor thin gross margins) and helps it pursue the hearts and minds of consumers.

4. HTC stored user fingerprints as image file in unencrypted folder. Lovely. Reminds me of one of the six reasons I’ve used an iPhone since the 3GS: industrial design, ease of use, camera, apps, software updates, and … security.

6. Back to the future: Nokia prepares for mobile comeback. Increase in hiring / activity, in preparation for 2016/17 brand-licensing comeback.

6. Graava is a new action camera that does the editing for you. Watch the two minute video. I like the idea of it. I don’t need the actual product, though. Will we ever see something comparable in a smartphone? It reminds me of HTC’s “Zoes”.

Sunday Assorted Links

Still digging out from vacation. Lot of interesting developments.

1. Huawei, Xiaomi to hike adoption of in-house-developed smartphone APs. I think they’re focused on reducing their component costs, and on diversifying or securing supply, rather than on any sort of performance boost. An interesting excerpt, however:

Xiaomi and Huawei’s strategy is expected to directly impact AP providers such as MediaTek and Qualcomm. Within the global top-5 smartphone vendors, Apple, Samsung, Huawei, Xiaomi and LG, which together contribute over 60% of worldwide shipments, four of them have already adopted in-house developed APs or have been aggressively increasing their adoption, which could seriously damage independent ARM-AP suppliers as well as x86-based solution supplier Intel.

Note, however, that Leadcore, the AP manufacturer working win Xiaomi claims that “Xiaomi wants its own custom-designed processors to differentiate its products and control its destiny“. I think that’s a bunch of marketing spin, and the “differentiation” is really a cost focus.

2. Microsoft Launches ‘Translator’ Free Apple Watch App. I haven’t tried it yet. In principle, sounds like a good idea; a good fit with the fact that a smartwatch is, in my view, essentially a tool. And it’s not surprising that Microsoft has a team(s) working to quickly deliver apps for Apple Watch.

3. Big Android Makers Will Now Push Monthly Security Updates. … because there’s something magical and comforting about the nice, round 30-day number?

4. Michael Lopp (Rands in Repose): “Busy is a bug, not a feature.” I suppose it depends on the role. I agree that for a leader to be continuously busy, or “too busy”, is not a good sign. Though it is more complicated than that (“war time” vs. “peace time”, etc.). Michael is now at Pinterest. Another interesting part:

“It’s gonna sound like I’m lazy but I swear I’m not lazy,” he says. “My job is to get myself out of a job. I’m aggressively pushing things I think I could be really good at and should actually maybe own to someone else who’s gonna get a ‘B’ at it. But they’re gonna get the opportunity to go do that [and continue to learn in the process]. My job is to — it sounds like I just want to sit here and drink coffee and talk about bread — but it’s about pushing it down, so these things, which naturally come to me [go to others in the company].”

5. Smartphones are hurting our children – but the real culprit is bad parenting. The headline says it all.

Saturday Assorted Links

I’m digging out after being on a great vacation in Maui, Hawaii with extended family. It’s also good to be back, though. Below are some interesting articles or sentences that caught my eye recently.

1. Xiaomi rumored to launch a Windows 10 tablet in the upcoming months. I believe it’s possible. Largely because of this.

2. With Some Work, Cortana Could Be Windows 10’s Killer Application.

I have some travel coming up, and within seconds—literally—of asking Cortana some questions, I was able to check the weather forecast for my destination, find a handful of restaurants around my hotel, and find out what kind of facilities are offered there. I also quickly found a couple of specific recipes online, search for some images, launched some applications, and added a handful of reminders to my calendar. I even had Cortana remind me to get up and walk around every couple of hours, so I wasn’t glued to my office chair for too long each day.

I’m looking forward to trying it out. The first system-wide assistant on a large-scale OS.

3. Tiny sensor tells you when your favorite places are crowded.

The tiny infrared detector is effectively a smarter, more connected pedestrian traffic sensor: it tells apps how many people are entering or leaving a building at any moment, giving you a good sense of whether that restaurant is packed or blissfully empty.

It’s going to be a sensor-filled world. It’s just a question of when.

4. Why the ‘ruthlessly efficient’ editor-in-chief of The New Yorker never tweets.

“I don’t tweet, mainly because I’ve noticed that some of the other people with jobs like mine have either ended up doing all promotional tweets, which is boring, or writing something half-thought-out that would be better used in a more considered piece of writing,” he told Business Insider.

Words to ponder.

5. You Need More than ‘Natural Talent’ to Make it as a Photographer.

Mr. Turlington: Any dips**t can take pictures […] Art, that’s special. What can you bring to it that nobody else can?

Applies to many things in work and life.

On Xiaomi: Imitation is a Choice, Sameness is an Opportunity

Emily Chang, for Bloomberg, interviewed Xiaomi SVP Hugo Barra. Hugo had some interesting things to say:

So this whole [accusation that Xiaomi copies Apple] all boils down to one chamfered edge, on one particular phone model, which was Mi4, which people said looked like the iPhone 5.

Judge for yourself, about this “one” product: here, here, or here.

If Jony Ive and his team — who are the most constrained to continuity in the iPhone’s design language — can make the latest major generation of iPhones look different from the last major generation, then so can any other OEM. Imitation is a choice. Different design is possible. It just requires leaders with fortitude and integrity.

On that note, congrats to the Nokia and Microsoft industrial design teams, who cared to be original and succeeded with great designs: the N9 and the Lumia series.

But Hugo had more to say:

Without a doubt every smartphone these days kind of looks like every other smartphone, right? You have to have curved corners. You have to have at least a home button, in some way. That’s how interaction design works.

Sounds like an opportunity to me – an opportunity to be different in a sea of look-alikes. This difference can range from the small to the large: industrial design details, form factor, or even product type. Think of the beige boxes that PC makers shipped before Apple introduced the iMac. Or the candy bar phones before the Motorola RAZR.

Xiaomi Aims to Reshape Brazil Smartphone Market

Parmy Olson, writing at Forbes, on Xioami’s recent entry into the Brazil smartphone market:

Barra believes that Brazilians will change the way they buy phones though, and implies that’ll partly be because of Xiaomi’s presence. “By the end of this year, depending on who you ask, probably one out of every five phones sold in Brazil will be sold online. This is a similar number already happening in India where between 20% and 25% of smartphone sales are happening online. I think we had something to do this with this acceleration since entering the market last summer. Things will evolve. People will buy online.” […]

Brazil’s smartphone market is about half the size of India’s but it’s the fourth-fastest growing market in the world, meaning success here could make a meaningful impact on Xiaomi’s global sales. Barra concedes that Brazil is a challenging and “very competitive” market, and one where Samsung controls half of all smartphone shipments. But Xiaomi’s big selling point is its price. At $160 the Redmi 2 is half the price of comparable phones by the company’s local competitors in Brazil.

Xiaomi prefers online distribution; it helps Xiaomi deliver a lower price to consumers. Brazil is a good market for Xiaomi to try and replicate its online distribution success: it has high demand for smartphones, plenty of consumers that can access the Internet and pay for goods online, and a reasonable number that actually do. Now, Xioami may well end up using both on-line and retail channels, as it has in India. But the odds are also high that it helps shift a meaningful amount of demand to online channels.

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