What Does Xiaomi, Compatible with Apple, Truly Seek?

A recent quarterly financial report from Xiaomi Group has revealed impressive figures for the third quarter of 2024, with revenue reaching an astounding 92.51 billion yuan, marking a yearly growth of 30.5%. This remarkable performance has surpassed market expectations, prompting discussions about Xiaomi’s strategic direction in the highly competitive tech landscape.

As the company sets its sights on the future, it is taking a bold step to align more closely with Apple’s ecosystem. But what does this move signify for Xiaomi’s growth? This decision may seem like a cunning strategy; after all, if one day you decide to switch from an Apple smartphone to an Android device while surrounded by a myriad of Xiaomi smart home products, which phone will you end up choosing?

Lei Jun, Xiaomi's co-founder and CEO, has openly stated ambitions for Xiaomi vehicles to be the most compatible cars with Apple’s ecosystem, while the goal for Xiaomi phones is to ensure they act as the best support for Apple’s platforms. Some may interpret this as a sign of subservience to Apple, but is that an accurate assessment?

So, for users who identify with Apple products, is the Xiaomi ecosystem a worthy alternative to consider?

Examination of Xiaomi's strategic positioning reveals much. One of the core strategies employed by the company involves a non-confrontational approach to the market. Rather than directly competing with Apple, Xiaomi has chosen to create a compatible ecosystem that invites Apple users to engage without feeling threatened. This strategic choice results from an acknowledgment of Apple's vast global user base, which stood at 2.2 billion active devices as of February 2024.

Advertisement

Apple users are notoriously loyal, making them a challenging market segment to penetrate. By not engaging in direct competition, Xiaomi effectively mitigates risks and navigates competition dynamics more smoothly. The company has strategically leveraged technological innovations to ensure seamless connectivity between its devices and Apple’s offerings. For instance, the Xiaomi 15 series smartphones fully support Apple’s ecosystem, allowing for fluid file transfers with MacBooks, iPads, and iPhones.

This approach has the dual benefit of attracting Apple users while enhancing the perceived value and user experience of Xiaomi's products. Furthermore, the market positioning of Xiaomi differs fundamentally from that of Apple; while Apple focuses on the high-end segment, Xiaomi seeks an equilibrium between affordability and quality. Offering high-value products enables Xiaomi to attract consumers who might otherwise be locked into the expensive Apple ecosystem.

Building on its open ecosystem and value-driven offerings, Xiaomi seeks to cultivate influence within Apple's territory, thereby providing Apple users with a broader spectrum of products and services. As Lei Jun articulated, Xiaomi strives for its mobile devices to be the finest companions for Apple’s ecosystem.

The open nature of Xiaomi’s ecosystem represents a significant competitive advantage, especially when compared to Apple's HomeKit and Huawei’s stringent ecosystem policies that deter smaller companies. Xiaomi goes a step further by not only allowing free access to its ecosystem but also offering detailed guidance and, for partners with considerable budgets, development support.

According to Xiaomi’s third-quarter report, their AIoT platform connected a staggering 861 million IoT devices, reflecting a robust 23.2% growth year-on-year. In the smart home device sector, this success solidifies Xiaomi's position, with revenues from IoT and consumer products climbing 26.3% to 26.1 billion yuan, achieving an all-time high gross margin of 20.8%.

The growth in shipments of major household appliances has also been substantial, with air conditioners, washing machines, and refrigerators witnessing remarkable year-on-year growth rates of over 55%, 50%, and 20% respectively. These figures underscore the pronounced advantages stemming from Xiaomi’s open ecosystem, compelling a deeper dive into its brand strength and market positioning.

Xiaomi demonstrates formidable strength particularly in entry-level markets, with a significant presence in the mid-range segment. Instead of targeting high-end competitors like Apple and Samsung directly, Xiaomi strategically positions its products at competitive pricing while rapidly innovating. This tactic allows Xiaomi to nibble away at market share in areas segmented by price rather than brand prestige.

Data reveals that Xiaomi has been steadily climbing the ranks in the high-end smartphone market, capturing a market share of 22.6% in the 4000-5000 yuan segment, reflecting a 9.7% increase year-on-year. In the segment ranging from 5000 to 6000 yuan, Xiaomi's share reached 6.9%, up 2.4% from the previous year.

In the entry-level market, Xiaomi excels due to its unbeatable price-performance ratio, effectively claiming a significant part of the overarching market. Recent statistics indicate that Xiaomi's market share in the 3000-6000 yuan smartphone segment rose by 3.1% to 16.2% in the first half of 2024.

Xiaomi's third-quarter financial performance was likewise impressive, with a total revenue of 92.5 billion yuan and an adjusted net profit of 6.3 billion yuan. In the smartphone sector, the company's revenue reached 47.5 billion yuan, bolstered by an impressive shipment total of 43.1 million units.

As a personal reflection, when making informed purchases or investing in quality, Xiaomi might not top my list. However, when it comes to areas I am unfamiliar with or where I do not intend to spend extravagantly, Xiaomi has become my go-to choice. This strategic market positioning allows Xiaomi to meet the needs of a diverse consumer base, particularly among price-sensitive users who still seek quality products.

When considering Xiaomi's performance in device compatibility, it is notable that the company has shifted away from a zero-sum approach to one that embraces collaboration. For instance, this year, following Apple’s decision to exit the automotive race, Xiaomi intensified its investments in the car industry.

As Lei Jun expressed, Xiaomi’s vehicles aim to achieve superior compatibility with Apple’s ecosystem. The release of the Xiaomi SU7 marks significant strides in ensuring compatibility with Apple devices, particularly with the launch of the new Panghu OS 2, which emphasizes an AI-driven comprehensive approach to the interconnected ecosystem of vehicles, home, and mobile technology.

Notably, the Xiaomi SU7 supports Apple CarPlay connectivity, enabling users to leverage their Apple devices seamlessly while incorporating Xiaomi’s AI assistant. This integration enriches user experience, ensuring that Xiaomi products appeal not only to Android aficionados but also to Apple users seeking improved cross-compatibility.

While previously acknowledged, it is worthwhile to reiterate the distinctive features of the Xiaomi vehicles. With a significant proportion of SU7 owners identified as Apple users, a robust 51.9% share as confirmed during a presentation at the Beijing Auto Show further emphasizes the effectiveness of Xiaomi’s strategy in cultivating a multidimensional, user-friendly automotive experience.

The SU7 caters explicitly to Apple users by providing support for iPads within its back seats. Once users procure a specialized mount, they can transform their iPads into multifunctional devices by downloading the "Xiaomi Car Expansion Screen" app, and accessing car functionalities like air conditioning adjustments and multimedia entertainment.

Further enhancing user convenience, Xiaomi car owners can monitor battery life and charging states through their iPhones, utilizing one-click functions to adjust vehicle settings. This compatibility presents Xiaomi vehicles as a viable choice for Apple enthusiasts.

Xiaomi’s latest foray into smart home technology has resulted in unyielding performance in Q3, where automotive revenue hit 9.7 billion yuan, while gross margins improved to 17.1%, further reducing losses per vehicle. The remarkable response to the Xiaomi SU7 Ultra, which garnered over 3680 pre-orders within just 10 minutes of launch, showcases Xiaomi’s potential to redefine the high-end automotive sector.

Xiaomi's ecosystem transcends its mobiles and vehicles, extending to an array of smart home products. The "Apple + Xiaomi" symbiotic approach effectively amplifies the control capabilities of Xiaomi's devices through Apple gadgets, showcasing a significant synergy within their offerings.

By Q3 2024, the monthly active user base of Xiaomi's AI assistant, "Xiao Ai", had climbed to an impressive 135 million, signifying Xiaomi's commanding presence in the smart home domain.

Xiaomi’s technological capabilities are witnessing marked advancements; the company recently inaugurated a 1.2 billion yuan smart appliance research center in Wuhan, with a total area exceeding 10,000 square meters comprising 47 laboratories. This underscores Xiaomi's commitment to R&D and quality assurance in its smart appliance innovations, establishing a firm foundation for future developments.

In the arena of smart home technology, Xiaomi’s well-established Mi Home ecosystem is now viewed enviously by competitors who scramble to keep pace, often too late to make a dent. Even with other brands releasing new products in traditional sectors such as TVs and refrigerators, they often fail to present compelling reasons for consumers to abandon Xiaomi.

Xiaomi has leveraged its vast scale to minimize costs effectively, rendering the prospect of a price war futile. It’s worth noting that product introductions tend to face numerous challenges; any pioneering company must continuously refine and enhance early designs to drive profitability. Xiaomi’s current success stems from iterative improvements of their early products, which appealed thanks to their integrated smart features and competitive pricing.

What applies to Xiaomi also questions their symbiotic relationship with Apple. What are the specific advantages that make Apple a preferred choice for many people? This inquiry highlights the contrasting philosophies of innovation and market strategy within the tech sector.

At the heart of Apple's appeal lies formidable technology, an unparalleled ecosystem, and fierce user loyalty. Apple’s ability to craft a closed system facilitates seamless data transitions across their product range, augmenting user experiences consistently. This, combined with strong brand positioning and targeted marketing strategies, has proven instrumental to Apple's triumph in the tech industry.

The allure of Apple is further enhanced with plans for future innovations in the smart home space. The company is preparing to launch smart home accessories, focusing on privacy through their HomeKit Secure Video protocol, ensuring that user data remains confidential and secure.

Moreover, Apple’s commitment to interconnectivity across platforms showcases its ability to respond to competitive pressures, especially regarding matters of user privacy and open collaboration. Initiatives aligned with the Matter standard illustrate Apple's openness and willingness to integrate seamlessly with other smart home solutions.

As Xiaomi seeks to enhance its position within Apple’s ecosystem, it has accomplished a remarkable feat by integrating its products in a way that Apple users can readily connect and interact with Xiaomi offerings seamlessly.

Xiaomi’s move to align its devices with Apple’s, utilizing the pioneering Panghu OS 2, allows for significant interaction between the two ecosystems. Through functions like file sharing and document viewing across devices, Xiaomi reinforces its appeal as a harmonious extension of Apple’s product realm, cultivating a new generation of brand enthusiasts.

Ultimately, Xiaomi is in the process of enveloping Apple’s ecosystem through strategic open innovations while showcasing its unique identity and capabilities. The challenge to Apple lies not merely in product development but in fostering an encompassing ecosystem that enhances service provisions.

As we venture further into an interconnected future, Xiaomi’s innovative pursuit warrants a close watch. Will the company’s efforts lead to a paradigm shift, redefining industry norms? The prospect of a blend between Xiaomi and Apple may facilitate a new dimension of user experience, alongside exciting possibilities for future tech landscapes.