Xiaomi is in the midst of a "midlife crisis": How did it become what it once hated?

On July 11, at the celebration party for the sales of 110 million Redmi mobile phones, Xiaomi founder Lei Jun finally had a chance to face the outside world in a relaxed manner.

With the grand momentum created by two drummers, 47-year-old Lei Jun, wearing a white Xiaomi employee T-shirt and black trousers, slowly walked into the center of the stage of Shunshi Jiaye Entrepreneurship Park, the headquarters of Xiaomi. This is a courtyard-style building, and the glass windows above the four sides are crowded with Xiaomi employees wearing the same T-shirts, who try to feel the atmosphere of the celebration through the windows.

On the big red screen at the back of the stage, the latest cumulative sales of Redmi phones, "110 million units", stood out. On a long table in front of Lei Jun, there were 12 bottles of champagne and 11 cakes. The words on these 11 cakes spelled out the number "110,000,000" (110 million).

Lei Jun announced on the spot that he would invite three celebrities to be the spokespersons for the Redmi mobile phone, and then he led Xiaomi executives to open champagne to celebrate.

After a round of photo-taking, Lei Jun took a sip of champagne from his goblet. Behind him, several Xiaomi executives were talking in groups. Lei Jun, who was standing alone on the stage, did not participate. He shook the goblet in his hand a few times, and the golden liquid swayed in the goblet.

The founder, who has experienced the rise and fall of Internet companies several times, knows better than anyone that behind the halo of huge sales of Redmi mobile phones is Xiaomi's hidden worries in the control of the mobile phone supply chain - in the first half of this year, Xiaomi's mobile phones were in extreme shortage for three months. This was a fact revealed by Lei Jun at a closed-door meeting of experts organized by Xiaomi on June 23 this year.

What is more serious is that Xiaomi's sales volume has been left behind by its competitors. According to IDC data, Huawei ranked first, Apple ranked second, and Xiaomi fell to third in the Chinese smartphone market in the fourth quarter of 2015. In the first quarter of 2016, Huawei still ranked first, with OPPO, vivo and Apple ranking second to fourth respectively, and Xiaomi fell to fifth. In the second quarter of 2016, OPPO and vivo surpassed Xiaomi again.

Just last year, Xiaomi remained the leader in China's mobile phone market, although it did not achieve its expected mobile phone shipment target of 80 million to 100 million units.

As Lei Jun himself said, Xiaomi is experiencing its first trough since its establishment.

Xiaomi model fails

Xiaomi’s so-called trough is essentially the result of the slowdown in China’s smartphone growth and changes in the business landscape under the squeeze of competitors, which has led to the failure of the Xiaomi model on which it relies for its rise.

The so-called Xiaomi model, as Lei Jun has been promoting since the beginning of his business, is to not build factories, set up offline channels, or place advertisements, but to quickly create popular single products through light assets, Internet sales, and high cost-effectiveness.

This model experienced explosive growth in the first two or three years, causing traditional mobile phone manufacturers including Huawei and Lenovo to panic. They began to imitate Xiaomi's strategy, and online sales gradually became the standard for almost all mobile phone manufacturers.

Today, relying solely on the Internet is no longer a panacea, and Xiaomi itself has begun to move away from its original model. Many changes show that Xiaomi is moving in the opposite direction, gradually becoming what it once "hated".

At the beginning of the business, Lei Jun said in various public occasions that the most important thing about Xiaomi's profit model is light assets. It does not have factories, so it can use the best factories in the world. But the reality is that since Xiaomi does not have its own factories, it has little control over the supply chain, and it is easy to have delayed delivery or even out of stock.

Xiaomi believes in the model of eliminating channels and only doing online business. Selling mobile phones through online channels such as Xiaomi.com can save channel price difference and retail store costs, so consumers can buy mobile phones at the most affordable price. However, since last year, the growth rate of mobile phone shipments through online channels has begun to slow down. Currently, more than 2/3 of users still purchase through offline channels. Xiaomi has to make adjustments to this and will open 60 "Mi Home" offline stores across the country within this year.

Xiaomi once claimed that it would not advertise, but only conduct marketing promotion through new media channels, believing that word-of-mouth communication from users is the best advertising. However, the reality is that the cost-effective model it advocated no longer has an advantage, and it is difficult to reach target users in third- and fourth-tier cities by relying solely on online new media promotion. Therefore, Xiaomi began to do building advertising, hired spokespersons, and even considered TV advertising in the future.

As the model changed, as Xiaomi gradually became a super unicorn with a valuation of US$45 billion and more than 8,000 employees, the mentality of Xiaomi's internal employees began to diverge, the processes became complicated, and it was becoming a large company.

Lei Jun previously claimed that there are "no meetings" within the company, but in fact almost every department of Xiaomi has weekly meetings and other large and small meetings, which is no different from all large companies.

Lei Jun said at Xiaomi's annual meeting earlier this year that Xiaomi does not have a sales target for 2016, and that as long as they are happy, everything is fine, but this does not mean that all departments and employees do not have KPIs.

Zhang Chenxi, a former employee of Xiaomi MIUI, said that some departments of Xiaomi still have KPIs, but KPIs have nothing to do with mobile phone sales. Instead, they are based on profit. For example, the MIUI department where he was at the time required a monthly profit of no less than 500,000 yuan for the "MIUI Forum" App alone.

In the past year, the change in the importance of revenue to Xiaomi's top management has been obvious. "In the past, MIUI rarely built-in external advertisements, but was dedicated to optimization, modifying any bad experience. Even if a function is not harmful, as long as it is not beneficial to users, Xiaomi will not launch it online." Zhang Chenxi said that the current product concept is to pay more attention to whether a function can make money while considering the user experience.

If we compare it to a person's life, Xiaomi is experiencing a mid-life crisis: no longer brisk and high-flying, but becoming mature, stable and law-abiding. In the end, will Xiaomi gradually become a traditional mobile phone company?

From "no factory" to Boss Lei "personally managing the factory"

In fact, just four days before the celebration meeting for the sales of 110 million Redmi mobile phones, Lei Jun also held a mobilization meeting in the Xiaomi mobile phone department and announced that Xiaomi mobile phones would embark on a second venture.

At this conference, Lei Jun emphasized that he has taken over the management of mobile phone product research and development and supply chain from Xiaomi co-founder and supply chain manager Zhou Guangping since May 18, and is confident that mobile phones can be delivered in a timely manner.

During more than four years of crazy growth, supply chain problems have been spreading like a tumor inside Xiaomi. It was not until Lei Jun personally took action that the outside world realized the seriousness of the problem.

The core factor for the success of Xiaomi mobile phones is to achieve massive sales with extremely cost-effective products. The Redmi series, which has sold over 110 million units to date, is the best proof of this.

However, Wang Qiang, a supply chain person at a mobile phone manufacturer, revealed that the supply chain management requirements for a single product are not high for mobile phone manufacturers. As long as the core components and costs are controlled, it is not difficult to make a single product a hit. The difficulty lies in dealing with the supply chain management pressure of producing multiple products at the same time.

Generally speaking, a smartphone is made up of hundreds of materials, which means there are at least hundreds of suppliers. In the early days, Xiaomi only produced and sold one type of mobile phone at a time, and the requirements for materials were still in the exploratory stage, so there were not many suppliers and management was relatively simple.

"After Xiaomi became an instant hit, its shipments soared, and problems with supply chain control began to be exposed. Because there were no backup suppliers, once the main supplier had problems, it would lead to product defaults, out-of-stock situations and other problems," said Wang Qiang.

At that time, the "chip replacement" incident of Xiaomi Mi 3 in 2013 was caused by the fact that in order to cope with the urgent delivery needs, Xiaomi replaced the previously advertised Qualcomm 8974 chip with the low-end Qualcomm 8274 chip, which caused dissatisfaction among consumers.

Xiaomi's early products were mainly based on Qualcomm chips, and the core components were all from one supplier, so the company's ability to control the production rhythm was naturally weak and it lacked bargaining power. "In the core links, such as chips, screens, storage, and production, mobile phone manufacturers need to establish at least three suppliers to prepare for emergencies," said Wang Qiang.

Later, at the end of 2013, Lei Jun realized this problem and personally negotiated with suppliers such as Inventec and MTK, introducing Qualcomm's competitor MTK and later Nvidia in chips ; in order to ensure supply in production, such as when the demand for Redmi increased sharply, Foxconn and Inventec were added to the production on the basis of the exclusive OEM of Wingtech.

However, with the continuous increase in the number and types of Xiaomi products, the growth in sales, and the expansion into overseas markets, Xiaomi's supplier system has become increasingly large, with more than 100 suppliers at its peak. For the growing Xiaomi, how to control this "giant" supply chain is a huge challenge.

Due to the lack of effective supply chain management, Xiaomi's products are always delayed, out of stock, and delayed. For example, the Xiaomi 1s Youth Edition was originally scheduled to be snapped up on Singles' Day in 2012, but was finally delayed until December; the Xiaomi Note Premium Edition was delayed by Xiaomi President Lin Bin on the grounds of "pursuing the ultimate experience."

This problem has become more serious this year. The launch of the latest Xiaomi Mi 5 was delayed from the second half of 2015 to the beginning of this year, a delay of more than half a year (according to the one-year interval between the launch of Mi 3 and Mi 4, Mi 5 should have been launched in the third quarter of last year). The outside world believes that this is related to the delayed launch of Qualcomm's 820 chip, and the Mi 5 Premium Edition was delayed even longer before it was launched; the Mi Band 2, which was to be launched together with Mi MAX and MIUI 8, was also delayed by a month due to mass production reasons.

"Supply chain management is a long-term science. Xiaomi currently lacks the ability to integrate the supply chain, but the interest chain involved is too long. Xiaomi is a company with an Internet background. In addition, with the continuous launch of routers, Xiaomi boxes and other products, supply problems are inevitable." Wang Qiang said.

In the face of the above problems, Xiaomi has continuously improved its supply chain management by introducing talents and improving supplier relationships. In the past two years, it has recruited professional mobile phone talents from Nokia , Motorola, Qualcomm, etc. They have brought Xiaomi high-end components used by European and American mobile phone giants such as LG, Sony, Toshiba, and Qualcomm.

However, these suppliers do not only serve Xiaomi, they also cooperate with giants such as Apple, Samsung, and Huawei. In comparison, Xiaomi has a clear gap in terms of voice.

"Apple, Samsung and Huawei have done a good job in supply chain management. On the one hand, they have been in the electronics industry for many years and have rich experience. On the other hand, their senior management has always attached great importance to supply chain management and often flies at least three times a month to communicate with suppliers."

Lei Jun took action. He replaced Zhou Guangping to personally manage the supply chain and took immediate action. According to Korean media reports, Lei Jun visited Seoul in early July to discuss component supply cooperation with Samsung Electronics executives. This was Lei Jun's first visit to Samsung's headquarters as Xiaomi CEO.

From "eliminating channels" to expanding "Xiaomi Home"

While solving the back-end supply chain problem, Xiaomi also tried to solve the front-end channel problem. If time goes back to the beginning of the business, this is not a problem at all, but an advantage. Because one of the magic weapons that Xiaomi relies on for success is to "eliminate offline channels", thereby saving a lot of costs and creating a reputation for high cost performance.

However, when the pure online model hit a growth bottleneck, offline channels became important. Compared with manufacturers such as OPPO and vivo that mainly rely on offline channels, Xiaomi's channels have always been in a weak position.

"Xiaomi's products are not selling well now. The gross profit of each product is too low and lacks competitiveness." Xu Zheng, a distributor in Shenzhen's Huaqiangbei, said in Cantonese-accented Mandarin.

In 2010, when Xiaomi just launched its mobile phone, Xu Zheng started the offline sales business. Xu Zheng still gets excited when he recalls the scene at that time, "Almost all channel retailers were frantically buying Xiaomi mobile phones at that time, because the profit of a single product was as high as more than 200 yuan, and the profit of selling a Xiaomi mobile phone was two to three times that of other brands."

But other mobile phone manufacturers caught up. Since 2013, a large number of Internet mobile phone brands have been born, learning and following Xiaomi's cost-effective model from scratch. For example, Huawei's Honor, Meizu's Meilan, ZTE's Nubia, Coolpad's Dasheng, Gionee's IUNI, and now 360 mobile phones and LeTV mobile phones. They have taken Xiaomi's cost-effective strategy to the "extreme", starting from 1999 yuan to 1799, 1499, 999 and even 599. As Xiaomi's cost-effective advantage gradually disappears, the status of various mobile phone brands in the minds of channel dealers has risen and fallen.

"The profit of Xiaomi mobile phones has not changed and is still between 100 yuan and 200 yuan. However, the profits of other brands have increased significantly, especially vivo, OPPO and Huawei. The profit of a single product has become twice that of Xiaomi mobile phones." Zhang Wei, who has been working in the mobile phone channel in a second-tier city for many years, explained why channel dealers are more willing to sell other mobile phones.

According to public data, OPPO and vivo continued to grow rapidly in 2015, with a combined shipment of nearly 100 million units, with an average price of 2,000 yuan, which means sales of nearly 200 billion yuan, more than twice that of Xiaomi, and profits of 15 billion yuan, making them the most profitable mobile phone manufacturers in China. This data has not been confirmed by the above two mobile phone manufacturers, but feedback from channel dealers shows that it is even higher than that.

"Vivo and OPPO have significantly more sales staff than last year, and store representatives also supervise longer than before. This mechanism ensures stable product prices and guaranteed channel profits, which are even higher than before, with profits per unit reaching more than 30%," revealed a channel dealer in Tianjin.

If the sales of mobile phones through online e-commerce channels can continue to grow, forming a situation where online channels compete with offline channels, then Xiaomi does not need to pay too much attention to offline channels. However, since last year, the growth rate of online channels in the domestic mobile phone market that rely on e-commerce sales has slowed down significantly and gradually stabilized.

According to the latest data provided by GFK, the online sales share of smartphones was between 20% and 25% from 2015 to 2016, while in the first quarter of 2016 it was only 22%. After two years of rapid growth, the online sales share has entered a period of stability, and mobile phone manufacturers have gradually shifted the field of competition to offline.

This is not a problem unique to Xiaomi, but a challenge faced by the entire industry. In order to accelerate the expansion of offline channels, LeTV, Meizu and 360 have signed offline sales agreements with D.Phone. Meizu has opened 2,000 experience stores across the country, and Coolpad ivvi has announced a total investment of nearly 1 billion yuan to develop offline channels.

In addition, the growth rate of the global mobile phone market has slowed down seriously, and the incremental market is almost coming to an end, so the existing market has become a focus that mobile phone manufacturers must pay attention to.

Wang Ziru, founder and CEO of Zealer, a technology and lifestyle service provider, believes that when the mobile phone market was still growing rapidly, Xiaomi relied on a new model to quickly gain market share and achieve success. However, when the mobile phone market became saturated, Xiaomi targeted the existing market, hoping that users would think of Xiaomi when changing their phones. Therefore, it is not surprising that Xiaomi attaches importance to offline channels.

Lei Jun recently said in a speech within Xiaomi that the focus of Xiaomi mobile phone sales channels in the future will shift from online marketing to physical stores, and Xiaomi Home will expand vigorously.

In fact, as early as the beginning of this year, the heads of Xiaomi stores in Shanghai, Tianjin, Shenyang, Suzhou, Chongqing, Dongguan, Zhuhai and other places were called to Xiaomi's Beijing headquarters for a meeting to upgrade the Xiaomi stores in various places and prepare for relocation. Subsequently, Xiaomi headquarters sent special personnel to various places to select sites, sign contracts and carry out decoration.

Xiaomi has opened Mi Homes in many cities before, but they were mainly for after-sales service and were almost all located in office buildings. The biggest change this year is that in cities where Mi Homes were previously opened, the stores were moved from office buildings to shopping malls. After the upgrade, the Mi Homes will focus on experience and sales; and in cities where Mi Homes were not previously opened, Mi Homes were directly opened in shopping malls in order to attract more customers.

An employee of Xiaomi Home in Tianjin said that he became a formal employee of Xiaomi after passing a video interview at the Beijing headquarters, and has been engaged in after-sales related work since then. However, this year he received a notice from the headquarters that the store would begin to transform, and he gradually began to be responsible for sales services. Xiaomi has currently selected a new site in a shopping mall in Tianjin and will soon relocate as a whole.

During this process, after-sales service was gradually separated and authorized to third-party companies. "If someone wants to repair their mobile phone, we will give them this address, and they can choose the nearest Xiaomi authorized service outlet for repair based on distance." The employee handed Shenzhen Net a small note with the detailed addresses of six Xiaomi service outlets in Tianjin.

According to data provided by Xiaomi, there are currently 29 Mi Homes in China. In addition, Xiaomi has more than 4,000 authorized service outlets nationwide, as well as more than 2,000 retail outlets in cooperation with Suning Cloud Commerce, Gome Electrical Appliances, D.Phone and Leyu.

Another sign that Xiaomi values ​​offline sales is advertising. In December 2013, the first advertisement for Xiaomi Mi 3 appeared in an elevator in a residential area in Kunming, Yunnan, breaking Xiaomi's claim that it does not advertise. Subsequently, Xiaomi Mi ads began to appear in many residential areas across the country. Xiaomi's Redmi ads, endorsed by three celebrities in July this year, were also placed at bus stops and building elevators in many places.

From "pursuing cost-effectiveness" to "manufacturing high-end machines"

In 2015, competition in China's mobile phone market has become increasingly fierce, especially in the mid- and low-end markets. Mobile phone companies including LeTV even rely on subsidies to increase sales, and they may lose hundreds of yuan for each phone sold.

The high-end market is still dominated by Apple and Samsung, but many mobile phone manufacturers including Huawei have begun to focus on the high-end market, and Xiaomi is no exception.

Liu Lirong, chairman of Gionee Group, said earlier, "A few years ago, everyone was in fashion saying 'I'm cheap', but now no one is willing to even mention 'cost-effectiveness'. Only mobile phone products that can be sold at high prices can be called brands, and those that rely solely on low-priced products will not even be able to survive in the future."

In response to the upcoming high-end mobile phone war, Meizu also launched its high-end brand "PRO" in September last year. Together with the previously mid-range "MX" and the thousand-yuan "Mei Lan", Meizu has formed three brands with clear positioning and no conflicts. Huawei, on the other hand, focuses on the thousand-yuan and mid-range mobile phone markets with its "Honor" brand and the high-end mobile phone market with its "Huawei" brand.

In contrast, Xiaomi does not have a clear division between the mid-range and high-end markets, and both use the "Xiaomi" brand.

Since its inception, the Xiaomi brand has become popular in China with its high cost-effective price of 1,999 yuan. This price has been deeply rooted in the hearts of Chinese people. It seems a bit misplaced to focus on the high-end market with the Xiaomi brand. Xiaomi claims that its high-end mobile phone Xiaomi Note has considerable sales (Xiaomi has not disclosed sales data), but the market generally believes that Huawei is the winner in the high-end mobile phone field.

A vice president of a Xiaomi competitor revealed the embarrassment of Xiaomi's high-end brand: for users, Xiaomi's two most famous slogans are "Xiaomi phones are fast" and "the king of cost-effectiveness". "Fast" is a strong functional slogan, and "the king of cost-effectiveness" implies "I am the cheapest". Functionality itself means low-end. When the first slogan has problems, the second slogan will solidify the positioning of "Xiaomi". It will become more difficult to break away from this tonality and become a high-end brand.

In fact, the differences between Xiaomi and Huawei in the development of mobile phone brands have already triggered research and thinking among entrepreneurs in the technology industry. Many of the top electric car startups come from Xiaomi and Huawei. While learning from the uniqueness of Xiaomi and Huawei, they will try their best to avoid repeating the detours of the two.

In early 2015, Li Yinan, former vice president of Huawei and founder of Niu, held a long meeting within the company and decided to restructure the product line, starting with high-end products as much as possible, using lamps with exquisite design like BMW and lithium batteries like Tesla, first winning high-end users and then moving on to low-end products, rather than the other way around. In the end, the Niu N1 electric car launched by Niu was priced at 3,999 yuan, far higher than the original planned price of 2,000 yuan.

Xiaomi has already taken some actions to address the lack of high-end brands. On July 11, at the celebration party for the cumulative sales of 110 million Redmi smartphones, a reporter asked Li Wanqiang, co-founder and senior vice president of Xiaomi Technology , whether Xiaomi would launch a new, more high-end brand in addition to Redmi and Xiaomi. Li Wanqiang replied that they were indeed considering it. However, Li Wanqiang said that it was not convenient to disclose the specific brand name to be used in the future.

The unfulfilled dream of getting rich

On the evening of September 19, 2014, Alibaba officially landed on the New York Stock Exchange, once again creating a myth of wealth creation through technology entrepreneurship. More than 30 billionaires and thousands of tens of millions of yuan were born overnight.

That night, Lei Jun sent text messages to congratulate several Alibaba executives. One of the executives expressed his gratitude to Lei Jun and said that Xiaomi would be the next one.

Inside Xiaomi, early employees all hoped to achieve financial freedom as soon as possible, but the IPO was nowhere in sight. In late June, Lei Jun once again postponed the IPO date for Xiaomi, and publicly stated at the Tianjin Davos Forum that Xiaomi might go public in 2025.

Xiaomi co-founder and vice president Wang Chuan later explained through social media that the reason for the 2025 listing was because the founding team believed it would take 15 years to achieve the preset goal. In fact, Xiaomi may go public after 2025, but more likely before that.

The announcement of a 2025 IPO must be related to strategic choices such as whether the valuation is reasonable, the saturation of the smartphone industry, and not wanting to be constrained by financial reports. However, employees have their own stances, and their mentality often changes with the length of time they have worked and the growth of material needs.

For old employees who have worked for four or five years and have already received options, the listing in 2025 is indeed a test of their mind and perseverance, because some old employees have begun to complain about the heavy workload, too little pay, and no time to spend with their families.

Some people choose to transfer their options to current Xiaomi employees or choose to let the company buy them back, and then jump to other companies. Due to the success of the Xiaomi model, Xiaomi employees are very popular in various companies, and some even offer double or triple their original salaries.

An employee who resigned from Xiaomi's marketing department said that he and his colleagues in Duokan, Xiaomi TV, Xiaomi Box, MIUI and other departments worked very hard. But since last year, colleagues in many departments have become lazy and even ignored him. "This lazy atmosphere is easy to spread internally. Fortunately, the company reacted quickly and took countermeasures in time."

In mid-June this year, all Xiaomi employees received verbal notice that the company's 5×12 work system (5 days a week, 12 hours a day) that had been in place for several years would end and be replaced by a 5×8 work system. In the first two or three years of its founding, Xiaomi implemented an even crazier 6×12 work system.

Xiaomi said there was no special reason for making the above adjustments. When the company grows to a certain scale, all aspects need to be put on the right track. It is necessary to ensure the long-term combat effectiveness of employees and take the initiative to reduce the pressure on employees.

Next step, how to evolve?

For Xiaomi, even if the mobile phone business encounters challenges, it is still a very competitive company. In addition to mobile phones, Xiaomi also has TVs, boxes, routers and ecological chain businesses. According to Xiaomi's plan, these products will also be stationed in Xiaomi Home. Lei Jun said, "Like Muji, there are only 50-100 products in the store, and consumers are conquered by 50-100 products."

Xiaomi TVs, boxes and routers have not yet seen explosive growth. In comparison, several ecosystem companies invested by Xiaomi have developed beyond expectations.

According to Liu De, co-founder, vice president and head of Xiaomi Ecosystem, Xiaomi Ecosystem has looked at more than 600 teams in the past two years, invested in 55 of them, 30 of which are startups from scratch, 20 of which have already released products, 7 of which have annual revenues of over 100 million, and 4 of which are unicorns with a current valuation of 1 billion US dollars. It is worth mentioning that the Xiaomi Notebook Air, which was recently launched by Xiaomi, is also produced by Tianmi Technology, a Xiaomi Ecosystem company.

According to previous plans, Xiaomi will also focus on VR, artificial intelligence, finance, and film.

The VR industry is currently in its early stages and is unlikely to make a significant contribution to Xiaomi's revenue in the short term; in the field of artificial intelligence, Xiaomi will focus on investment, similar to the ecological chain companies that Xiaomi has previously deployed in the field of smart hardware; Xiaomi Finance went online in May last year, and in June this year, Xiaomi announced that it would join forces with New Hope to enter the banking industry.

In addition, Xiaomi has also invested in Tiger Securities, an Internet brokerage, PINTEC Group, the parent company of P2P platform JiMuBox, and MiMo Finance, an installment payment platform. Xiaomi Pictures, led by Xiaomi co-founder and senior vice president Li Wanqiang, is also highly expected by Lei Jun.

Xiaomi's future growth will not only rely on the new layout of Xiaomi mobile phones, but also on the support of new businesses such as the ecological chain.

Lei Jun said that Xiaomi is currently at a low point, but the rebound is about to begin. According to Xiaomi data, Xiaomi's mobile phone shipments in June 2016 reached 6.94 million units, which has shown an upward trend compared with the performance in the first few months of the year. Xiaomi expects that shipments will start to improve significantly in the second half of the year.

The success of Xiaomi's model has made it a dark horse in the global smartphone industry, and it has taken a completely different path in the competition with traditional mobile phone manufacturers such as Apple, Samsung, and Huawei. When Lei Jun started his business, he wanted to make Xiaomi's valuation reach US$10 billion, and it took him only three years to achieve it.

As the Xiaomi model encountered difficulties, Lei Jun began to re-examine Xiaomi's practices. From light assets to personally managing the supply chain, from no advertising to hiring spokespersons, from eliminating channels to expanding Xiaomi Home, the current routines of Xiaomi mobile phones and traditional mobile phone manufacturers are no different. Behind this is a questioning of the pure online business model based on the Internet.

Although the Internet model that Xiaomi initially adhered to was not consistent, the impact it brought to the industry and users was still huge and far-reaching. For the Chinese mobile phone industry, it was a highly destructive catfish, causing Huawei, Lenovo, ZTE, and OPPO to make rapid progress in panic; and for Chinese Internet users, the Xiaomi model cleared out all domestic copycat phones, allowing people to experience efficient and convenient mobile Internet services, and accelerated the popularization of smartphones in China.

(At the request of the interviewees, Zhang Chenxi, Wang Qiang, Xu Zheng, and Zhang Wei are all pseudonyms)

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.