Who is Xiaomi? Meet China's hottest smartphone maker

Xiaomi has its sights set on international expansion and becoming a global brand

IDG News Service/Michael Kan

The 'little rice' that could

Xiaomi, which means "millet" or literally "little rice," is the upstart Chinese company that's making waves in the smartphone business. Four years after its founding, Xiaomi is now China's biggest smartphone maker. Here's a look at how it became successful, and what's in store for the international consumers who are its next target.

IDG News Service/Michael Kan

China's answer to Apple?

When Xiaomi announces a product, hundreds of "Mi fans" (from Xiao-mi) are there to cheer it on. Its ardent followers have inspired comparisons with Apple, though some critics say Xiaomi copies a bit too much from its U.S. rival. Whether it's the look of its products or its CEO Lei Jun dressing like Steve Jobs, the accusations keep cropping up. At a recent product unveiling, Xiaomi lifted straight from Apple's playbook with a slide that read: "One more thing..."

The Chinese company has tried to play down the comparisons but it clearly admires Apple. In January it invited Apple co-founder Steve Wozniak to its Beijing office.

IDG News Service/Michael Kan

Shaking up the market

Despite the comparisons to Apple, Xiaomi has a very different business model: It sells its products at the lowest price it can afford. In 2011, it launched its flagship device at 1999 yuan ($324) without carrier subsidies, drawing an instant following. Since then, Xiaomi has always sold its products at only slightly above the cost to make them. It's been a cornerstone of its success and put pressure on rivals Samsung, Huawei and ZTE.

Pictured is Xiaomi's newest flagship phone, the Mi 4, which has a quad-core 2.5GHz Snapdragon 801 processor, 3GB of RAM and a 5-inch 1080p screen, all wrapped in a steel casing.

It keeps its prices low partly by selling most of its phones online, rather than through physical stores or mobile carriers.

IDG News Service/Michael Kan

Redmi

The products that drove Xiaomi to the top of China's smartphone market haven't been its top-end phones but its lower-priced Redmi products. Redmi phones start as low as 699 yuan (US$113) without carrier subsidies.

Pictured is the Redmi 1S. Encased in plastic, it doesn't feel like a premium device but it has some good specs, including a quad-core processor, 4.7-inch display with a 720p resolution, and an 8-megapixel camera. Analysts estimate that over half of Xiaomi phones sold in China are Redmi devices.

IDG News Service/Michael Kan

MIUI

Ask CEO Lei Jun why Xiaomi is succeeding and he'll point to its constant engagement with its "Mi fans." This is achieved partly through its MIUI software, the forked version of Android installed on its products. Xiaomi offers updates to MIUI on a weekly basis, using input from its hardcore fans to streamline the interface and improve system apps.

"When Apple develops its iOS 7, you have no idea what they will do with it before the release," Lei said last year. "It's not like that for us. We will first ask what you want."

IDG News Service/Michael Kan

The Xiaomi team

Xiaomi hasn't been around for long but its leadership team includes executives who've worked at top firms including Microsoft, Google and Motorola. Their past projects include work on Windows Mobile and Google Search, and they have experience localizing products for the Chinese market.

Before founding Xiaomi, CEO Lei Jun, pictured in the red shirt, created Joyo.com, a Chinese e-commerce site that was acquired by Amazon. Jun has said he used his e-commerce experience to turn Xiaomi into a major force selling smartphones online.

Last year, Xiaomi made one of its biggest hires, snagging Google executive Hugo Barra to lead its international expansion. Barra has since been busily promoting Xiaomi in India and Southeast Asia.

IDG News Service/Michael Kan

Mi Pad

Though best known for phones, Xiaomi has been quick to expand its products. Earlier this year it began selling its first tablet, the 7.9-inch Mi Pad, which starts at 1499 yuan ($276).

The Mi Pad has a 2048x1536 resolution display, an 8-megapixel camera and Nvidia's latest Tegra K1 processor. There are 16GB and 64GB versions, and a microSD slot allows for up to 128GB of additional memory.

Xiaomi hopes the Mi Pad will rival Apple's iPad mini, also 7.9 inches with similar specs. But the Mi Pad has drawn criticism for looking like a different Apple product -- available in several bright colors, it resembles an oversized iPhone 5C.

IDG News Service/Michael Kan

A family of products

In some ways Xiaomi is moving faster than Apple, having already come out with its smart TV and fitness smartband. As is its style, they're both priced exceptionally low: The second-generation TV has a 49-inch 4K display and goes for 3999 yuan ($649). The smartband? Around $13.

Xiaomi also sells Internet routers, set-top boxes, external battery packs, and even a stuffed Xiaomi mascot. Don't laugh at the mascot -- it's a huge seller. But the top-selling item in its store is a 5200 mAh battery pack for just 49 yuan, or $8.

IDG News Service/Michael Kan

How does it price things so cheap?

Xiaomi doesn't have a network of physical stores to maintain or spend millions on billboard advertising. It relies largely on the Internet and word-of-mouth.

Also, Xiaomi produces only limited quantities of a product for the initial launch, and it ramps up production over time as component costs fall. The downside is that it can be hard to buy some new Xiaomi products. Its most recent phone, the Mi 4, sold out 37 seconds after it appeared in its online store.

It's unclear how much of a profit Xiaomi is making, but it's in startup mode and focused on drawing customers to its products. It does its best to monetize that user base by selling software and virtual goods through devices, much as Amazon does with its Kindles.

IDG News Service/Michael Kan

International expansion

Xiaomi's CEO wants the company to be an international brand that Chinese people can be proud of. Earlier this year it announced it plans to expand in 10 foreign markets including Indonesia, Russia and Brazil.

That means the same business model that made Xiaomi a success in China will be put to the test on a global scale. It's not using the Xiaomi name much outside China, though, opting for simply "Mi" instead. The handsets are already selling like hotcakes in India: This week, an executive bragged that the latest batch of 20,000 phones sold out there in 2.4 seconds.