Chinese smartphone maker Xiaomi, which outsold Samsung and Apple in its domestic market at Christmas, is expanding to 10 new countries as it races larger rivals to flood emerging economies with low-cost gadgets.
Founded just four years ago by Lei Jun, a digital entrepreneur known as the Chinese Steve Jobs for his showmanship and penchant for wearing jeans on stage, Xiaomi will begin exporting phones to countries including Brazil, Russia, India, Turkey and Mexico this year.
In December, Xiaomi outsold even Samsung in China, according to research firm Kantar, and it is now planning to take the battle abroad as the cost of parts needed to build high-end smartphones continues to drop. The falling cost of mobile computing pushed down the share price of British chip designer ARM Holdings nearly 3% on Wednesday.
Sales of top-end smartphones were lower than expected at Christmas, a factor that hit growth in royalty revenues for ARM. The company reported slower growth than in previous years, with pretax profits up 9% compared with a 44% leap a year ago.
Hugo Barra, recently poached from Google to lead Xiaomi's international effort, will play a key role in the Chinese firm's latest move. In preparation, the group has already changed its web address to mi.com, paying $3.6m (£2m) to acquire the rights to a brand that it hopes will travel more easily outside China.
Xiaomi shipped almost 19m handsets last year and was valued at $10bn in an August funding round. It plans to sell 40m handsets in 2014, and Lei has set a goal of 100m by 2015. Expansion outside China has already begun. Xiaomi has started selling phones in Singapore and set its sights on five other Asian markets: Malaysia, Indonesia, the Philippines, Vietnam and Thailand.
Xiaomi's growth has come largely through word of mouth – the company sells high-end products, which use Google's Android operating system, at low-end prices. Costs are kept low because the company spends little on advertising and on distributing stock to physical stores, selling mostly via its website.
"You can certainly call this acceleration," its co-founder, Bin Lin, told Bloomberg. "It's our mission and our belief that this model should be able to achieve some level of success outside of China."
The business captured 7% of the Chinese smartphone market in the fourth quarter of last year, ranking just ahead of Apple, according to research firm Canalys.
It has also put pressure on native manufacturers, which tend to dominate in China, forcing vendors ZTE and Huawei to offer more affordable high-end phones.
"It's definitely disrupting everyone," said Ryan Lai, a researcher at IDC. "Now consumers expect phones with high-end specs at low prices."
Xiaomi's business is not limited to smartphones. The expansion plans were announced at a product launch in Beijing on Wednesday, where the company updated its television set-top box and unveiled two new wireless routers. Lei, 44, made his first fortune in software, and his Hong Kong business KIS Holdings could soon join fellow Chinese digital company Alibaba on Wall Street.
In January, an application was lodged to float KIS Holdings in the US. The company specialises in security software and makes the Clean Master app, one of the top non-gaming downloads from Google's store, which wipes junk files from Android phones.
