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Huawei and Xiaomi: Charting the future of IoT

Posted: 01 Jun 2015 ?? ?Print Version ?Bookmark and Share

Keywords:start-up? B2B? B2C? wearables? smartphone?

Huawei and Xiaomi, two of China's biggest electronics companies, possess diverse backgrounds and experiences, but they both share the same goal of connecting everything.

Huawei's technological prowess in telecom and Xiaomi's agility in China's consumer electronics market illustrate both companies' potential and their weaknesses. Understanding the differences offers a glimpse into the futurewhere China is guiding the global electronics industry.

First, the commonalities between the two Chinese companies:

1. Staying private

Neither Huawei nor Xiaomi is publicly traded. Huawei, in particular, has famously chosen to stay private since its foundation in 1987.

As Shao Yang, president of strategy marketing department of Huawei's consumer business group, told us, being private has allowed Huawei to dodge the rat race of quarterly pressures and to take a long view. By chipping away at the global telecom gear market over 20 years, Huawei today holds a 50 per cent market share in the 4G market in Europe, according to Yang.

Huawei's revenue in 2014 was $45.5 billion, its profit at $4.5 billion.

Huawei and Xiaomi

Xiaomi, a five-year-old start-up, is also private, with $12 billion in 2014 revenue, up by 140 per cent compared with the year before. Xiaomi sold 61 million smartphones in 2014, a whopping 227 per cent increase from the company's 2013 figure. According to IDC, Xiaomi became the world's third largest smartphone vendor last year.

Xiaomi has never revealed its profitability. Many industry observers believe it razor thin.

While both companies are rapidly increasing market share, they've never had to detail the cost of getting there.

2. Most sought-after partner/investor in the industry

Drop Huawei's name to anyone in the IoT world. Leading vendors in different industries are likely to leap at the opportunity for a partnership with Huawei as they devise their own "everything connected" business strategy. Yang told us, "Companies like Benz and BMW are glad to talk to us."

Xiaomi, in consumer electronics, is not just the darling of the media. It's also the most sought after investor many start-ups are looking for. Huami, who developed Mi band, is a good example. Xioami's investment and support in defining the Mi band pushed the wearable start-up into stardom in China.

3. Youth movement

The youthful energy Xiaomi emanates is natural. But the older company, Huawei, also takes pride in staying fit and young. With its employee retirement age set at 45 and an annual infusion of 10,000 graduates fresh out of college, Huawei keep its engineering workforce young, passionate and selflessly hardworking.

Similarities between the two companies, however, stop there. Huawei is a behemoth of 170,000 employees. Xiaomi is a start-up with 8,000.

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