Xiaomi, China’s Fast-Growing Android Phone Maker, Posts 271% Sales Bump In The First Half

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The fast-growing Chinese Android devices startup Xiaomi has put out a new set of sales figures for the first half of the year, revealing exactly how fast it’s now selling phones. Xiaomi shifted 26.11 million handsets in 1H14, an increase of 271% from a year earlier — and more than its total phone sales for the full-year 2013 (18.7 million).

Xiaomi has previously stated it’s aiming to sell 60 million handsets this year. Its phone sales in 2012 were 7.19 million, underlining how fast this business is blowing up.

The company also said today its phone sales revenue for the first half of 2014 was 33 billion Yuan Renminbi ($5.3 billion), up 149% year-on-year.

The startup was founded four years ago by Lei Jun, an angel investor and serial entrepreneur who also founded companies such as Amazon-acquired Joyo.cn and YY.

Smartphone market research put out by Kantar WorldPanel ComTech at the end of May noted that Xiaomi had outsold Samsung in China for the second time in April, with its budget RedMI device the top selling smartphone in the country. The largest proportion (41%) of consumers buying Xiaomi’s handset were first time smartphone buyers, but almost a quarter (23%) were Samsung switchers.

Xiaomi’s initial target demographic has been young users, with a focus on selling handsets to teens via social media sites helping to deliver viral levels of growth.

As part of its strategy to scale up very fast, the company is now moving overseas quickly — with a big global push planned for this year, expanding its availability to 14 regions in total: China, Hong Kong, Taiwan, Singapore, Malaysia, Indonesia, India, the Philippines, Thailand, Vietnam, Russia, Turkey, Brazil, and Mexico.

Xiaomi’s current flagship handset is called the Mi 3, which has a quad-core 2.3GHz processor and a full HD display — and costs circa $330 unlocked. It also sells the lower cost popular Redmi, targeting the mid-range, which costs circa $130 — yet still packs a 1.5GHz quad-core chip and 720p HD display. The devices run Xiaomi’s own Android firmware, called MIUI.

The relatively low price of Xiaomi’s handsets (vs the specs they pack) helps explain why it’s handsets are selling like hot cakes.

However thin hardware margins mean the business needs an alternative strategy to monetize these sales. Xiaomi is pegging that future monetization on building services revenue off of a swelling hardware fan-base. So selling lots and lots of phones to scale up is crucial.

It also launched an iPad competitor back in May, extending its device portfolio to tablets.