Xiaomi Makes $2.16B In First Half Of 2013, Beating Its Entire 2012 Revenue

Android handset and OS maker Xiaomi sold 7.03 million handsets in the first half of 2013, the company announced today. Over that period, the Beijing-based startup made RMB 13.27 billion (about $2.16 billion) in revenue.

Xiaomi’s latest figures mean it sold almost the same number of phones in the first half of 2013 as it did in all of 2012 and made more than double the amount of revenue in the first half of 2013 as the $957.46 million it netted in the corresponding period a year ago. The company did not reveal its profits, but investor Hans Tung, a partner at Qiming Venture Partners, has said in reports that Xiaomi makes about 10 percent profit on its handsets.

Lei Jun, Xiaomi’s CEO, has said that the company expects to double sales to 15 million phones in 2013, bringing the company $4.5 billion in revenue, and it looks like the startup is on its way to meeting that target.

Xiaomi was founded three years ago by Lei, an angel investor and serial entrepreneur who also founded companies like Amazon-acquired Joyo.cn and YY, which had its IPO in November.

The company depends on a novel marketing model to boost sales. Xiaomi sold 72 percent of its phones directly through its online store last year, allowing it to bypass the costs of operating brick-and-mortar locations. Phones are made available in batches of 200,000 to 300,000 on Xiaomi’s Web site and sometimes sell out in less than an hour. (The company has been accused of deliberately underproducing in order to create hype for its phones, but Lei says that Xiaomi produces to demand in order to avoid wasting resources).

Xiaomi is also able to keep its costs down by inviting customers to help design phones. Every week, the startup releases a new version of miUI, its customized Android skin, which is then scrutinized by a few hundred thousand hard-core fans. This enables Xiaomi to offer its handsets for relatively low prices: their two handsets sell for just 1999 RMB ($326) and 1499 RMB ($245).

While Xiaomi’s sales figures are living up to the company’s hype from a consumer perspective, Kim-Mai Cutler noted in May that the startup has yet to deliver on high expectations. For example, Xiaomi still has to prove that it can monetize software services, an arena in which it has to compete against giants like Alibaba and Tencent.

Xiamo is expected to revamp its two models, the Mi2S and Mi2A, this summer, and there is speculation that it will launch a Smart TV at its annual conference on August 16.