Xiaomi to launch U.S. store in 2015 - but not to sell smartphones

Chinese smartphone maker Xiaomi is launching an online store in the United States this year, but it won't be selling smartphones. Instead, it will sell products like headphones and a wearable. The effort is part of the company's strategy to position Xiaomi as more than just a smartphone maker.

Those were some of the key takeaways from a presentation Xiaomi made for U.S. media in San Francisco, the company's first event in the United States. The company will launch its Mi.com online marketplace later this year but will not sell its Mi Note phablet or Redmi line of smartphones, nor its Mi Pad tablet. Instead, Xiaomi will sell products like its Mi Band wearable fitness tracker and earbuds.

According to the Wall Street Journal, Xiaomi co-founder and President Bin Lin said the company will not be offering handsets in the U.S. in the near future because of the difficulty of having such devices certified.

Xiaomi was valued in a recent fundraising at $46 billion, but Lin said the company is not planning an initial public offering in the next "three to five years."

Xiaomi started in China but has expanded to India, Indonesia, Singapore and other Asian countries. According to research firm IDC, the company was the world's No. 5 smartphone maker in the fourth quarter, with 4.4 percent global market share. Samsung Electronics, Apple (NASDAQ: AAPL), Lenovo and Huawei were ahead of the firm in market share.

Later this year the company plans to expand to Brazil, and is eying other markets including Russia, according to Re/code.

Lin said the key factor in determining where the company will expand to is market size, since Xiaomi plans to make eventual profits off of services rather than hardware, and therefore needs a large potential customer base. Lin acknowledged that intellectual property disputes are a concern in the company's expansion plans, but he said they are a smaller factor, according to Re/code. Network giant Ericsson (NASDAQ: ERIC) alleged that Xiaomi was illegally violating its wireless patents, which disrupted Xiaomi's sales in India.

Xiaomi sees itself as an Internet services company, and primarily makes its profits through the sale of digital goodies such as books, apps, games, phone themes and other add-ons.

Executive Hugo Barra said Xiaomi wants to be thoughtful in how and where it launches flagship products. Barra is a former Google (NASDAQ: GOOG) executive who was heavily involved in Android; he left the search company to join Xiaomi as vice president of international operations in 2013.

"The amount of effort required to bring those products [phones and tablets] to market is significant. We just have to move at the right pace," Barra said at the event, according to CNET. "So we're accelerating our entry in a sense by bringing simpler products."

Barra also said that Xiaomi is "a very strong supporter of Google." He said the company doesn't have plans to build its own custom, forked version of Android, as Amazon has done for its Kindle and Fire products. According to Re/code, Barra said Xiaomi also tries to ensure its devices are running current versions of Android.

For more:
- see these two separate CNET articles
- see these two separate Re/code articles
- see this WSJ article (sub. req.)
- see this The Verge article

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