Headline Nov 14, 2014/

''' SMARTPHONE​S THE MONEY '''

XIAOMI sold  7.2 million handsets  in 2012.  And it did so in China, Hong Kong and Taiwan, earning revenues of  12.6 billion yuan  -that is $2.1 billion.

APPLE sold  125 million  smartphones globally, earning about $80 billion of its  $157 billion sales. 

But since it was founded in 2010, Xiaomi has grown very, very fast.

A recent funding round valued it at  $10 billion, more than Microsoft just paid for Nokia's handset unit.

That made Xiaomi one of the 15 most heavily  venture-backed  mobile start-ups ever, says Rajeev Chand of Rutberg, an investment bank.

In the second quarter of  2013 Xiaomi's  market share in China was 5%, says Canalys,  -a research firm-  more than Apple's  4.8%   -for the first time.

"Yet we have never compared ourselves to Apple  -we are more like Amazon," says Lin Bin, Xiaomi's co-founder,  who once worked for the Chinese arm of Microsoft and Google.  

APPLE sells its iPhone 5 for around  $860  in China and has the industry's highest margins.

XIAOMI offers its handsets at or near cost: the MI-3, its new flagship, costs 2,000 yuan  ($330), and sells directly to customers online, rather than via network operators or retail stores, which also keeps prices down.

Crucially, its business depends on selling services to its users, just as Amazon provides its Kindles readers at low prices and  makes its  money  on the sale of e-books.

The idea is to make a profit from customers as they use the handset, rather than from the sale of hardware, says Mr Lin.

Xiaomi's services revenues were  20m  yuan in August,2013,  up from 10m yuan in April. It is a classic business model : build to an audience then monetise it later, as Google and Facebook did, notes Mr Lin.

Selling games, customer wallpapers and virtual gifts may not sound very lucrative, but China's Internet giants have found a huge market for virtual goods: the biggest-

 Tencent, sold $5 billion worth of them last year.

Another big difference is their openness to user feedback. Apple takes an almost Stalinist approach to its handsets, limiting user customisation in favour of :

 A "we know best"  design philosophy.

Xiaomi is more guided by its users, releasing a new version of its MIUI software (based on Google's Android operating system) every week in response to their suggestions.

In some cases Xiaomi asks users to vote via weibo, the Chinese equivalent of Twitter, on whether particular features should be included or how they should work- 

***A form of democracy its  American rival would never countenance***.   

The Honour and Serving of the operational research continues. Thank you for reading and don't miss the next one.

With respectful dedication to these two  very great company: Apple and Xiaomi. See you on !WOW! the World Students Society Computers-Internet-Wireless:

''' Students Resurgence ''

'''Good Night and God Bless

SAM Daily Times - the Voice of the Voiceless