Xiaomi: Success May Make Life More Difficult

Xiaomi has had tremendous success with their low cost high featured smartphone line, kicking Samsung from the smartphone throne in China earlier this year.

As a Chinese vendor, they have something of a home field advantage that has allowed them to become a major player in the Asian region.

Their market valuation has grown from around US$10 billion in the fall of 2013 to currently US$45 billion today. This comes just after closing a new US$ 1 billion funding round. While the financial and sales results in China are nothing less than phenomenal, the success in markets outside of China is a little more difficult to assess.

As a newcomer, Xiaomi has very little bargaining power when it comes to patent licensing. If you can’t cross license, you have got to pay, a position that does not help the low cost providers of smartphones. In a recent law suit in India, Ericsson had Xiaomi smartphones banned from sales. This injunction was reversed recently, at least until the next court hearing in January 2015. According to an article in Digitimes, this position is leading to an issue in all the overseas expansion plans of Xiaomi. The article suggests that other smartphone companies may also start legal action against Xiaomi. – Norbert Hildebrand