Xiaomi becomes worlds most valuable tech start-up at $45 BILLION

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Xiaomi becomes worlds most valuable tech start-up at $45 BILLION

Posted by sciencetech-blog on Tuesday, December 30, 2014 Label:

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A Chinese smartphone manufacturer that has been accused of copying Apple has become the most successful tech start-up in the world after being valued at $45 billion (£29 billion).

Xiaomi achieved success in just four years by producing a range of low priced mobile phone handsets that have attracted millions of customers.

It is now worth more than Uber, the taxi app - which went on the market valued at more than $18.2 billion (£11.7 billion).

Xiaomi has enjoyed success with smartphones like the Mi-2A and Mi-2S after it was founded by Lei Jun (above) four years ago although the company has drawn criticism for copying some of Apple's products

Investors now believe that Xiaomi it has the potential to become a global consumer brand and as a result they have poured in cash in recent months.

SIR JONATHAN IVE ON XIAOMI

Apple's head of design hit out Xiaomi at the recent Vanity Fair New Estalishment Summit in San Francisco.

Asked what he felt about the company being described as the 'Apple of China', Sir Jonathan Ive criticised them for copying his company's designs.

'I don't see it as flattery,' he said, 'I actually see it as theft.'

Sir Jonathan said seeing knockoff designs made him think of the lengthy development cycle that went into producing the originals.

He said: 'When you're doing something for the first time, for example with the phone, and you don't know it's going to work, and you spend seven or eight years working on something, and then it's copied — I have to be honest, the first thing I think isn't "ooh, that was flattering".

'All those weekends I could have had at home with my lovely family but didn't, but the flattery made up for it.'

However, Xiaomi's global vice president Hugo Barra said such accusations were 'sensationalist'.

He told the Verge: 'If you have two similarly skilled designers, it makes sense that they would reach the same conclusion.'

Among those investing in Xiaomi is a private equity group linked to Jack Ma, the boss of Chinese e-commerce giant Alibaba, which recently floated on the New York Stock Exchange.

Yuri Milner, who was an early investor in Facebook, has poured in more than $500 million (£321 million) after saying Xiaomi was 'unprecedented in terms of the speed of its growth'.

He predicted that the company's value could got even higher - and reach as much as $100 billion (£64 billion).

Xiaomi is currently the third biggest smartphone maker in the world behind Apple and Samsung. It produces phones and tablets bearing the 'Mi' logo.

Similarities in the design of Xiaomi's products and those of Apple have earned the company the unofficial title as 'the Apple of China'. It even produces a MiTV similar to AppleTV and its own version of Apple's iCloud called MiCloud.

Executives at Apple, which is valued at around $651.5 billion (£418.6 billion), have reacted badly to these, with its vice president of design SirJonathan Ive effectively accusing Xiaomi of theft.

Xiamoi's revenues increased by 300 per cent last year and now stand at $5.5 billion (£3.5 billion).

Last year it turned just a small $56 million (£36 million) profit, a figure that investors are convinced will increase very sharply very soon.

Sources told Recode that Xiaomi's revenue is now more likely to be $10 billion (£6 billion) which, in a mark of how fast the company is growing, is the same as what it was said to be worth in total last year.

The Xiaomi Miui 6 handset, which many have said is simply a copy of the iPhone 5S and uses its own apps, has helped turn Xiaomi into the third biggest smartphone producer in the world behind Apple and Samsung

Xiaomi has huge plans to expand and poached Hugo Barra from Google after he oversaw the launch of its Android operating system.

It could bring its aggressive pricing strategy to the US or Europe - in China it is known for tactics like selling 100,000 phones costing just $130 (£84) in just 90 seconds via Internet promotions.

Xiaomi's new valuation was announced by chief executive and founder Lei Jun in a statement.

He said: 'This fundraising round is in recognition of the results Xiaomi has achieved in the last four years since inception, and also unveils the next chapter of development for Xiaomi.

'Xiaomi will assume we are starting from scratch, and continue working towards our dream to let everyone globally enjoy a better life through technology.

Xiaomi Redmi phones have been the company's best selling products in China, Singapore, Taiwan and India

'Xiaomi will launch some heavyweight flagship products in January 2015 to show gratitude to the fans, partners and investors who have been supporting us.'

Analysts' eyebrows were raised after Uber, the US-based taxi app, was valued at $17 billion (£11 billion) in June.

But since then it has more than doubled and is now said to be worth some $41 billion (£26 billion) with another $1.2 billion (£0.8 billion) infusion of cash earlier this month.

Analysts have said that investors seem to have a 'limitless appetite' for Uber and that it is on course to trump General Motors, the largest American car maker, which has a market capitalisation of $53.2 billion (£34.2 billion).

In an interview with Bloomberg Milner said that he was attracted to Xiaomi instead of Uber because of the 'size of the opportunity ahead of them'.

He said: 'I don't think there's any company that has reached $1 billion in revenue as fast as Xiaomi. In every conceivable benchmark, it's almost unprecedented in terms of its speed of growth.'

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