Xiaomi raises $1.1B on a $45B valuation | Hacker News Reader

Xiaomi raises $1.1B on a $45B valuation

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Looks like they've got the war-chest ready to defend against future lawsuits when they get into markets that actually take IP laws seriously.

Their hardware's actually decent, but they shamelessly ripoff Apple. They could have gone the route of providing the same hardware with stock android and getting treated like a credible company. Instead, they ripped off iOS wholesale.

boohoohoo, this is the same argument over and over again. :p

Although I have yet to find how to block permissions per app on iphone. For the UI I don t see why this is even an issue. Xiaomi is selling an android device customized for the chinese market primarly and not a generic idevice (which would be impossible anyway).

I d like to think you are correct about pre empting future lawsuits.

disclosure: I own a Mi2s device in the uk and I am quite happy about it, despite the lack of 4G and sd card reader.

Why would they bother going into the EU or US?

Their phones are already getting there, anyway.

It was known when they launched, that xiaomi's interface look was apple "inspired", but besides that I dont know why it can be called shameless ripoff, sure there must be other reasons. The feel and look of the phone actually have some kind of own personality, is different from IOS and different from stock Android, and probably will get more different with time. Apple, probably, somewhere in time also took "inspiration" from other companies ideas.

Will someone please explain this valuation? A company with very thin margins, no defendable IP, and very little barrier to entry for competitors. Yes I've noticed they seem to be executing well and starting international expansion but I can't see how investors get past the first three points.

Its probably something to do with their revenue growth. While they have razor thin margins, its very easy to increase them once there's some kind of brand established.

There's probably that bit of 'unknown' in there too, being that the company may be able to penetrate the Chinese market in creating a desirable product very well. The unknown being the Chinese market could be significantly larger than western markets in terms of how a single company could scale its sales in the single geographic location in such a way that history may not have seen before.

Very easy to increase margins? Historically, this is very difficult for companies to do. What makes Xiaomi special in this aspect?

It's building recognisable brand, and that too a fairly good one. Historically it's been quite easy for companies that do this to raise margins. This is a company barely 4 years old and quite nearly a household name in asian countries.

Additionally when manufacturing electronics, input components decrease in price so there is a natural tendency for their margins to increase even if they keep their pricing consistent.

Xiaomi recently bought large stakes in chinese "youtubes" companies, YiQiYi and youku, it seems those companies are investing in creating their own TV shows and stuff, and big brands are advertising on the videos people in China already watch on those sites. The quality of the advertisings increased drasticcaly recently, with even big international brands advertising on them. Maybe someday phones will be like video-game consoles, where they loose money selling the hardware to make money on apps or services.

They're doing about $10b / yr in revenue, so this is only a 4.5x multiple, which is small for a company growing this fast.

It's true that they have little defendable IP or innovative products. However, their scale, brand, and direct-to-consumer distribution are all significant barriers to competition.

Their model is basically to use their scale and product design process (ie, copy existing products) to make devices cheaper and then rely on their strong brand (in Asia anyway) and direct-to-consumer model to market and sell them cheaper than anyone else is able to.

This is why they're now the largest phone maker in China and the 5th largest in the world.

A bit funny that this is announced on Facebook given that Facebook is blocked in China.

Neat. Their phones always interested me, but I recently got a pair of their headphones, which are amazing. Not just in the quality of the item itself, but the fact that they are made on the other side of the earth, and arrive at my door rather promptly for less than an hours wages. (I know that point itself isn't unique to Xiaomi, but they are exploiting it to great success)

So any explanation on what a company with a $45B valuation needs an investment of $1.1B for?

valuations are based on future incomes.

They make smartphones -- they're a hardware company. The money will probably help them ramp up production and increase advertising presence.

The valuation implies that they're profitable, but it takes time for profitability to turn into cash in hand. Raising this money (an action pretty similar to taking out a loan) will let them strike while the iron is hot.

It appears their margins are razor thin.

http://www.forbes.com/sites/parmyolson/2014/12/15/xiaomi-pro...

"They make smartphones -- they're a hardware company."

Actually, they don't make smartphones. They design and sell smartphones.

Valuation is descriptive, not really relevant to how much they need or raise. If you can raise $1 by selling 0.00000000222% of your company, then the company has a $45 billion valuation for the time being (if I counted 0s correctly).

Marketing. Buying IP to protect future growth.

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