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Despite a late entrance to mobile phone business, Xiaomi bolstered the revenue quickly with its rapid selling handsets and MIUI firmware. The company aims at offering decent product that came with high-end features, easy-to-use software for Chinese customers, but with pricing that put it in the lower-end, striking a good balance between 'affordable' and 'luxury'.
To deliver this full package of value for customers, Xiaomi smartphone operated a business that was similar to a mixture of Amazon and Google, where the handsets were like Amazon's Kindle—sold at near cost, with the money recouped from sales of the e-books—while in Xiaomi's case, the apps and games were bought via its own online market which closely resembled Google Play.
As we know, handsets running Android in China should remove certain features like Google's app store, maps and several others, which in a way gave an advantage to Xiaomi to sell its own replacement services.
Because of these similarities in the appearance, the company's Co-founder and CEO Lei Jun was given monikers "Leibs" , "Leizos" which stand for China's Steve Jobs, and Jeff Bezos. But a business model itself is a high-level plan for operation, some scholar even refers it as a term of art, indeed people can recognize it when they see it, but they can hardly define it. The way how people call the term is very much depended on how they use it, but not on how they manage it.
Therefore, it is very necessary to look at Xiaomi's business model from the perspective of the top management team and hearing what they say:
"We benchmark ourselves with three companies: Costco, Tong Ren Tang, and Haidilao. We are a retail business in the consumer tech sector, our real business model is more akin to Muji."
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