Wearables: Xiaomi’s Low-Cost Unique Functionality Geared to the Long Term

By August 07, 2014
Mi Band

Chinese smartphone manufacturer Xiaomi has developed Mi Band, a low-cost connected wristband with the kind of clean, straightforward functionality that might make it part of users’ everyday habits in the long term.

In July this year, smartphone manufacturer Xiaomi overtook Apple in the Chinese smartphone market, reaching 21% first quarter market share compared with Apple’s 16%, according to consumer knowledge and insights company Kantar Worldpanel Comtech. The meteoric rise of this newcomer – which was only set up in 2010 – on the mobile market is certainly partly due to its affordable prices, just half to a third the cost of an iPhone. But company founder Jun Lei had a plan to extend the range of Xiaomi products to connected objects, as he revealed when he recently unveiled his low-cost connected wristband, known as Mi Band. It has similar features to all the other wristbands – it measures the number of steps you take, the calories you burn, it analyses your sleep patterns etc. – but it sells at only ¥79, i.e. less than €10. The wristband, which is compatible only with the Xiaomi smartphone, is aimed exclusively at the Chinese domestic market which, according to the latest figures from independent New York research company eMarketer, currently numbers not less than 574 million smartphones users, equivalent to 42% of the total population of China.

A slimmed-down business model

Mi Band is as attractive-looking as a FitBit or Jawbone wristband, and has all the features of connected bracelets that measure and monitor various aspects of your health. However, one thing that the Mi Band has over its competitors is that its battery lasts for up to 30 days after full recharging.  So how can Xiaomi sell it at a price that is so much lower than other wristbands offering the same functionality? The company has not posted details of the wristband’s production costs, but the answer may lie in its stripped-down business model. Adopting a different strategy from other mobile device manufacturers in China, its smartphones are sold exclusively online, which cuts out most advertising costs and much of the logistics. By spending only 1% of its revenues on marketing, compared with competitor Samsung’s 5%, Xiaomi can probably afford to buy high quality components and still keep its price extremely low.

How to make the wristband part of users’ everyday habits?

Apart from battery life and price, there is a third aspect that differentiates Mi Band from its competitors. Using a Bluetooth connection, it will automatically unlock your (Xiaomi) smartphone if you hold the phone in the hand on which you are wearing the band. Nevertheless, despite its attractive price and additional functionality, Mi Band, like its competitors, will need to overcome people’s general apathy about wearing wristbands. A report* published in January this year by US strategy consulting firm Endeavour Partners, which specialises in mobile and digital, explored the behaviour of wearable device owners in the United States. One out of ten people aged over 18 owns a connected object that monitors health. The survey revealed however that within six months of making the purchase, a third of all wristband owners no longer use them. This sharp falling-off might well be due to the fact that ‘fitness trackers’ do not go beyond an information-providing function and do not really motivate their users to alter their habits. This drawback is certainly something that wearable device manufacturers will need to think hard about.

*Based on an online survey carried out in September 2013 among a sample of several thousand Internet users in the United States

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