Consumer technology companies operate in an intensely competitive environment and constantly face commoditization pressure. The graveyards of consumer electronics history is littered with once dominant brands – Motorola, Nokia, Kodak, RCA, Blackberry and the list goes on. Apple has avoided this heap and instead is amongst the most valuable companies in the world. While the drivers of its success are many, the pivot to software and services and a recurring revenue model has been a key enabler.
Consumer technology businesses that have come to market since the mid 2000s have tried to emulate Apple with a focus on creating a subscription model. Xiaomi has been the most ambitious on this note with the CEO stating:
We are more than a hardware company. We are an innovation-driven internet company.
We are more than a hardware company. We are an innovation-driven internet company.
We dig deep to analyze if this is indeed true and if Xiaomi ought to be valued as an internet services company.
