From strength to weakness
However, despite recent excitement over Xiaomi's cell release (its press conference was so swamped with fans that they overflowed into the hallways surrounding the room in which it was held), it faces daunting obstacles if it is to establish itself as a leader in China's cell market. It will face fierce competition not only from Tencent's Weixin, but also from established cell phone manufacturers that will challenge its phone sales. Its staff lack experience in the cell phone market and its chip producer, Qualcomm, has established relationships with Huawei and ZTE, huge Chinese cell manufacturers who will likely receive better pricing and more advanced technology because of their size and compete directly with Xiaomi's new phone.
And, although Xiaomi's decision to market its phone only over the internet (as Google did with its first cell phone) will make up for some of this cost gap, it is unlikely to make up for all of it and there is concern over the ability of Lei Jun himself to successfully manage a stable mobile internet company. As Zhang Wangyan told China Newsweek reporters, marketing, which has been Xiaomi's primary test until now, is also an area in which Lei Jun excels. However, the coming challenges of the day-to-day operations of a cell company and the maintenance of stable cell systems are "exactly the areas where Lei Jun is weakest."
However, if anything is certain, it is that Xiaomi has picked the right time to enter the mobile internet market. With Morgan Stanley estimating that the number of mobile web users will surpass that of traditional web desktop users within the next five years, Xiaomi stands well positioned to ride the coming wave of mobile web users. That, Lei Jun may hope, may be enough.
