Xiaomi's Theory Of Disruptive Innovation

Disruptive Innovation

Xiaomi is often mentioned in the context of disruptive innovation. But does Xiaomi qualify?

Figure 2.0 (Christensen ) https://www.interaction-design.org/literature/book/the-encyclopedia-of-human-computer-interaction-2nd-ed/disruptive-innovation

The theory of disruptive innovation was introduced by Clayton Christensen, of Harvard Business School, in his book “The Innovator’s Dilemma” (1997). Disruptive innovation describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors. Most companies pursue innovations that will help them sustain the higher tiers of their markets, most

It´s important to remember that disruption is positive for the mass-market and are innovations that make products and services more accessible and affordable, thereby making them available to a much larger population. When we look at the full extent of Xiaomi´s business model, we can clearly see how different and how disruptive it is. How does Xiaomi keep their prices at least 60% lower than their competitors? While Apple need to come up with a new model to maintain their high profits, Xiaomi have found a clever way to reach these profits without overserve the market with smartphones. For Xiaomi to sell high-end smartphones at such cost, Xiaomi keeps their models

Knowing this, does Xiaomi meet the criteria for being a disruptive innovation? We feel that some criteria from both “new market” and “low-end” fits Xiaomi. When they first entered the smartphone market with their low price and e-commerce distribution strategy, they enabled the middleclass in China to access high-end smartphones. Xiaomi created low-end disruptive growth by targeting the price sensitive middleclass in China that did not need all of the functionality and could not afford the products that were available by the bigger companies. Furthermore, when Xiaomi expanded to new high-volume countries like India, Singapore and Malaysia, the market for high-end phones were rather non existent. Because Xiaomi´s products are so much more affordable, the market for high-end phones have changed. With their convenience and affordability, Xiaomi basically created a new mass market for smartphones in the emerging countries they´ve expanded