Lei Jun dishes on Xiaomi’s “open and inclusive” smart home strategy

Today in Beijing, Xiaomi unveiled three new consumer-facing devices that will surely excite the company’s fans and followers: the Xiaomi Note phablet, a pair of headphones, and a mini set-top box. But from a strategic perspective, Lei’s least sexy announcement was arguably its most important.

At the start of the keynote, Lei disclosed the company is developing an attachable module that can turn any dumb household device – an air conditioner or a coffee machine – into a smart device. The module can be purchased and used by any vendor, large or small. The unit, which costs RMB 22 (about US$3) in capital, will be given out to any device maker who wants it. In turn, users will be able to control the third-party (but partially Xiaomi-powered) device from an all-encompassing app.

This technology is far from new. It’s not uncommon for startups to release gadgets and accompanying software that use infrared technology, for example, to turn on coffeemakers or DVD players through wifi. The concept of an all-encompassing app, or a unifying cloud platform for the smart home, is also not new. It recalls Apple’s HomeKit, and Chinese internet companies like Alibaba, Baidu, and Tencent are all trying to get hardware makers to use their cloud services. But neither of those three companies have the critical hardware touchpoint that Xiaomi does – the smartphone.

Details of how the module will be distributed remain scarce, and we’re working on learning more. But even with missing pieces, announcement is significant because it confirms Xiaomi’s strategy for penetrating Chinese households (as well as households in Brazil, Indonesia, India, and elsewhere). Instead of building out a closed or semi-closed smart home ecosystem, Lei wants everything that can be smartified to be smartified by Xiaomi, and centrally controlled by one of its smartphones.

Lei highlighted that three pain points exist in the status quo smart home market – syncing is complicated, every piece of equipment requires a standalone app, and cloud services are difficult. By providing its cloud services to third-parties, Lei believes Xiaomi can help solve these problems.

The intended effect of this strategy is to make Xiaomi phones more sticky. Xiaomi smartphone owners benefit because the pool of supported smart gadgets can expand. China’s dumb gadget makers benefit by being able to reach more consumers with the help of China’s number one phone vendor. Xiaomi benefits by earning increased loyalty of both of these parties.

Xiaomi’s broader ecosystem of peripheral gadgets hasn’t yet spread beyond mainland China. But if Lei’s announcement is any indication, expect Xiaomi to distribute even more smart home devices this year, along with more third-party companies using Xiaomi as a conduit for access to consumers.

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Lei Jun dishes on Xiaomi’s “open and inclusive” smart home strategy