We live in the era of mobile connectivity – where internet services are available at our fingertips, connecting us to the world and simplifying our lives. As a result, the internet-savvy population is continuing to expand worldwide.
As an internet company, our job is to provide value-added services and a superior user experience to our large and highly engaged global consumer base. As of March 2018, we had approximately 190 million monthly active users on MIUI, our proprietary operating system built on the Android kernel. Utilizing our proprietary technologies – big data and AI analytical capabilities within the parameters of our strict data privacy and protection policy – we offer comprehensive and innovative internet services to our users and business partners.
In late July, we obtained a license to run virtual telecom network services from China’s top industry regulator, allowing us to lease the network from traditional telecom players. Now, we’re able to offer niche mobile internet services – unmatched by traditional players – while providing an upgraded user experience at a fair price. For example, we offer unlimited data for just RMB 1 per day, providing endless opportunities to explore the mobile internet.
In 2017, 8.6 percent of Xiaomi’s revenues and 39.3 percent of our gross profit came from internet services, derived from advertising and value-added services. After all, sending the right message to the right person at the right time is key to a superior mobile user experience and we achieve this by providing tailored internet services through these two categories.
Let’s take a deeper dive…
Xiaomi’s advertising distribution channels primarily consist of mobile apps and smart TVs. During March 2018 in Chinese mainland, we offered 38 apps with more than 10 million MAUs and 18 apps with more than 50 million MAUs, including Mi App Store, Mi Browser, Mi Music and Mi Video, among others.
Meanwhile, our advertising customers cover diverse industries, ranging from auto and consumer goods to internet and financial services. We cater to each user’s unique needs and optimize their product experience.
Take our smart TVs for example – we customize the look, feel and timing of the display messages to allow seamless integration into content, never compromising user experience. Based on viewing history, tailored advertisements help reduce irrelevant messages and allow users to discover new products while complementing their preferred content, making online searching and shopping faster and easier.
When a user opens the Mi Store homepage, the system recommends different products based on anticipated user interests. When a user adds a product to the shopping cart, the system recommends similar products which may be appealing to the user. These technologies allow us to deliver a better user experience and increase our sales conversion rate.
According to Hong Feng, Xiaomi’s co-founder who now heads MIUI business, Xiaomi also provides tailored advertising on apps, including the weather, calendar and themed wallpaper, among others. Within these apps, we recommend related products from diverse distributors that seamlessly display on the interface to ensure an optimal experience while increasing brand awareness.
Internet value-added services
Our internet value-added services include online games and paid subscriptions by users of premium entertainment content. Therefore, a significant portion of our revenue is derived from online gaming.
According to Hong Feng, Xiaomi provides more than 7,000 published games and several exclusive games to consumers. We customize the display of our Mi Game Center homepage and rank games based a variety of factors, including the individual user’s preference which we identify by leveraging our big data analytics capabilities. As such, users get a curated selection of games for a gaming experience. Additionally, we offer live streaming services designed for gamers to create, share and discover a broad range of mobile game-related content.
Scenes from our popular online gunplay game
Paid subscribers are also provided with additional benefits. Our killer app Mi Music, for example, offers music streaming services that are generally free to users. The app also offers VIP packages for a fee to users who prefer high-quality music formats and are interested in downloading the music they stream.
We provide our users with targeted, comprehensive internet services so they can access the web and its endless information and opportunities with higher efficiency.
As our Founder, Chairman and CEO Lei Jun said in a recent open letter: “Fundamentally, the Internet is all about transparency, efficiency and equality. We want to allow everyone regardless of gender, ethnicity, religion, nationality or education level, to enjoy the benefits of technology… This is the goal that all Xiaomi employees and I are working tirelessly for.”