Why Xiaomi won’t sell smartphones in the US just yet

• Xiaomi entered the US with a wide array of accessories, but no smartphones.
• Xiaomi's patent portfolio has been growing steadily over the past few years.
• The company's focus remains on India and China for now, but it's creeping towards the western market.

After setting foot in the world’s two most populous countries — India and China, Xiaomi is now advancing to expand its product portfolio in the third largest smartphone market in the world — the US. Curiously, the company is doing this without actually bringing its smartphones to the US.

The company entered US with its accessories. Xiaomi is now officially selling products, like the 10,000mAh Mi Power Bank Pro, audio accessories, select cameras and lifestyle devices like the Mi Body Composition Scale and Mi Electric Scooter in that market. The products are now listed on Mi USA website, and select products on Amazon as well.

These products do add a lot of value and versatility to the company’s portfolio, but the company’s identity may still be incomplete without smartphones.

So, why didn’t Xiaomi launch smartphones?

The primary reasons restricting Xiaomi from launching smartphones could be the unfledged patent and carrier relationships as well as in-process customisations to address the US marketplace.

Unlike India and China, patent enforcement procedures in the US are strict. Also, phones are sold through carriers in the US. To tackle this, Xiaomi has been working towards building its patent war chest. This will help the company avoid patent disputes in the long run.

To recall, in 2015, the company faced a patent lawsuit by Blue Spike over its Mi 5 and Mi 5 Plus smartphones in the U.S.To avoid such instances, Xiaomi is constantly partnering with important companies like Qualcomm, Microsoft, and Nokia.

In January 2018, Xiaomi had 786 patents in the US, which is the second highest for the company, after China.

The other issue is with carrier partners. Phones in the US are mostly sold through carriers, which adds an additional go to market hurdle for manufacturers. Xiaomi’s business model revolves around high performance products, sold at low prices. It might be more difficult to maintain this model under the carrier driven system.

There are many buyers that purchase phones from service providers like Verizon, Sprint or T-Mobile rather than buying unlocked phones.

Coming from China brings another diplomatic complication for the company as well. Most recently, Huawei Technologies was scrutinised and put under supervision citing concerns about possible spying on US officials. Amid the controversy, six top US intelligence officials advised Americans to avoid using their products or services.

So, it is essential for Xiaomi to navigate through potential concerns from US authorities and intelligence officials. This will help the company evade legal troubles and delaying Xiaomi’s its American dream. Xiaomi has never said no to the US market and has been slowly creeping towards it, but for now, its focus remains on markets like China and India, where it has an established market presence.

Before making any assumptions, we must consider that the US market is disparate to the India and the China markets in many ways. It’s a wise move to put controlled investment in such an important market, especially when it does not mix well with the company’s existing business model.

It’s not about hesitancy, but more about understanding the market and taking conscious business decisions in accordance with it.