If we were to summarize Xiaomi's recent launch event, high-end positioning would undoubtedly be a key theme.

Whether it's the Xiaomi 15 smartphone or the Xiaomi SU7 Ultra electric vehicle, it's clear that Xiaomi is determined to move towards a premium positioning.

While we may not yet know how the market will respond, Xiaomi has at least demonstrated its ambition to move upmarket.

For both the smartphone industry, which is undergoing a significant shakeup, and the increasingly premium automotive sector, Xiaomi's path towards high-end positioning is a smart choice.

Observing Xiaomi's entire launch event, it's evident that the company wants to convey that its high-end positioning is rooted in technology and research, rather than mere marketing.

This is evident in Xiaomi's continuous investment in research and its deep transformation efforts.

It's admirable that Xiaomi is leveraging its technological prowess to drive its high-end strategy.

If this strategy continues, Xiaomi stands to gain a foothold in both the smartphone and automotive industries, even as they undergo significant shakeups.

The market today is no longer the incremental one that fueled Xiaomi's growth; it's become a mature market with limited new growth opportunities.

I

Since its inception, Xiaomi has targeted young users as its primary customer base.

From its "Born to Be Cool" slogan to its marketing strategies, Xiaomi has consistently focused on appealing to younger audiences.

This strategy allowed Xiaomi to quickly capture the youth market and become a staple among young consumers, even in the highly competitive smartphone industry.

However, as these young users grow older, Xiaomi's youth-focused strategy faces new challenges.

At the same time, competition in the industry has shifted from marketing and concept gimmicks to technology and research.

To adapt, Xiaomi must adjust its strategy based on changing market conditions, rather than relying solely on its past successes.

This is why we're seeing Xiaomi increase its investment in research and add value to its products.

Xiaomi's recent launch event is a testament to this.

The event was branded as a "new starting point," and the products unveiled were packed with innovative technology.

Take the Xiaomi 15, for example. With its innovative aluminum metal finish and ultra-narrow bezels, the phone is a testament to Xiaomi's commitment to premium design and craftsmanship.

Lei Jun, Xiaomi's CEO, said at the event that Xiaomi's high-end strategy has been in place for five years, with five generations of products released. The Xiaomi 15, he said, is the most refined, sleek, and user-friendly small-screen flagship Xiaomi has ever made.

To achieve its ultra-narrow bezels and LIPO screen encapsulation, Xiaomi invested heavily in research and development, investing hundreds of millions of dollars and securing 30 patents over 20 months.

Xiaomi has transformed from a manufacturer of assembled products to a creator of technologically advanced, value-added goods.

Perhaps this is why Xiaomi chose to label the event as a "new starting point."

II

If Xiaomi's increasing value-added offerings are helping it shed its old image, the profound changes in its market environment are another key factor driving its push towards premium positioning.

In other words, Xiaomi's market environment demands that it embrace high-end products.

Traditionally, both Xiaomi and other smartphone manufacturers grew by tapping into incremental markets, driven by the increasing adoption of smartphones and internet connectivity.

However, after the mobile internet era, both smartphone and internet penetration rates have reached saturation levels.

As a result, players in the industry are now focusing on premium positioning to unlock new growth opportunities.

In fact, Huawei, Apple, Samsung, and many others are all pursuing high-end strategies.

In a sense, high-end positioning has opened up new growth avenues for these companies in a mature market, offering possibilities for growth through iteration and upgrading.

Huawei's foldable screens and Apple's titanium metal designs are just a few examples of the industry's commitment to premium positioning and its potential for growth in a mature market.

For Xiaomi, sticking to a low-end strategy and being seen as an assembler would hinder its ability to grow in this market and convince investors of its potential.

This is why Xiaomi unveiled so many proprietary technologies at the launch event and announced significant investments in research and development.

Lei Jun emphasized that Xiaomi's new starting points are built on a foundation of technological innovation, particularly in AI, OS, and chip development.

In 2024, Xiaomi expects to invest over 24 billion yuan in research and development, rising to 30 billion yuan in 2025.

This commitment has paid off, with Xiaomi posting year-on-year growth of 27% in Q1 and 32% in Q2 of 2024, positioning it as a leading global technology company.

According to Interbrand's 2024 Top 100 Global Best Brands list, Xiaomi ranks 87th, one of only two Chinese brands in the top 100.

Canalys data shows that as of Q2 2024, Xiaomi's smartphones ranked among the top three in 58 countries and regions and among the top five in 70.

In Q3 2024, Xiaomi maintained its position as one of the top three smartphone vendors globally for the 17th consecutive quarter.

In the automotive sector, Xiaomi's SU7 outsold the Tesla Model 3 in July 2024 to become the best-selling electric sedan priced above 200,000 yuan. In October, Xiaomi delivered over 20,000 SU7s in a single month, achieving this milestone just seven months after the first delivery. The annual delivery target of 100,000 vehicles will be exceeded in November.

In smart home appliances, Xiaomi's smart locks, routers, and Mini LED TVs have all led the Chinese online market for three consecutive years, while its air conditioners rank fourth.

III

Another aspect of Xiaomi's high-end strategy worth noting is its embrace of AI and its ambition to create an integrated ecosystem for people, cars, and homes.

A new AI-driven revolution is underway among technology players, with AI becoming a key battleground in both software and hardware.

Companies like Apple and Honor are leveraging AI to drive innovation and growth, and Xiaomi is no exception.

Xiaomi sees AI as a crucial stepping stone towards premium positioning.

The company has introduced Xiaomi Surge OS 2, its first step towards an AI-powered ecosystem, positioning it as a new starting point for Xiaomi's "AI Ecosystem."

To date, Xiaomi Surge OS's cross-device connectivity technology has linked over 1 billion devices globally. Xiaomi Surge OS 2 aims to create a people-centric, AI-powered ecosystem that integrates cars, homes, and personal devices. It introduces three core technological innovations: HyperCore, HyperConnect, and HyperAI.

Based on Xiaomi Surge OS 2, Xiaomi has launched Super XiaoAI, an AI assistant that simplifies complex operations across multiple devices, addressing common issues encountered in daily life.

For example, it can automatically add flight and meeting details to a calendar, find specific frames from videos, initiate navigation based on screen content, and execute commands across Xiaomi's ecosystem, such as turning off lights and starting a cleaning routine after leaving home.

Clearly, Xiaomi is leveraging AI to unlock new opportunities for premium positioning.

Successfully leveraging AI to create a larger ecosystem that integrates people, cars, and homes will be critical to Xiaomi's high-end strategy.

The success of Xiaomi's AI strategy will directly impact the success of its premium positioning efforts.

Conclusion

For Xiaomi, today's push towards premium positioning truly marks a new starting point.

The success of Xiaomi's premium strategy will significantly impact its future growth prospects.

This is why Xiaomi is so resolutely embracing and executing on its premium positioning strategy.

With this strong start, Xiaomi now faces the challenge of finding the sweet spot between product offerings and consumer demands, much like it did during the internet era.

If Xiaomi succeeds in this endeavor, its premium positioning will not be seen as a "Waterloo" but rather as a new launching pad for its growth.