Xiaomis five-year plan is a $1.5 billion bet on smart homes

Xiaomi, the Chinese company best known for budget phones, is betting big on a future of connected homes. It plans to plough at least 100 billion yuan, or $1.48 billion, into the so-called AIoT sector over the next five years, founder and chief operating office Lei Jun announced on Friday.
AIoT, short for AI + IoT, is an upgrade from devices connected to the internet,known as the Internet of Things. AIoTs are intelligent, run on automated systems and can learn from users habits, like lights that automatically turn on when you get home.
We see a future where all home devices will be connected to the internet and controlled by voice. A wave of home appliances will be replaced by smart devices. There will be an AIoT network that infiltrates every second and scenario of peoples lives, collecting mountains of users, traffic and data, said Lei in his annual address to employees.
The plan is to get all sorts of gadgets, not just handsets, onto Xiaomis operating system so the company can hawk services through these devices. The move comes as Xiaomi, the worlds fourth-largest smartphone vendor, copes a weakening market. Smartphone shipments in China were down more than 15percentyear-over-year in 2018, according to a government-backed research institute.
Phones remain strategically important to Xiaomi as it looks to lower-end phones for growth. On Thursday, the company announced it has split up(not spin out) its budget phone brand, Redmi, in hope of launching red rice what Redmi means in Chinese to Xiaomis little rice stardom. The strategy is similar to how Huawei operates sub-brand Honor for its line of cheaper phones.
Xiaomis new billion-dollar pledge is a continuation of a plan in 2013 to back 100 startupsover the course of five years. These portfolio companies, in turn, helped make Xiaomi products, which now count 132 million total devices among which 20 million are activedaily. Meanwhile, Xiaomis voice assistant Xiao Ai has hit 100 million installs.
These gadgets, along with an assortment of lifestyle products like suitcases and umbrellas, became the largest revenue driver for Xiaomi in the second quarter of last year, the companys earnings report shows.
Xiaomi is in a land grab with other Chinese tech giants like Baidu to enter peoples homes. Its becoming something akin to a department store, but it cant make everything itself. Recently,the giantmade a big push in TVsthrough a partnership with a veteran Chinese home appliance manufacturer. Its also teamed up with IKEA on a 100 million yuan ($14.8 million) fund for third-party developers, which will enrich Xiaomis inventory as consumers in China may soon be able to buy many Xiaomi-powered furniture from the Swedish retailer.
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