Hugo Barra, the vice president for Android product management at Google, has taken a new job at China-based smartphone maker Xiaomi.
Foreign media have reported extensively over the past day that Barra's departure from Google is a dark omen for the search engine, but a boon for the Chinese startup Xiaomi, which values itself at USD10 billion.
Xiaomi, which recently stated its USD10 billion valuation without divulging yet its latest investors or methodology for calculating such a high figure, has been expanding fast in China and hopes to find new markets overseas. Taiwan-based Trendforce says in a recent report that Xiaomi's aggressive pricing strategy will affect the average smartphone prices in the Chinese market, and in turn intensify the competition among mid-end smartphone makers. So now is the time for Xiaomi to look elsewhere for growth.
But Barra's tenure at Xiaomi could prove rocky as a Chinese handset maker extends its reach overseas. ZTE and Huawei have both come under scrutiny in foreign markets because of the companies' close relationships with the Chinese government. And while Xiaomi appears to have skirted some of these relationship problems, a Chinese-branded communication device in the age of worries of governments snooping on users' data may be problematic for Xiaomi to gain acceptance in foreign markets.
Social networking provider Tencent has one of the most popular microblogging services in China called WeChat, or Weixin. WeChat too is seeking overseas expansion, but already there are grumbles from overseas that data flowing through the WeChat apps might be going through Chinese servers that monitor and censor users' communications. Xiaomi faces possible similar mistrust of its handsets.
Margins for phones have also continued to slide, pushing stalwart phone companies like Motorola and Nokia to seek exits or partnerships. These margins will become tighter as handsets become more commoditized, leaving the software inside the phones to be one of the differentiators. Xiaomi, which relies on the Android operating system, may find itself in the same position as its competitors as they try to sell products in a homogenous sector.
Barra posted on his Google+ page that as he becomes the new vice president of Xiaomi Global, he is "really looking forward to this new challenge, and [is] particularly excited about the opportunity to continue to help drive the Android ecosystem."