TOKYO -- Xiaomi, the Chinese smartphone maker known for budget handsets, has zeroed in on the "internet of things" as its next profit source and is moving aggressively to break into the Japanese market for smart management everything from coffee machines to convenience store lines.
Following its initial public offering in July, Xiaomi wants to expand the scope of its business. It is using an affiliate, Lumi United Technology, which recently announced it has partnered with Japan's software developer Asteria to sell sensors that control temperature, ventilation, lighting and other functions in offices, hotels and shops.
Lumi, in which Xiaomi holds a stake of 30% or less, will work with Asteria to promote the technology. To penetrate Japan's famously risk-averse businesses, the two companies have adopted what almost amounts to a giveaway strategy.
"Lumi is a leading [provider] of smart devices in China," Eugine You, Lumi's CEO, told reporters in Tokyo. "To enter a brand-new foreign market, we needed to find a good partner like Asteria. Our hardware and Asteria's software are very complementary."
Asteria, formerly known as Infoteria, offers an artificial intelligence-based system called Gravio, which manages and analyzes data from sensors and controls software.
Gravio has a wide range of capabilities. When the density of carbon dioxide has increased in an office, the system warns staff to open windows. When customers line up at the register in a convenience store, sensors detect their presence and send a signal to personnel who might be in the storeroom. If an office coffee machine runs out of stock, the system informs the supplier.
Gravio is supplied on a monthly basis, at a cost of 500 yen ($4) for four sensors or 20,000 yen for 10. The low entry-level price is intended simply to draw in customers: For comparison, Lumi's website lists sensors for 80 yuan ($12) apiece.
Asteria and Lumi are confident that customers will eventually choose the 20,000 yen option, which includes superior capabilities such as image recognition and comes with extensive customer support.
Japan is the first foreign market for Lumi. You said he plans to expand elsewhere in Asia, too, including South Korea and Southeast Asia.
You said Lumi is the only business-to-business smart device company in the Xiaomi group. He established the company in 2009, and took an investment from Xiaomi in 2014. Based in Shenzhen, it has 350 employees.
Management and employees control over 50%. Xiaomi and Lumi develop some products collaboratively.
Asteria CEO Yoichiro Hirano said: "We search for good device makers, and I visited several Chinese makers. Lumi is the best choice because it has good designers and stable [backing] in Xiaomi's group."
"As to selling sensors separately, we will talk with Lumi," Hirano said. "IoT for business use is spreading, such as in factories and hospitals, and we want to offer it for more general uses in offices, shops and even homes."
The partners expect to have 1,000 customers by March 2019.