Xiaomi's Assault on the NAS Market: The Next Smart Home Hit?

Xiaomi's Assault on the NAS Market: The Next Smart Home Hit?Following Huawei, another smartphone manufacturer has set their sights on the NAS industry. Recently, Chen Bo, General Manager of Xiaomi's ecological chain, announced in a video that Xiaomi has been conducting preliminary research on core NAS technologies for several months, aiming to create a home storage product most suitable for Mijia users

Xiaomi's Assault on the NAS Market: The Next Smart Home Hit?

Following Huawei, another smartphone manufacturer has set their sights on the NAS industry. Recently, Chen Bo, General Manager of Xiaomi's ecological chain, announced in a video that Xiaomi has been conducting preliminary research on core NAS technologies for several months, aiming to create a home storage product most suitable for Mijia users. Although Bo did not divulge the product's release date, given Xiaomi's three-year car manufacturing speed, developing a NAS product within a year should be feasible. It is expected to be launched by the end of this year at the earliest, or in the first half of next year at the latest.

For C-end consumers, NAS remains a niche need compared to storage methods like cloud drives and mobile hard drives. The market size is significantly smaller than the mobile hard drive industry. Some consumers are even unaware of what NAS is. However, despite the small size, the NAS market is already crowded with numerous players like Green Union, QNAP, Asustor, Synology, and Hikvision. With so much competition, is it really necessary for Xiaomi to enter the NAS market?

NAS: A New Wind in the Storage Industry?

Compared to mobile hard drives and cloud drives, NAS is limited by bandwidth and internet speed. While offering comparable portability to cloud drives, it comes with a higher deployment cost and is typically limited to data transfer within a home or company, making it less versatile. Consequently, the domestic NAS market reached only 72.37 billion yuan in 2023. However, a smaller market often signifies lower competitive intensity, greater development potential, and a less saturated landscape, making it more suitable for new brands to enter.

Market research firm Beizhes Consulting estimates that the global NAS device market reached 214.82 billion yuan in 2023, with China accounting for 72.37 billion yuan. The global market is projected to reach 447.46 billion yuan by 2029, with a compound annual growth rate of 12.67%. Regarding home NAS, market research firm QYR (Qianzhou Bozhi) stated in a report that the global home NAS device market amounted to 24.4 billion yuan in 2023. It is expected to experience a compound annual growth rate of 41.99%, reaching 289.3 billion yuan by 2030. This inherent potential could be the driving force behind Xiaomi's decision to venture into the NAS industry.

Two Forms of NAS: Pre-built Devices and DIY Devices

Currently, NAS mainly falls into two categories:

• Pre-built Devices: Companies release finished NAS products. Consumers purchase them, connect them to power according to instructions, install hard drives (some devices come with hard drives), and install relevant apps on their phones, PCs, tablets, TVs, etc., to start using it.

• DIY Devices: Users purchase hardware components and assemble them into a NAS. They can then share their hard drive using the built-in sharing functionality of systems like Windows or Linux, or by installing specific systems. This method requires a certain degree of technical expertise and can be more troublesome to operate.

There are also NAS applications that can share hard drives. Users only need to install relevant apps on other devices to access and modify the content on the hard drive, simplifying the process. However, this approach poses risks of information leaks.

DIY NAS offers better cost-effectiveness and allows for flexible expansion of drive bays, but it might suffer from higher power consumption and stability issues. Assembling a NAS is not recommended for novice users. While pre-built NAS might be more expensive, they offer superior stability and reliability.

NAS caters to users experiencing storage space constraints on their phones or PCs, or those who need internal file sharing for their home or office. While the current domestic NAS market size is not substantial, its potential is undeniable. This is why Huawei took the lead in entering the NAS industry, followed closely by Xiaomi.

Compared to traditional NAS companies, "new forces" like Huawei and Xiaomi undoubtedly have a greater advantage in the C-end (consumer) market.

Will Xiaomi Be the Catfish in the Home NAS Market?

The B-end (business) market dominates the NAS market. However, according to Chen Bo, Xiaomi's NAS product will target the C-end market. Xiaomi lacks relevant experience and technical reserves in the B-end market; therefore, it's challenging for them to enter that segment. In contrast, Xiaomi and Huawei have a natural advantage in the C-end market. They are not just smartphone manufacturers but also leading smart home companies in China, and have achieved seamless interconnectivity between their smartphones, tablets, PCs, and TVs. By leveraging their strengths in cloud computing, communications, and smart ecosystems, Xiaomi and Huawei can better balance high performance and stability in their NAS devices, providing users with more convenient data transfer services.

Chen Bo revealed three key functionalities of Xiaomi NAS:

1. Integrating smartphones, PCs, TVs, and tablets to enable phone expansion and AI photo albums.

2. Creating a home movie center that generates personalized cinema poster walls, allowing users to effortlessly stream movies from their NAS.

3. Offering rich cloud drive management and resource download capabilities for users with basic storage needs.

Overall, Xiaomi's cloud services are highly likely to integrate with NAS, essentially acting as an external hard drive for smartphones, PCs, TVs, and other devices. This offers greater portability than mobile hard drives and eliminates the need for ongoing cloud drive subscriptions or separate app downloads. Xiaomi NAS enables users to access, use, and modify files across different devices, and even handle some edge computing tasks.

AI Large Language Models Empowering NAS: From Data Transfer to Smart Assistants

Large language models are typically deployed in the cloud. Smaller models with fewer parameters can be deployed on local devices like phones and PCs. NAS is closer to the user side. If equipped with a powerful NPU chip, it can deploy small models with 3 to 10 billion parameters for computing highly private and personalized tasks without utilizing phone or PC resources.

With the addition of AI large language models, NAS can incorporate features like intelligent file and data categorization, analysis, and summarizing. It could even enable smart image and video post-processing. Data interaction is merely the fundamental use case for NAS. With enhanced NPU performance, NAS can take on the roles of a personal AI assistant and AI space.

During the period when NAS solely served as a data transfer platform, the industry lacked vitality. Leading brands lacked motivation for advancement, primarily pursuing stability in device hardware and software. Their product development mindset remained rooted in the PC era, with little to no focus on optimizing for mobile devices. The entry of new forces like Xiaomi and Huawei is bound to revolutionize the entire industry, adding new functions and features to NAS devices, propelling technological progress, and transforming the market landscape.

Cloud Storage + NAS: The Best of Both Worlds?

Games often exceeding several GBs in size, music files ranging from tens to hundreds of MBs, and ultra-high-definition videos are consuming increasingly large amounts of storage space. While flagship phones offer a starting storage combination of around 12GB + 256GB, many users still face insufficient storage space on their phones.

Leveraging its cross-device connectivity feature and inherent cost-effectiveness, Xiaomi NAS could emerge as the most suitable high-capacity storage solution for users of Xiaomi smartphones, PCs, tablets, and TVs. By entering the NAS industry, Xiaomi has the potential to generate additional revenue of several hundred million to billions of yuan annually, while also increasing user stickiness. Consumers can use NAS to alleviate storage pressure on their phones. By storing files on NAS, a 256GB phone can be sufficient for daily use, eliminating the need to buy expensive 512GB or 1TB versions of new phones, thus saving significantly on purchase costs.

However, not everyone is suited for NAS. NAS meets the data transfer needs between homes and businesses. The larger the amount of data transferred, the more beneficial NAS becomes. If you rarely transfer data or frequently download resources from the internet, cloud drives are still the better option.

The entry of Xiaomi and Huawei will inject new vitality into the NAS industry, potentially encouraging more smartphone and smart home companies to enter the market, building home storage centers. The pressure brought by competition is also a driving force for industry progress. As Xiaomi and Huawei motivate more brands to enter the NAS industry, intensifying market competition, it will unlock the industry's potential and give rise to more and better products.