Abstract: The product innovation is the core part of a business model for companies. In today's Internet environment, it is an area of re-engineering for business model differentiations. This paper studies the product innovation model of a fast growing smartphone maker: Xiaomi Company. The main findings are as follows: 1) Xiaomi fully merges itself into the Internet ecosystem, and adopts the latest Internet tools and platforms to motivate and manage customers in its product development;2) Xiaomi's innovation model is different from the traditional Open Innovation Model, because they are using crowdsourcing methods to include customers and utilize their cognitive surpluses in the entire product development cycle seamlessly; and 3) Unlike the traditional product management process, Xiaomi uses one small team responsible for all the steps of an entire R&D process seamlessly, and it also adopts fast iteration methods to make this process efficient. Evidently, this is an innovative product innovation and management model, so we name it the "Seamless Open Innovation". As many hardware companies are imitating Xiaomi's model, a complete understanding of such product innovation model is important for further theoretical formation.

Key words: innovation management, internet ecosystem, innovation model, seamless open innovation