Xiaomi Claims That Unless Component Prices Go Up, It Cannot Sell a High-End Smartphone at a Premium Price Like Its Competitors
With the launch of the iPhone X, Apple established a new trend of charging premium margins on flagship devices, but thankfully, a manufacturer that takes an approach in a completely different direction is Xiaomi and it did not bat an eyelash after seeing the rise of ludicrously expensive devices. On the contrary, the company went ahead and launched the POCO F1, which as of right now, is the cheapest Snapdragon 845 smartphone you can buy. In a recent interview, a company executive reinforced the OEM’s commitment to keeping the prices of its products low.
Xiaomi Pledges to Limit Profit Margins to 5 Percent When Selling Smartphones
When asked if the company will ever sell a device for $699 USD, Xiaomi India’s managing director Manu Kumar Jain said that it is very unlikely as there is currently no viable smartphone technology that will compel the company to sell its devices at that price point. Keeping up with its pledge to limit profit margin to 5 percent, Xiaomi will not increase the price of a device to $699 just to earn extra profits.
The company executive shared these thoughts during the launch of the POCO F1 in India. Launched under the company’s sub-brand POCOPHONE, the new device undercuts competitors with a low price and high-end specifications. The price friendliness has helped the company penetrate emerging economies like India where bigger players like Apple are struggling immensely.
While it’s true that Xiaomi’s board doesn’t allow high-profit margins, the price of its products may increase in the future in response to rising component costs and expensive technologies. The fourth-largest smartphone maker has a rather unusual business model which it calls a triathlon. Using this business model, it relies on long-term customer loyalty and internet services, not high smartphone prices, to earn revenue.
With a focus on important features such as a faster processor and a larger battery, Xiaomi manages to keep the prices of its products low by cutting corners in the phone’s construction. So, for now, Xiaomi’s phalanx of fans can continue to expect affordable high-quality smartphones as a price hike is unforeseeable in the near future.
Even with the launch of the Mi MIX 3, we expect the smartphone to be cheaper than its direct Android competitors like the Galaxy Note 9 and the upcoming LG V40 ThinQ.
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- Here Is How Xiaomi CEO Lei Jun Was Inspired by Steve Jobs, Eventually Leading His Company to a $6 Billion IPO
Source: India Today