Will Xiaomi ever find convincing tech to sell a $700 smartphone?
As Xiaomi shares went to market, CEO Lei Jun made a promise to the public to limit margins from hardware sales to 5 percent and return any excess to consumers… somehow.
Barring the fact that it makes the majority of its profits through services, the assurance gave hardware geeks solace in seeing cutting-edge features like in-display fingerprint sensors and time-of-flight facial recognition sensors set into phones that cost just $500.
“If we sell our products at close to cost and return value to our users, then we can earn the long-term support of our users,” Jun wrote in an internal email to staff at the time of Xiaomi’s IPO. “Aiming for large volumes with small profit margins will still result in suitable hardware profits for us in the long term.”
However, India Today decided to broach the question with Xiaomi India’s managing director, Manu Kumar Jain: “What will it take for Xiaomi come out with a Rs. 50,000 [$695 smartphone?]”
Manu reiterated the margin promise, saying that it was “not in our DNA” to behave like its competition. Apple is probably most representative of the crowd, pushing prices at least twice the cost to produce any given iPhone. Contrast that with the recent Pocophone F1, a Snapdragon 845 device with 256GB of stoage and 8GB of RAM not even touching the Rs. 30,000 ($417) mark.
However, with volatile component costs in the picture, there’s always a chance.
“Our board will not allow 60 percent margins. This is not to say we will never have a Rs. 50,000 phone in the market,” Manu said. “If we make a phone that has some new and expensive technologies, it may come with higher price tag.”
What compelling conditions could trigger that breach of threshold? True bezellessness? Lasers? Foldability? Flame-throwing? Could Xiaomi wait just a little bit to introduce those technologies by procuring parts at a lower price? There are plenty of questions we could ask, but the track record remains clear: we probably won’t see a $700 phone from Xiaomi for a while yet.