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Hugo Barra Explains Xiaomi's Business Model

News by Luke Jones on Monday January 19, 2015.

industry news · luke jones

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Xiaomi's ascension in the smartphone market has been meteoric, and it has shaken up Samsung in the process. Since being founded in 2010 the Chinese company has become the third biggest smartphone company in the world in terms of sales and has taken market share from main Android competitors. How has this been possible?

Well, Xiaomi's Hugo Barra took the time to explain the company's business model, a model that has catapulted it into the stratosphere. Speaking with TechCrunch, Barra said

A product that stays on the shelf for 18-24 months - which is most of our products - goes through three or four price cuts. The Mi2 and Mi2s are essentially the same device, for example," explains Barra. "The Mi2/Mi2s were on sale for 26 months. The Redmi 1 was first launched in September 2013, and we just announced the Redmi 2 this month, that's 16 months later."

It goes deeper than that though as the company sells devices at extremely low costs, which means there is actually very little per unit profit made, with Xiaomi saying the number is a single dollar figure. The company does not make much money compared to rivals, but its strategy is getting the brand name out there and heard, and one day it will sell devices for more profit. Likewise, Xiaomi sells extensively through its own web portals, meaning it cuts costs on shipping to other retailers.

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Luke Jones
Luke Jones is the Managing Editor at MobileBurn.com and is the person you need to speak to about the content on the site. Luke studied creative writing at degree level before carving out a reputation as a freelance tech writer. He settled here at MobileBurn, where he reviews devices and contributes to the news, as well as overseeing the site's content and direction.

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