Why xiaomi mobiles are so cheap

Buying Chinese mobiles has become an increasingly popular option, both by users looking for affordable phones and by users who want the best features at the lowest possible price. Xiaomi is one of the most successful Asian manufacturers on the market, as evidenced by the fact that they have sold 34 million smartphones so far this year. What do Xiaomi mobiles have to amass this success in the market, both in China and in the rest of the world?

Obviously, their prices hardly have competition. The Xiaomi Mi 4i was announced with a price of around $ 220, and that included a mobile with a screen with Full HD resolution, a Snapdragon 615 processor, 2 GigaBytes of RAM, Android 5.0 Lollipop, 3,120 mAh battery… and, yes We take a look at the additional products to mobiles, we will find that a camera like the Xiaomi Yi Camera costs just over $ 70. But… why are Xiaomi phones so cheap? In this article we have proposed to find out, and in five points we are going to fully understand the reason for the tight prices of this brand's mobile phones.

1. - Cost reduction

What do we do at home when we have to face a difficult economic situation? We tighten our belts, and that is precisely what Xiaomi has been doing since its birth. In fact, it was practically not until a few months ago that Xiaomi began to open its first physical "stores" in the world -or rather, we speak of " experience centers " or " My Homes ", since these stores do not You can buy Xiaomi phones (here we can read it in a message posted on the company's forums) -. One of the most recent of these openings has taken place in China, and in this CNN report we can see what the store is like inside.

In this way, all Xiaomi's sales go through the Internet. And let's not think that Xiaomi invests a lot of money in having a spectacular sales website; Much of its sales go through TMall.com, which in a way - in a very simplified way - would be the Chinese Amazon; Therefore, all Xiaomi has to do is display its products (from mobile phones to accessories) in this store, and sales come practically alone. Expenses with a tendency to zero in infrastructures, in web platforms, in distribution… we are beginning to understand why the prices of this brand's mobiles, right?

Since its first months of life, Xiaomi has focused its commercial strategy on minimizing expenses as much as possible, and that happens by practically not investing money in advertising. And when it comes to advertising we do Referring to the conventional advertising model, as an interview with the year past own Hugo Barra (one of the most important positions of Xiaomi, and head of the company) stated that " lives in networks social, which are much less expensive for us . "

- So, first point to copy the success of Xiaomi: sell exclusively online and invest as little money as possible in advertising.

2. - Quality must be

But be careful, being a company with a closed fist is not enough to succeed in the mobile phone market. Any Chinese company could follow this same strategy, and we could bet that it would not last more than a few months in the market. Why? Xiaomi, in addition to closely monitoring its expenses, has known how to pay attention to the most important details. Xiaomi negotiates very well with the manufacturers from which it acquires the components of its mobiles, which allows it to obtain more quality in the final product while investing the same money as other companies.

In fact, Hugo Barra commented in an interview that Xiaomi has reached very beneficial agreements with its suppliers, and by continuing to launch smartphones based on similar components (or, in some cases, on identical components that do not need to be renewed), they continue to receive the Same discounts even on mobiles that are sold as the latest generation. In short, a win-win situation for both the consumer and the manufacturer.

But, in addition, Xiaomi also grants a much higher useful life to its mobiles (up to 20 months after the presentation, compared to six or eight months of the competition). And the longer the life of the mobile phones, the longer the company collaborates with suppliers, which ends up translating into discounts and improvements in components that benefit both parties.

And let's not deny the obvious: that touch of "One more thing" based on Apple always helps to embellish the image of a brand of Asian origin.

- Second point to copy the success of Xiaomi: give quality to your products and, if you are aware of what you are doing, do not be opposed to people who compare you -for better or for worse- with companies like Apple (“ One I would say that being compared to Apple is a great thing , " Hugo Barra said at the time).

3. - Risks, the fair ones

As if all of the above were not enough, Xiaomi almost always plays with an ace up its sleeve. That a newly introduced smartphone does not have the expected acceptance? There is no problem; Xiaomi will only have manufactured a few hundred units of that mobile, and hardly any unit will remain unsold. Xiaomi manufactures its smartphones very low, and the fact of handling such small inventories of mobile phones is what reduces practically to zero the risk of failing with a specific model (hence the " flash sales "; few units of a mobile that are sold in a matter of hours, guaranteeing Xiaomi the budget necessary to cover the first batch of terminals).

- Third point to copy Xiaomi: the risks, for athletes.

4. The "icons" give money

For a European user, buying icons for an application does not sound particularly attractive. But Chinese users are very different from European users in a variety of ways, and one of them is the attraction for icons and personalization on mobile phones. To give us an idea, the instant messaging application Line opened a service last year that allowed Asian users to create and sell " stickers " through this platform; which it was the result? 1.47 million dollars in "icons" sold in a month. Almost nothing.

In Xiaomi they may not spend money on advertising, but of course they have a team that knows perfectly the trends of their own market. For this reason, Xiaomi has been offering Chinese users different payment customization options for the layer of their smartphones for some time. How much and how are the two great unknowns of this service, since Xiaomi does not offer concrete figures of the income obtained through these sales. In any case, looking at Line's example, we assume that they are not exactly small numbers.

- Fourth point to copy Xiaomi: if there is demand, sell everything that can have a price.

5. - Europe, the United States… not crazy!

Much has been said about Xiaomi's foray into Europe or the United States. But, beyond a few innocent headphones and various accessories, the truth is that Xiaomi has not yet dared to take the step to fully enter such powerful markets as Europe or the United States. And because? There may be many factors, but of course the patent problems that were analyzed in the daily IBTimes.com have a lot to do with it.

As far as Xiaomi comes to tread on American soil, it is most likely that it will find dozens of patent lawsuits from heavyweights such as Apple, Samsung or Nokia. Patent lawsuits in the United States are the order of the day, and for a company that supposedly has only two patents in that territory, landing with aggressive prices does not seem to be the best idea at the moment. Xiaomi will have saved a lot of headaches - and, above all, a lot of money - with patents (rather, with the absence of patents), but that same decision is responsible for the problems that it could face if it abandons its territory.

- Fifth and last point to copy Xiaomi: forget about patents, that's for Americans.