Nov 6, 2014

Xiaomi is the hottest smartphone maker

Everybody raves about Xiaomis success - with low cost smartphones in "developing" markets. The English article linked below describes their business, but misses one point that the excellent German article reveals: Slower update periods for phone models. Xiaomi goes in with a very low price point, but keeps its models for 2 years. Their flash sales are only cycle-stretching activities to keep the phones hip during that long period (Apple and Samsung launch new products in less than a year on average). With a stable consumer price, Xiaomi will earn good margins during the two years once the component prices fall. And they are falling rapidly. So a few cent margin on a phone during its introduction may become a serious market when the phone is at the end of its lifecycle. Smart business.