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CIO.inNewsSPECIAL REPORT: Why Are Xiaomi Phones So Inexpensive? 3 inShare NEWS
SPECIAL REPORT: Why Are Xiaomi Phones So Inexpensive?
Added 19th May 2014
By Michael Kan
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Chinese smartphone vendor Xiaomi has made a name for itself by selling iPhone-like gear for almost a third of the price of Apple products. It may sound too good to be true, but the company is managing to sell millions of phones and is already kicking off a global expansion. So how does it pull it off?
For one thing, Xiaomi claims to price its phones just above their costs. But company officials also point to its iconoclastic business model, which eschews the financial burden of using traditional marketing and distribution practices, and relies on the Internet to fuel sales. It's made Xiaomi into a company that doesn't operate like a typical smartphone vendor, but still successful enough to become one of China's hottest tech firms.
Disrupting the market
When Xiaomi unveiled its first flagship Mi 1 phone in August 2011, attention was fixated on the device's price. Consumers could buy what was then a cutting-edge smartphone for 1,999 yuan (US$324). This was a major bargain compared to other high-end phones including the iPhone 4, which started at 4,999 yuan.
Xiaomi maintained the initial 1,999 yuan price for the flagship phone. But the company also released its Hongmi line of products, which are lower-spec phones, at even lower prices, starting at 699 yuan. The Hongmi phones are doing so well, they've helped Xiaomi become China's third largest smartphone vendor in this year's first quarter, according to research firm Canalys.
What do they cost to make? Xiaomi's latest…...

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