Here’s Savov again in an interview with Xiaomi’s VP Hugo Barra, explaining the Mi 5, its design, and their business model:
If you can forgive the awkward remarks from Savov, the whole thing is worth a watch. But what he says about their view on hardware is particularly interesting:
“So we have always been thinking about hardware as a distribution vehicle for the software. Software includes platforms, services, which of course, we monetise. So think of us as more of an internet company - a mobile internet company - that monetises on digital content, advertising, and so on and so forth."
It explains the low prices, even for their flagships. I think this is the business model Google should have adopted in the first place with Android - come to think of it, maybe this is their business model and we’re looking at all the wrong metrics, including profit share (which Apple has more than 80% of). The value and growth of their mobile ads business on Android isn’t often talked about, but it’s perhaps why Android continues to push for higher market share. (Which reminds me of the need for subsequent discussions about how user data gathered via Android is handled.)
However, unlike Google, Xiaomi is one of the only other companies apart from Apple that seem to adopt not just a design philosophy, but a focused yet holistic approach. Here’s another interesting remark from Barra:
"We are the third largest e-commerce company in China, and we only sell our own products through that channel. That allows us to sell direct[ly] to consumers. We have a direct relationship with the consumer. We don’t have intermediaries…
So all of it supports this one business model which is to be a mobile internet company."
How hardware, software, and services support being a “mobile internet company” - whatever competencies and profit centres that entails - I don’t yet fully understand. Hopefully it doesn’t have much to do with user data. But it’s nonetheless refreshing to hear about a company other than Apple talking about multiple facets of their business being handled in a way that works towards a single goal.
One last interesting bit is that he refers to their core markets outside of China as a group of “fans” that “clamour” for their products. I think they know their international audience is niche, which I think implies their awareness of their potential for growth; to capture the attention of the mass market.
Companies like Samsung seem to evoke a superiority complex no matter the situation - Xiaomi seems to regularly check the balance scale and face realities.