Ever wonder why Xiaomi’s products are so cheap compared to the competition? Aside from selling their wares online and cutting out the middleman, it seems that the Chinese company has a completely unheard of reason why they sell their products at rock bottom prices compared to the competition: they don’t care about profits from smartphone sales.
Hugo Barra, Xiaomi’s global vice-president said that their business model isn’t based completely on smartphone sales. “Basically we’re giving [handsets] to you without making any money… we care about the recurring revenue streams over many years,” he told Reuters in an interview.
“We could sell 10 billion smartphones and we wouldn’t make a single dime in profits,” he added.
Instead, Xiaomi makes its money from sales of smart home devices and its software eco-system. Another major sales driver is its connected home devices and other appliances. Suddenly, the rice cookers, robotic vacuums and air purifiers start to make more sense.