This Is Why Xiaomi Phones Are Usually So Cheap

Xiaomi is one of the world’s largest smartphone makers. In fact, according to Canalys, the company passed Apple to become the world’s second-largest smartphone maker in Q2 2021, with a market share of 17%. Only Samsung remains ahead of Xiaomi, with 19% of the market.

In addition to its overall market share, Xiaomi holds the Guinness World Record for the most smartphones sold by a company in a 24-hour period. At the company’s annual “Mi Fan Fest” event in 2015, it sold 2.12 million phones (via CNN).

Xiaomi’s popularity stems from multiple factors, not the least of which is its similarity to Apple. In fact, both its phones (via Ars Technica) and its tablets (via Mashable) have drawn criticism for being near-clones of Apple’s products.

Xiaomi’s similarity to Apple is only half the equation, however. The company manages to deliver Apple-like hardware at a substantially lower price point, leading many to wonder how it does it.

One of the main reasons Xiaomi phones are so cheap is because the company focuses on volume over high profit margins. While Apple’s cost of components for the iPhone 13 is roughly 36% to 37% of the retail price (via iMore), leaving a hefty profit margin in the 60% range, Xiaomi’s CEO says his company’s profit margin per phone is only 8% or 9% (via GizChina).

Another factor that may contribute to Xiaomi’s low prices is the company’s privacy, or alleged lack thereof. According to a report in Forbes, the web browser that ships with Xiaomi devices records all of a user’s online browsing activity, even when used in “incognito” mode. The company also appears to be collecting other device data that can give it glimpses into the personal lives of its customers.

“Xiaomi is one of the top four smartphone makers in the world by market share, behind Apple, Samsung and Huawei,” writes Forbes’ Thomas Brewster. “Xiaomi’s big sell is cheap devices that have many of the same qualities as higher-end smartphones. But for customers, that low cost could come with a hefty price: their privacy.”