Xiaomi Says Its Overall Net Profit Margin For Hardware Business Will Never Exceed 5%

by Jeet 0

During the Xiaomi Mi 6X launch event, the China-based company made a separate announcement that the overall net profit margin of the company’s hardware business, including smartphones, IoT and lifestyle products, will never exceed 5 percent.

The company also said if the net profit margin of its hardware business exceeds 5 percent, then it will find a way to return the excess of 5 percent to its users. However, the company has not yet revealed how exactly it plans to do that.

Xiaomi 5% Profit Margin Announcement

With such move, the company is looking to earn the long-term support of its users and sell its products in large volumes with small profit margins, which the company believes is suitable hardware profits for Xiaomi in the long term.

The company says that it has created a unique “triathlon” business model, which encompasses hardware, internet service, and new retail. It claims to be the only smartphone in the world that has rebounded after a decline in sales. That development is the result of its relevant and advanced model, believes the China-based company.

Xiaomi added that cost efficiency is at the heart of business competition, and a 5% limit on our overall hardware net profit margin is evidence of the company’s high-cost efficiency. It says that across various product categories, the company has successfully launched the best products and kept them close to their cost price, thus revolutionizing the entire industry and allowing these products to be available to the masses in a short span of time.

Xiaomi Quality Product Honest Pricing

The company believes that maintaining reasonable profits is an inevitable industrial trend and any move pushing for high gross margins will eventually reap no rewards. Currently, Xiaomi has exceeded 100 billion RMB in annual revenue and claims to have nearly 20,000 employees.

This announcement was made at the event where Xiaomi launched its latest smartphone — Mi 6X. It comes with a 5.99-inch display with 18:9 aspect ratio and narrow bezels on the sides. Under the hood, the device is powered by the Qualcomm Snapdragon 660 octa-core processor coupled with Adreno 512 GPU. It packs up to 6GB LPDDR4x RAM and up to 128GB internal storage.

The smartphone features a 20-megapixel Sony IMX376 sensor with f/1.75 aperture and Soft-LED flash on the front. On the back side, there’s a dual camera setup with 12-megapixel primary Sony IMX486 sensor with f/1.75 aperture and 1.25-micron pixels, and a 20-megapixel secondary Sony IMX376 sensor with the same aperture but 1-micron pixel size.

 

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Running on Android Oreo-based MIUI, the device is powered by a 3,010mAh battery that supports QuickCharge 3.0 technology, which can charge the battery from 0 percent to 50 percent in just 30 minutes. It comes in five color options — Red, Gold, Rose Gold, Blue, and Black and will go on sale in China from 27th April.