china

Xiaomi claims it’s a services company, but it’s really not

As Stratechery pointed out, it’s conventional wisdom that Xiaomi is an Internet services company. That selling smartphones at break-even prices is merely a gateway for selling profitable services. Except this might all just be a marketing ploy, because Xiaomi does make money from hardware, and quite a lot of it.

As much as 92% of Xiaomi’s 3.46 billion yuan profit (or $566 million US dollars) is from hardware. That’s profit, not revenue.

Let’s start with how Xiaomi’s CEO, Lei Jun, describes the company:

We’re actually an Internet company. We’ve already got a business in mobile phone hardware and we want to add to that an Internet platform. We can earn money from that, once it’s established. People just don’t get it. The mobile phone itself is only the carrier. Microsoft used to sell Windows in a box with a CD in it. Does that make Microsoft a paper box company? The box and the CD are only the carrier. If people don’t understand this, they can’t understand [Xiaomi].

Wouldn’t Microsoft be a paper box company if paper boxes actually generated 92% of its profit? If people cared more about the paper box than whatever’s inside?

An Internet company might be what Lei Jun wants Xiaomi to be one day, but right now it’s squarely a smartphone company.

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Mark Zuckerberg is one impressive dude

As an entrepreneur or CEO of a company, you might think it’s hard to find the time to do anything outside of work, family and a hobby or two. Well, Mark Zuckerberg runs a $200 billion dollar company, and he still found the time to learn Mandarin Chinese.

I learned Mandarin Chinese and let me assure you — it’s a really tough language.

But Mark was interviewed recently at the prestigious Tsinghua University in Beijing and spoke entirely in Mandarin Chinese! Wow!!

That puts me to shame — I don’t even know if I dare do that, and I learned Chinese while young. Mark’s accent is funky, but it’s definitely understandable and he has a decent vocabulary.

If you can understand Chinese, see the 30 minute interview below.

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Starting a phone company? Here’s a blueprint for success

Xiaomi and OnePlus proved that it is possible to start a successful smartphone company, even with limited resources. Here’s their strategy in a nutshell:

  1. Create a compelling product for tech enthusiasts
  2. Sell it direct as a loss leader
  3. Limit production to create scarcity
  4. Build awareness and demand
  5. Sell profitable related products and services
  6. Scale production once component costs drop

Small Chinese companies like Xiaomi and OnePlus were able to create markets even while competitors like Apple and Samsung spend billions in advertising their smartphones. Their success is a blueprint for others to follow, whether you’re running an established smartphone company or starting one.

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OnePlus One equals two good

I received an invite for the One from OnePlus a few weeks ago and pulled the trigger. I’ve used it as my daily driver ever since, replacing my iPhone 5S.

Yes, folks, the Cornerplay does reviews. If you have something you want us to look at, send it our way. We leave the factual details to excellent publications like Engadget (rated the OnePlus One 9/10), Gizmodo (9/10) and PC World (9/10); and focus on providing insight into all the other things that make the phone interesting.

What I want to start off with is what an amazing job OnePlus did marketing this phone. The smartphone market is super saturated, with giant corporations like Apple and Samsung spending multiple billions on advertising their phones. Here is this tiny Chinese company who, without having spent much if at all on marketing, has made the OnePlus One famous among tech enthusiasts.

This is already a sought after phone because of its flagship performance and low cost; couple that with limited supply and what you’re left with is – incredibly – a status symbol among tech snobs. I can’t believe the amount of attention I’ve gotten because of this phone, both in real life and online. One guy found me on Instagram and started liking a bunch of my photos in the hope that I would give him an invite!

All this from a tiny Chinese company? Unprecedented. Amazing. Stupendous. Good job, OnePlus.

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