wall street journal

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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You might have seen the $8 for 8 weeks trial for the digital version of the Wall Street Journal. If you’re tempted, thinking, I can always just cancel at the end of the 8 weeks: don’t.

That’s what I thought, and why I took the trial and put down my credit card information. The 8 weeks came by quickly and saw on my credit card statement that I was billed the subsequent monthly amount. Even though I read maybe two articles on the WSJ during that time span…no problem. Went to the website, tried to find a cancellation button, couldn’t, and fired off an email with all my details to cancel.

Two months of busy life go by. Nothing from the WSJ. I check my credit card statement again and…WTF, saw two more monthly charges from the good journal. Now I really go through the site, trying to find out how to cancel the subscription. Buried in the FAQs section I finally see my answer:

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