I never understand Xiaomi's biz model and dont know who is stupid enough to invest in this scam. Apprently they are losing money by selling phones below the BOM. the dumping strategy is mostly used by by the deep-pocket behemoth not a startup which worrys about where their next meal is. Make no mistake, Baidu has nothing to do with the high volume and low price, it enjoys 65% gross margin which is Higher than google. I dont see this company survive another year.
Actually, what I find it most fascinating are the following notions Xiaomi points out:
1. "High volume" and "low cost" are the two factors that have driven Internet companies such as Baidu. Modern consumer electronics companies should follow that examples by selling their hardware at cost. (The idea is to create a large enough base first so that you can earn money from services.)
2. Traditional consumer electroincs companies tend to spend too much time in perfecting their products. The new consumer electronics vendors' M.O. should be: roll out the box first; contineu to evolve it by upgrading software and even swapping hardware, if necessary, as they launch their systems in incremental batches.
In fact, as I travelled in Shenzhen and Beijing last week, I saw many local ODMs and OEMs do the pre-order first on the Internet; and continue to tinker and "optimize" their systems after their initial announcement.
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