Don’t be silly, Xiaomi is no threat to Apple

“In recent weeks, much has been made in the financial media about the looming threat to Apple from a company many people probably haven’t even heard of,” Bob Ciura writes for Seeking Alpha. “Xiaomi is a smartphone manufacturer that is often referred to as ‘the Apple of China.'”

“That’s because Xiaomi’s business model is to produce devices that look and feel like Apple’s iPhone, yet are much cheaper. For example, on January 15, Xiaomi released a phone called the Mi Note that mimics the iPhone 6. The key difference is, that the Mi Note will cost $375, while the iPhone 6 costs $865 in China,” Ciura writes. “The response from the financial media was predictable. As soon as the new Xiaomi model was announced, it was lauded by some as an Apple killer. However, there is a critical point Apple bears are missing. Xiaomi is a low-margin operator with low-priced devices, whereas Apple reaps significantly higher profit margins with premium-priced devices.”

“This implies that those individuals buying Xiaomi devices do so primarily because of the low cost. This is not true competition to Apple, because those customers would likely not have purchased the more costly Apple device anyway,” Ciura writes. “For this reason, I would argue that Xiaomi steals market share not from Apple, but from other low-cost smartphone manufacturers in China, such as Lenovo and to a certain extent Samsung. That is why the real danger from Xiaomi is to other device makers on the low-end of the price spectrum, not Apple.”

Read more in the full article here.

MacDailyNews Take: Xiaomi is a threat to Apple as Yugo was a threat to BMW.

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  1. What makes no sense with these comparisons- and these comparisons are born out of the mental bifurcation of hardware and software, is that yes the iPhone has a substantially higher margin, BUT the buyer is also purchasing the software in the phone, iCloud, as well as the after sale support.

  2. These writer idiots can’t possibly that stupid to believe Xiaomi is a serious threat to Apple, so I believe they’re simply trying to get a rise out of those who actually know Xiaomi doesn’t even come close to Apple. Again, everything is being based on market share. Xiaomi has fine growth so far but that doesn’t make it financially successful. How is their customer support? How well-built are their smartphones? I’d still like to know how they’re able to undercut Samsung in pricing and still make decent profit margins. If Samsung doesn’t prove much of a threat to Apple then how could Xiaomi be a threat.

  3. This it the same stupidity as people who argue that Apple should reduce the cost of the iPhone to sell more. Apple could half their margin, but would they sell double the amount? Probably not, if only because they can barely make them fast enough as it is. Even if they did, at that reduction they’d essentially be making the same overall profit as they were before. Apple are not idiots. They price their products aggressively, but also to maximise profit within a price bracket. Xiaomi could sell every other phone that isn’t an iPhone, but if they’re making next to no money on each one, the volume doesn’t make them massively profitable – and much like Amazon, they can’t just raise prices at some point and have their customers just accept it.

  4. (Android = Java = buggy, insecure, pretend OS, interpreted language) = shite
    (iOS = OS X = BSD Unix) != shite

    In other words as long as Apple’s “competition” relies on a pretend OS, iOS (and iOS devices) will always be better. Throw in vertical integration and it isn’t even a fair contest. Why are media folks still talking about it.

  5. Xiaomi has already shown its true colors as a malignant non-ethical copy infringer, which probably will end up meaning it can only sell product in China. The rest of the world harbors some (if precious little) respect for IP. And it may not survive as well as predicted in that lawless, albeit huge, market.

  6. These guys are just looking for anything to say to knock down the idea that Apple is the leader. It’s part of their business model. They don’t really believe this crap.

  7. I don’t think they are trying to get a rise out of anyone, and I don’t think it’s stupidity. It’s much simpler.

    They are paid to write.
    There isn’t sooooo much interesting and valid news… not enough to justify their full-time employment
    So they have to make up the other 80% writing crap.

    1. Nailed it, John. Journalism is the new homelessness. They hold up signs at stoplights on the Internet: “Will write for food.” Any water cooler remark can be turned into a story, and if facts are scarce, it is safe to label as a “rumour” since no one has yet been exposed as a deliberate fabricator of rumours. (There is trenchant evidence of this amongst a subset of Wall Street analysts, but the SEC keeps a sleepily baleful eye on that motley crew. If that organisation ever wakes up, expect wholesale carnage, and frantic profit-taking.)

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