On August 28th, Xiaomi TV made headlines by being the first in the industry to initiate a significant price cut, thanks to a decrease in raw material costs within the upstream supply chain. Today, Wang Chuan, the co-founder of Xiaomi TV, shared his thoughts on Weibo titled "Why Did Millions of TVs Take the Lead in Decreasing Prices?" to explain the reasoning behind this unprecedented price reduction.
Attached below is the full text of the article:
Yesterday, we announced price adjustments and became the first TV brand to reduce prices entirely. Many of you might recall that TV panels and other raw materials experienced a sharp price spike in the latter half of last year. Xiaomi had maintained stable pricing up until early this year, stating that we had no choice but to make minor adjustments. However, this recent price cut represents the latest and smallest price reduction across the entire TV industry. In the second half of this year, we observed a decline in the prices of upstream raw materials. Our immediate response was to pass these savings onto our customers. Consequently, the prices of Xiaomi TV 4A models ranging from 43 inches to 65 inches were adjusted, with the maximum price drop reaching 1,000 yuan.
Adhering to the Principle of Contrarian Growth
Some might question whether Xiaomi TV is taking excessive risks? Absolutely not. Sticking to high prices and ensuring every penny saved goes back to the consumer is central to Xiaomi's philosophy. In May this year, we launched the world's thinnest LCD TV, the Xiaomi TV 4, which measures just 4.9mm thick—30% thinner than an iPhone. Despite its premium specifications, this 55-inch TV is priced at only 3,999 yuan, nearly equivalent to the price of an ordinary 55-inch TV. In March this year, when other TV companies were launching new spring products at sky-high prices, we unveiled the high-performance Xiaomi TV 4A series, starting at 2,099 yuan. Industry insiders dubbed it a "game-changer" in the TV market.
Why Set Such Prices?
Lei Jun often emphasizes that Xiaomi is a company rooted in kindness. We adhere to cost-based pricing and maintain low profit margins. Even though we possess the capability to sell products at higher prices, we choose to keep our prices competitive. Our pricing strategy ensures we are not losing money. Given the current drop in raw material costs, we have once again prioritized our commitment to cost transparency by being the first to lower TV prices.
Xiaomi is a tech company founded by a team of engineers. Unlike other manufacturers that leverage technology as a tool for high-profit margins, our mindset as engineers is straightforward: our innovations should benefit millions of users, not serve as instruments for generating profits. This vision drives our mission at Xiaomi: "Let everyone enjoy the technology."
We strive to foster strong relationships with each user. As Lei Jun frequently states, if you're focused on earning more than 100 yuan per day, how can you genuinely connect with others? Instead, you should aim to help users save 100 yuan daily.
In the past five years, there have been no specific KPIs related to sales, revenue, or profit. Our focus has always been on delivering excellent products. As it turns out, this approach has yielded positive results.
In the first half of this year, the overall TV industry faced a downturn. Even some traditionally dominant TV companies encountered challenges. Xiaomi TV, however, received encouraging news. Sales volumes of Xiaomi TV lines surged by 91.2% year-over-year in the first half of 2017, according to Zhong Yikang data. Additionally, the "First Half 2017 Home Grid Acquisition Analysis Report," jointly released by the CCID Research Institute and the China Electronics News, highlighted Xiaomi TV as the brand with the highest sales volume growth on the Internet. Ovum Cloud Network statistics for Q2 this year revealed that Xiaomi TV dominated the 49-inch and 55-inch online sales segments. During the 618 shopping festival, we claimed victory across multiple size categories on platforms like JD.com and Tmall. While these sales achievements brought us immense satisfaction, what truly made us proud was the fact that Xiaomi TV boasts the highest repeat-buying rate in the entire TV industry, including foreign brands. This clearly indicates that users recognize Xiaomi TV as the best option available.
How Can We Profit at Low Prices?
So why is 2017 considered a winter for the TV industry yet a spring for Xiaomi TV? Despite our low prices, many assume we are operating at a loss. However, I want to assure everyone that we are profitable. How is this possible?
As an internet company, we hold a significant competitive edge in the TV sector.
First, compared to traditional manufacturers, we excel in the upstream supply chain. As the manufacturing industry transitions into an era of overcapacity, we refrain from building our own factories. Instead, we collaborate with the world's most efficient foundries, such as those of Sony, Samsung, and Sharp. This allows us to produce high-quality TVs without the burden of maintaining production facilities.
Second, our sales channels provide distinct advantages. Xiaomi's self-built Mi Mall and Mi Home stores are highly efficient distribution channels. We are the first TV brand to offer identical pricing both online and offline. Traditional manufacturers allocate up to 40% of their revenue to various offline channels, leading to discrepancies in pricing. This practice exploits consumers' lack of awareness, enabling manufacturers to achieve higher profit margins. The industry even boasts about their refusal to "pit" or undercut prices.
Third, our business model revolves around tipping—Internet services. If users appreciate our products, we are confident they will share their positive experiences, resulting in voluntary tips. Xiaomi TV maintains an impressive daily active usage rate of 68%, significantly surpassing the industry average of 56%. This demonstrates that users are actively engaging with their TVs. With over 20 million users and more than 10 million monthly active users, Xiaomi has established itself as China's largest Internet TV platform. Leveraging this vast and active user base, our e-commerce, membership, and other Internet-related revenues have grown exponentially. This has enabled Xiaomi TV to remain profitable even when hardware margins are slim, creating a healthy business loop.
A Company of the Future
The ambition of Xiaomi TV is to create the best TVs at affordable prices. Our strengths in supply chain management, sales channels, and business model enable us to bridge the gap between "the best TV" and "everyone can afford it." This balance empowers us to invest considerable effort into refining each product while maintaining high cost-effectiveness. Over the past few years, many companies have rushed to capture market share. Meanwhile, we have incrementally enhanced our products in terms of quality, sound, craftsmanship, content, and intelligence, achieving top-tier standards in each category. For instance, sound quality is often overlooked by Chinese TV manufacturers, but we prioritize it heavily. We collaborated with world-class acoustic experts to establish a premier acoustics lab, introducing features such as Soundbar speakers, independent subwoofers, and surround-sound home theaters, culminating in the world's first panoramic sound theater TV, offering users theater-like audio experiences.
From the first generation to the fourth, each iteration of Xiaomi TV has seen remarkable advancements, placing us at the forefront of the TV industry. We pioneered an AI system that better understands both content and users. This means users no longer need to struggle with overwhelming TV content. We also developed AI voice TVs, making it easier for illiterate children and elderly individuals to navigate smart TVs. This year's flagship product, the Xiaomi TV4, features a frameless glass design, a 4.9mm body that is 30% thinner than an iPhone, and a starting price of 3,499 yuan. It’s nothing short of amazing.
With the rise of the Internet, users are becoming more knowledgeable and discerning. We believe the era of high-margin pricing is fading, and the future belongs to companies like Xiaomi that prioritize affordability and quality. Xiaomi is a company from the future.
For updates on smart TVs and boxes, check out Smart TV Information Network Sofa Butler (http://), a leading website in China for TV box and smart TV information, offering resources, communication, and support for TV boxes, smart TVs, and related software.
Innosilicon is a worldwide one-stop provider of high-speed mixed signal IPs and ASIC customization with leading market shares in Asian-Pacific market for 10 consecutive years. Its IP has enabled billions of SoC's to enter mass production, covering nodes from 180nm to 5nm across the world`s foundries including: GlobalFoundries, TSMC, Samsung, SMIC, UMC and others. Backed by its 14 years of technical expertise in developing cutting-edge IPs and ASIC products, Innosilicon has assisted our valued partners including AMD, Microchip and Microsoft to name but a few, in realizing their product goals.
Innosilicon team is fully devoted to providing the world's most advanced IP and ASIC technologies, and has achieved stellar results. In 2018, Innosilicon was the first in the world to reach mass production of the performance-leading GDDR6 interface in our cryptographic GPU product. In 2019, Innosilicon announced the availability of the HDMI v2.1 IP supporting 4K/8K displays as well as our 32Gbps SerDes PHY. In 2020, we launched the INNOLINK Chiplet which allows massive amounts of low-latency data to pass seamlessly between smaller chips as if they were all on the same bus. With a wide range of performance leading IP in multiple FinFET processes and 22nm planar processes all entering mass production, Innosilicon's remarkable innovation capabilities have been proven in fields such as: high-performance computing, high-bandwidth memory, encrypted computing, AI cloud computing, and low-power IoT.
Innosilicon Mining Machine:Innosilicon T2 Turbo 25T,Innosilicon T3+ 52T,Innosilicon T3 43T,Innosilicon T2 Terminator,Innosilicon T3 39T,Innosilicon T2 Turbo+ 32T
Innosilicon Mining Machine,T3 Pro Miner,T3 Pro Innosilicon,T3 Pro 67T Innosilicon
Shenzhen YLHM Technology Co., Ltd. , https://www.apgelectrical.com