Xiaomi has continued its expansion into all-things-consumer with the launch of its MVNO network “Mi Mobile” in China. The first OEM to launch a carrier, Xiaomi’s mobile network is offering 3GB of LTE data for RMB 59 – which is under $10 – if you sign up to a monthly plan.
Xiaomi is “commoditizing its complements”1. It’s likely (re-) selling data at near what it cost to buy it from the carrier (China Unicom). This sort of thing was bound to happen, and it’s no surprise that an OEM that’s focused on smartphone market share above short-term profitability would be the first major OEM to do this. The carrier still gets paid, but other OEMs feel competitive pressure. At least that’s the intent. Let’s see how this fares.
With every ultra-low-margin phone and service Xiaomi launches, the odds that it will excel in any one area (except device unit volume) diminish. How would it fund high performance? One might argue that, with a large installed base, it could profit from selling content and services. The problem, however, is that the quality and demand, and therefore the profitability, of Xiaomi’s content and services remains uncertain. And by “uncertain”, I really mean “average”.