On August 28th, Xiaomi TV announced that it was the first in the industry to start a large-scale price cut due to the drop in raw material prices in the upstream of the supply chain. Today, Wang Chuan, co-founder and co-founder of Xiaomi Television, published on his Weibo article “Why Did Millions of TVs Take the Lead in Decreasing Prices?”, giving the reason behind the first price reduction for Xiaomi TV.
The following is the full text of the article:
Yesterday, we announced price adjustments and became the first TV brand to lower prices completely. Everyone may remember that prices of TV panels and other raw materials rose sharply in the second half of last year. Xiaomi has been insisting until the beginning of this year that it had no choice but to make a small price adjustment. This is the latest price increase and the lowest price increase in the entire TV industry. In the second half of this year, we discovered that the prices of upstream raw materials have come down. Our first response was to return the benefits to users: Xiaomi TV 4A adjusted its prices from 43 inches to 65 inches, and the maximum price dropped to 1,000 yuan.
Adhere to the trend of high growth rate contrarian Some people say that millet TV is crazy? No, sticking to high prices and saving every penny for users is the value of Xiaomi's mind. In May of this year, we launched the world's thinnest LCD TV, the Millet TV 4, which is only 4.9mm thick and 30% thinner than the iPhone. Pricing for this top-of-the-line 55-inch TV is only 3,999 yuan, which is almost the same as the price of an ordinary 55-inch TV. In March of this year, when all TV companies launched new spring products and set prices at astronomical prices, we launched a new high-performance series - Xiaomi TV 4A, starting at 2099 yuan. It was called by the industry as a fighter in TV.
Why is this price set? Lei always said many times that Xiaomi is a kind company. It is a company that sticks to غير مجاز مي باشدt pricing and pursues low gross margins. It is a company that has the ability to sell products to 9,999 yuan but insists on pricing at 3,999 yuan. How much we price this TV is not losing money. Now that the prices of raw materials have fallen, we will continue to stick to the غير مجاز مي باشدts and cut TV prices at the first time.
Xiaomi is a company founded by a team of engineers. When other companies regard technology as their selling point for high gross profit, the idea of us as engineers is very simple. Our hard-working technologies are used to benefit millions of users. It is not the tools that manufacturers use to generate profits. This is our dream when creating Xiaomi “Let everyone enjoy the technology.”
We want to be friends with each user. Lei always said that if you are thinking about how to earn more than 100 yuan per day, how do you make friends with other people? You have to think about how to save people 100 yuan every day.
In the past five years, Lei did not give us KPIs. We did not discuss sales, sales, and profits. We think that as long as we can make a good product, these things will follow, and it turns out that this point.
In the first half of this year, the overall market of the TV industry was declining. In the past, powerful TV companies also encountered various problems. Millet TV has a good news, but it has achieved rapid growth. According to Zhong Yikang’s data, sales volume of Xiaomi’s TV line increased by 91.2% year-on-year in the first half of 2017; the “Analysis Report on Home Grid Acquisition in the First Half of 2017” co-published by the CCID Research Institute and the China Electronics News showed that Xiaomi TV is this year. In the first half of the year, the TV brand with the largest increase in sales volume on the Internet; according to the statistics of the Ovid Cloud Network for the second quarter of this year, Xiaomi TV has achieved the 49-inch and 55-inch mainstream online sales championship. This year 618, we swept the Jingdong, Tmall platform 43-inch, 49-inch, 55-inch, 65-inch and other size segment sales champion. These sales rankings have given us great excitement, but one ranking that makes me even more proud is that the repeat buying rate of Xiaomi TV is NO.1 for the entire television industry, including foreign brands. This fully shows that after experiencing Xiaomi TV, The user knows what TV is most worth buying.
How can we make money at low prices?
So why is 2017 a winter for the television industry and spring for us? Millet TV is such a low price that many people think that we are losing money, but I want to tell everyone that we can make money. Why is this?
As an internet company, we are making a huge core advantage in television.
First, we have an advantage over traditional manufacturers in the upstream supply chain. Today, as the entire manufacturing industry enters an era of overcapacity, we do not build factories ourselves. Instead, we select the best and most efficient manufacturers of millet TVs among the best foundries in the world. I can use Sony's, Samsung's, and Sharp's foundries. We can build millet TVs with the best craftsmanship.
Second, we have more and more advantages in sales channels. Millet's self-built millet mall and Xiaomi's home are very efficient channels. We are the first TV brand in the industry to sell online and offline at the same price; while traditional manufacturers give 40% of the fees to various offline channels, the same TV can only be made into two models. It's a big difference to have a price on the line and a price on the line. Bullying users do not know what to do and rely on Huyou to obtain high gross margins. The industry self-proclaimed: "Do not pit, not sell TV."
Third, our business model is a tipping model - Internet services. If users like our products, we are confident that the experience will be good enough so that users are willing to tip. Millet TV's average daily operating rate is as high as 68%, far exceeding the industry level of 56%. This shows that millet TV users love to turn on the TV, and Xiaomi has more than 20 million users on the TV and more than 10 million monthly active users. It is China's largest Internet TV platform. With the large-scale and highly-active user base, our e-commerce, members and other Internet revenues have grown explosively. This enabled Mille TV to achieve profitability even if hardware did not make money, resulting in a healthy closed-loop business.
The company from the future
The dream of Xiaomi TV is to "make the best TV so that everyone can buy it." The three advantages of supply chain, sales channel and business model make "the best TV" and "everybody buys" this. The two seemingly contradictory ideas are unified, allowing us to use a lot of energy to polish every product under the premise of insisting on high غير مجاز مي باشدt performance. In the past few years, many companies have been busy rushing to grab the market. We have improved our products little by little in terms of quality, sound quality, craftsmanship, content, and intelligence, and each of them has achieved the top level in the industry. For example, TV manufacturers in China do not attach importance to sound quality, but we are willing to make great efforts. We must go to world-class acoustic experts to establish a first-class acoustic laboratory, and we have successively introduced Soundbar speakers, independent subwoofers, surround-sound home theaters, and the first one. Than the panoramic sound theater TV, allowing users to enjoy the sound quality of the comparable theater.
From the first generation to the fourth generation, each generation of millet television has made great progress and is at the forefront of the television industry. We first created an artificial intelligence system that "understands content and understands you better." Users don't have to struggle to find out about massive amounts of TV content. The first one is to develop artificial intelligence voice TVs so that children who are illiterate and have no knowledge of smart TVs. Elderly people with fear can easily use smart TVs. We launched this year's flagship product of the year, the Millet TV4, which looks like a frameless glass design, a 4.9mm fuselage that is 30% thinner than the iPhone, and pricing starting at 3499 yuan. Amazing.
With the popularity of the Internet, users are becoming more and more experts and increasingly smarter to purchase. We are convinced that the era of high gross margins for users who rely on huyou has passed and that the future belongs to companies like Xiaomi who insist on “become a moving, price-honored product”. Xiaomi is a company from the future.
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