Xiaomi (1810.HK) announced the lowest priced 5G phone on the market but CEO Lei Jun is still not happy. The Xiaomi 9 Pro 5G starts at 3,699 yuan (USD 520), higher than what Lei wants.
High price driven by R&D
R&D costs for the 5G phones were significant and selling them at the same prices as 4G models would be loss making for the company.
“We initially planned to price the Xiaomi 9 Pro 5G at 3,999 yuan, but we wanted to subsidise consumers to let more people have a chance to use 5G phones … We set the starting prices at 3,699 yuan for the first 5G smartphones Xiaomi launched in China, and hope the consumers could feel our sincerity.”– Xiaomi CEO Lei Jun
Since going public on the Hong Kong stock exchange in 2018, Xiaomi has been trying to shake off its image of a budget phone brand. It has been moving towards premium phones with higher margins.
Smartphone brands aiming for piece of multibillion-dollar market
Most smartphone brands have been launching 5G-enabled handsets ready for the global 5G market which Gartner forecasts will be worth USD 4.2 billion by the end of 2020, driven by vast infrastructure investment from broadband providers.
The big three Chinese telecom operators, China Mobile (0941.HK), China Telecom (0728.HK) and China Unicom (600050.SH, 0762.HK), have yet to launch commercial 5G data plans even though they have been granted commercial 5G licences earlier this year.