Does Xiaomi’s Bargain Superphone Cost the Same to Make as an iPhone 4?

A pricing of the parts used in the brand-new Xiaomi phone – the 1.5 GHz dual-core, Android-powered beastie that launched two days ago – reveals that its components cost as much as for Apple’s iPhone 4.

But startlingly, Xiaomi’s first-ever handset, the M1, will retail for only 1,999 RMB (US$310), which is less than half the price tag of the cheapest iPhone 4 (4,999 RMB). This suggests that Xiaomi might be cutting its profit margins very thinly.

A survey of the parts for the Xiaomi phone by Anzhuo, a popular forum for Android fans, suggests that the device could cost as much as 1,130 RMB in parts. A separate tear-down of Apple’s newest phone totaled its bill of parts at an almost identical 1,195 RMB.

At the launch of the Xiaomi phone, which features the company’s MIUI skin atop of Google’s Android mobile OS, its CEO Lei Jun promised that his first phone was a quality device, and not in any way comparable to a made-in-a-dodgy-warehouse shanzhai gadget. He stressed that he has sourced premium parts, not the usual array of leftover bits and pieces that shanzhai manufacturers survive on.

The costliest single item on the list (see the image below) is the 4-inch touchscreen (for 181 RMB), followed the flash memory, the Qualcomm MSM8260 processor (150 RMB), and the 1 GB of RAM.

An add-up of the parts used to make the Xiaomi M1. Total is 1,130 RMB. (Source: Anzhuo.cn).

Even though Xiaomi will make use of e-commerce sites to avoid costlier retail channels and high street promotions, that leaves an alarmingly tiny profit margin. The Xiaomi phone is impressive on paper, and hopefully it will be equally jaw-dropping when people get theirs in October. And now we know that you’re at least getting value for money when you buy it. But I wonder if Lei Jun’s company will make a decent profit from the M1 in order to sustain its new hardware venture.

Speaking of a mobile firm living on a knife-edge, RIM really should’ve tried such brave price-lines for its new generation of BlackBerry Bold and Torch models, which look set to cost a pretty insane US$700 in Indonesia.

[Source: Anzhuo BBS; Image source: Xiaomi’s Sina Weibo page]