216: Chapter 216 Rice Impacts the Low-End Market, MediaTek Pays the Price

He picked up the Xiaomi phone, turning it over and over for a long time. Then, he looked at the unopened honor 3 and honor 3 pro sitting to the side.

In terms of build quality, at the 1999 price point, everyone was using plastic across the board.

However, Honor's design was clearly more premium, which scored more points in the eyes of users.

Of course, there were fatal flaws, too; the four-inch 460P screen was a bit outdated.

But the excellent feel saved it. The system was the latest EMUI2.0, and the smoothness was clearly a whole tier above standard Android.

Although the K3V1 was a low-frequency version, the battery life advantage brought by the 28nm process was real, completely crushing the MSM8260 (Snapdragon S3).

In terms of multi-tasking, where dual-core processors held the advantage, the K3V1 didn't perform poorly at all, and with the system optimization, the gap wasn't significant either.

Simply put, Snapdragon is done for...

As for the honor 3 pro, it was clearly a product designed to compete with the Mate2, yet it was placed in the 2500 price segment.

The Taishan 600 dual-core processor made it run significantly faster than the honor 3, and the screen was upgraded to 720p, completely solving the biggest issue and eliminating the gap in display quality.

Just as he was thinking about how to solve the problem, Lin Bin pushed the door open, holding a report in his hand.

"Mr. Lei, are the evaluation results out?"

Lin Bin's face carried a hint of joy, and he didn't seem that anxious.

After all, although the honor 3 series had been mocked quite a bit during the launch event, and their products seemed very good, they had a fatal crisis.

That was the 460 screen.

Now the entire industry was using 720P, except for a certain international brand... Consumer requirements for screens were no longer at the level they were a year ago.

The threat from Honor was actually not that big.

Lei Jun read the report for a while, but the expression on his face did not relax.

"Old Lin, do we still not have any advantage?"

Lei Jun pointed to the performance evaluation results: the AnTuTu benchmark score for the Snapdragon S3 (MSM8260) was 4300 points, while the honor 3 pro's score was around 3500 points.

In terms of performance, Xiaomi seemed to have the upper hand over Honor.

"Old Lin, ordinary users don't just look at benchmark scores. Most users care more about battery life. The honor 3 pro is equipped with a massive 3800mAh battery, and its battery life is at least three hours longer than ours."

"Old Lei, I know." Lin Bin looked at Lei Jun. "That's still not the biggest problem."

"Is it the price?"

"Yes." A look of worry finally appeared on Lin Bin's face. "Once the honor 3 series was released, their models covered everything from 1000 to 4000. The Enjoy 799 and 999 are bloodletting the low-end market, the honor 3, 3 pro, and honor play are locking down the mid-to-high end, and the Mate and Transsion S series are attacking the high end.

Our Xiaomi 3 is priced at 1999, which is being directly suppressed by the honor 3; we don't have much of a chance of winning."

Lei Jun stood up and walked to the window.

Xiaomi has sold over 4 million units, and the Xiaomi 2 and 2s series also sold well, but we can never shake off the nightmare that is Honor.

During the Series A financing, all the investors told him that Xiaomi was the hope of the Chinese mobile phone industry.

There were also many people who said they were investing in him as a person, so a higher valuation was no problem.

But only he knew how much pressure there was.

Of course, this pressure was purely self-inflicted; after all, at that time, he had promised that within three years, the annual shipment volume would reach 60 million units.

What was the concept of 60 million units? That was the quarterly sales volume of the world's number one, Nokia.

For a new brand to reach Nokia's scale within three years relying solely on the Chinese market was simply insane.

Ultimately, he believed he could do it.

The internet-based mobile phone model was about burning money to gain scale. If the scale didn't go up, costs wouldn't come down. If costs didn't come down, prices couldn't be lowered. If prices couldn't be lowered, users wouldn't buy.

This was a vicious cycle.

And the only way to break the vicious cycle was through shipment volume.

But despite all his calculations, he hadn't accounted for the surprise that was Shen Fei; as the overlords of Africa, they had returned early.

"The Redmi project can no longer be delayed." You have finally made this decision.

Lin Bin hesitated: "Mr. Lei, the supply chain prices are so high right now; making Redmi would mean a loss."

"Even if it means a loss, we have to do it." Lei Jun's voice was urgent, not because of the shipment volume targets, but because of this price segment.

"Haven't you seen how the Enjoy series is selling at 799? Less than a year after launch, the shipment volume has already reached 40 million units.

On average, they sell several million per month; even if the profit per phone is razor-thin, they can still make money."

Huawei has already downgraded the K3V1 to the thousand-yuan market, and the hundred-yuan market is only a matter of time.

With just one self-developed processor, we can't even enter the low-end market."

Lin Bin also began to panic. The biggest problem with the K3V1 was that it couldn't support a 720 screen, which led to a fatal crisis for the honor 3.

But if it were downgraded to the Enjoy series, it wouldn't be a crisis, but rather its unique feature...

"Old Lin, you continue to contact MediaTek and negotiate the chip prices again."

"I've already talked to them, and they said this is the lowest price."

This time, Lin Bin was negotiating for the MTK6574, which seemed to be a tier above the 6573, but in reality... MediaTek had performed another act of "reverse suction" (downgrading performance while inflating specs).

The chip's performance hadn't been improved; instead, the maximum clock speed had been cut to 502MHz, but it was still acceptable for the hundred-yuan price range.

"Then negotiate again." Lei Jun's tone was full of determination. "Tell them that Xiaomi 3 will add a MediaTek version, not as a 'Youth Edition,' but as a direct choice for consumers.

If they can lower the price by another 10%, we will sign a three-year long-term contract covering the mid-to-low end. Excluding the MTK6574, our annual procurement volume for other chips will not be less than 15 million units."

Lin Bin was shocked by Lei Jun's bold words.

15 million units? That's twice the annual sales volume of Xiaomi, and that's just for the MediaTek version?

"Mr. Lei, this volume..."

"I know." Lei Jun nodded. "But this is the only way. Only with high volume can costs come down.

Only then can we push the price of Redmi down to 799. Once Redmi stands firm and the market is cultivated, we will have the qualifications to continue the fight."

"But can the Xiaomi 3 really consume so many chips?"

"I only said that Xiaomi 3 will add a new option; I didn't say these chips would only be used for it."

A look of relief appeared on Lin Bin's face; he understood.

MediaTek wants to break into the high-end market?

Then I, Dami Company, will use all your chips in low-end phones, and we'll all go down together...

...

One day later, MediaTek headquarters.

Zhang Song sat in the conference room, looking at the contract in front of him, his hands trembling slightly.

Dami Company, three years.

MTK6574: 45 million units over two years.

Flagship series: Used in flagship phones, with an annual shipment volume of no less than 15 million.

This was the biggest deal he had ever signed since becoming a client manager.