218: Chapter 218 The Costs of "Success"

"Because we want to let everyone use a Smartphone." Lei Jun corrected him.

"Right! Right! We want to let everyone use a Smartphone." Lin Bin echoed, "In that case, should we set the storage to 512MB, just for the system?"

"Then we can put all the data on a memory card. Although it might be a bit slow, if the price-performance ratio is right, users definitely won't have a problem."

Lin Bin hadn't forgotten about the cost issue. After all, fighting back was one thing, but surviving was more important. One cannot lose their head in business.

"128MB RAM and 512MB storage—isn't that the configuration of a Feature phone?"

"If users buy it, install a few apps, and it's full, then it'll lag after two months. And then what?"

"Will they say that Xiaomi products are cheap but low quality?"

Facing Lei Jun's reminder, Lin Bin could only sigh helplessly.

How could he not know that you get what you pay for?

But right now, Xiaomi is simply not qualified to compete with Honor in the hundred-yuan market. This market is about snatching users, but it's also about burning money.

Using the company's cash flow to cultivate the future market?

But Xiaomi only raised a few hundred million, while Huawei raised 2 billion...

Moreover, the first-generation Redmi currently has a loss of 251, but in reality, this doesn't even account for manufacturing costs or logistics costs. If you calculate it slightly, it's around 300?

Lei Jun thought for a long time and finally said:

"We are making Redmi not to make quick money, but to occupy the market and cultivate users. If the user experience is bad, they won't buy Xiaomi again next time."

Regarding Lin Bin's plan, he also knew this was the optimal choice for a hundred-yuan phone, but it would affect the user experience too much.

Things hadn't reached that point yet, and fundamentally, he was still unwilling to agree...

He walked back to his desk and picked up the phone.

"I'll call Zhang Song again to see if we can squeeze more out of it."

The phone rang for only a few seconds before it was answered.

"Mr. Lei, didn't we just sign the contract?" Zhang Song's voice carried a smile.

"Mr. Zhang, the contract is signed, but I have a new idea."

"What?" Zhang Song on the other end of the line hesitated for a moment.

Could Xiaomi be going back on their word?

He had been scolded by Tsai Ming-kai in the office for over half an hour for this contract, and now...

If the other party went back on their word, his promotion plan would go down the drain... and then it would be he, Zhang Song, who would have to pack up and leave.

"Can the price of the MTK6574 be lowered by another 5%?"

Originally, the pricing for this iterative model of the MTK6574 chip was 143 RMB. This price was already infinitely close to the cost price.

After all, it wasn't exactly a popular chip, and Lin Bin had pressed the price down very thoroughly.

"Mr. Lei, aren't you making things difficult for me?" Zhang Song gave a bitter smile, "The price we signed is already the cost price."

"If we lower it any further, MediaTek will be selling at a loss. When the company investigates, I'll be fired."

"Mr. Zhang, I know your difficulties, but please let me finish." Lei Jun's voice was very serious, though this was essentially dangling a carrot.

"The new MediaTek version for Xiaomi 3 has already been decided."

"But I want to add one more condition: for the next three years, as long as there is a MediaTek version, all business will go through you."

Zhang Song's breathing became heavy.

All of it going through him meant that the commission would all be his.

"I guarantee the annual procurement volume won't be lower than 35 million units this year." Lei Jun's voice was even more tempting at this moment, "This is the minimum. If Redmi sells well, it might reach 50 million units."

A sound of swallowing came from the other end of the phone, indicating the other party had taken the bait.

"Mr. Lei, is this volume... for real?"

"It's real."

"Honor also uses your chips. You should know in your hearts how many orders they have placed."

"Our goal is just to not lose money, so our price will definitely be more attractive than theirs. You should understand what kind of reaction this will bring to the entire market."

Another long silence... only the occasional rustling of pages could be heard.

"I'll make a phone call and get back to you in 10 minutes."

Lin Bin stood by, thinking about what other aspects could be downgraded.

128MB RAM, 512MB storage, cutting two batteries down to one, changing the screen to a 3.2-inch OVGA (320p) resolution screen, using a 300,000-pixel rear camera, and canceling the front camera.

Canceling the GPS positioning system, using a public mold, using a single SIM card, and then adding other downgrades—this way, the cost could be significantly reduced, and there would be no problem pressing it down to around 700 RMB.

The response from MediaTek was significantly faster. Thanks to Zhang Song's efforts, the call came back in less than 8 minutes.

"Mr. Lei, I agree to lower it by another 5%." Zhang Song's voice carried a hint of helplessness, "This is my maximum authority, so I have one condition."

"A three-year contract, at least 30 million per year. If it's even one less, it must be charged at the original price."

"Deal."

After hanging up, Lei Jun started calculating. Now, a few more yuan could be saved on costs. Adding in optimizations of other components, the hardware cost could likely be compressed to a point where they wouldn't lose money.

As for the manufacturing side...

Selling one unit would still mean a loss of at least a few dozen yuan. Although it was still painful, it was at least acceptable.

"Old Lin, send out the notice."

"On October 28th, the first-generation Redmi will sync with the Double 11 event. The price will hit rock bottom, with a million units in stock."

"Understood."

"Also, for publicity, starting from now, post one message every day."

"Release the price, stock, and configuration in batches."

"We need to stir up the hype and keep it going until October 28th."

"Old Lin, we must win this battle."

Lin Bin stopped in his tracks and nodded.

Fortunately, Lei Jun made the right choice in the end, and the supply chain achieved a "great victory."

...

That afternoon, Xiaomi's official Weibo account posted a message: "The first-generation Redmi will be a stunning release. This time, we are redefining the thousand-yuan phone."

"What other tricks can Xiaomi pull?"

"It won't be electronic garbage with 256MB of RAM again, right?"

"To the person above, I wonder what phone you are using? Has 256MB at the hundred-yuan price point become garbage?"

"Mr. Lei, I only beg that it's not a pre-order scam!"

Lin Bin replied: "This time it will definitely not be a pre-order scam. We have currently reserved a stock of 1 million units. Three manufacturing plants are currently producing them simultaneously, and we can add 500,000 units to the stock every week."

"Damn, a million units in stock is awesome! This time we shouldn't have to fight to buy one, right?"

"Awesome! Honor next door should be feeling the pressure. I wonder if they are scared?"

"Hahahaha! Go Xiaomi!"

In this comment section, Lei Jun did not speak; only Lin Bin and others replied in the comment section.

He just forwarded that Weibo post and pinned it.

As for him, he opened his computer and started modifying the PowerPoint for the Redmi launch event.

On page 10, he added a sentence: Let everyone use a Smartphone.