Xiaomi has difficulty entering the US market, with operator subsidies becoming the primary problem

Chinese mobile technology company Xiaomi recently held a press conference in Silicon Valley, USA. Many people previously thought that this press conference was a new product launch conference for Xiaomi to enter the US, but this was not the case.

Xiaomi President Lin Bin and Vice Chairman Hugo Barra attended the press conference and said that Xiaomi is not yet ready to enter the US market because of the high penetration rate of smartphones in the United States, but many reporters present said that one of the obvious reasons is patent issues.

Xiaomi does not have its own patents yet, and in the US market, patents are particularly important, and registering patents is a huge additional expense.

However, in addition to the patent issue, there is another reason that prevents Xiaomi from entering the US market: operator subsidies.

In the United States, most smartphones are tied to specific telecom operators, which subsidize the phones and in return sign customers to a service contract for several years.

For example, if I want to buy an iPhone in New York, it will only cost me $200, but the condition is that I must sign up for a two-year mobile service with the wireless carrier that sells the iPhone. Of course, I still have to pay the full price of the iPhone, and the remaining unpaid amount will be added to my monthly wireless bill, but for the average customer, the "list price" of the iPhone is only $200.

That's in stark contrast to Asian markets, where phones are often detached from wireless networks. If you want to buy an iPhone in China, you'll have to spend $800.

If Xiaomi finds a carrier in the United States, American customers can get a Xiaomi phone for free by signing a two-year wireless contract, while the iPhone costs $200, which means that buying a Xiaomi phone can save users $200. However, in China, choosing Xiaomi instead of Apple can save users more than $500, so the prevalence of carrier subsidies in the United States undermines Xiaomi's price advantage.

Without a low enough price point that is attractive enough, it will be difficult for Xiaomi to gain a foothold in the US market. Although Xiaomi's brand awareness is gradually increasing, there is no doubt that mobile phones like Apple and Samsung are more well-known. If American customers are asked to choose between a free Xiaomi phone and a $200 iPhone, most people may choose the iPhone. Unless Xiaomi has a solution to this problem, it will be difficult for it to take root in the US market.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.