China Unicom Reportedly Buys 2 Million Xiaomi Phones

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Xiaomi’s Android smartphone, introduced in China in August, is priced near cost at 1,999 yuan ($315), and 300,000 units of the phone were pre-ordered within 34 hours of its release, according to media reports. Following the success of 300k pre-orders through the Internet, Xiaomi’s given the go-ahead for a cooperation with telecom operators to further expand its sales channels. We might actually see China Unicom ordering 2 million phones from Xiaomi in the not too distant future.

Before you read on, we need to remind you that China Unicom ordered 5 million iPhones from Apple during 2009.

Referring to industry sources, the local media says that Beijing-based mobile phone maker Xiaomi is holding talks with the country’s number 2 carrier China Unicom about selling its low-priced high-end smartphone — the Xiaomi Phone. Should the talks succeed, China Unicom could buy 2 million phones from the Xiaomi Tech, the source said. However, spokespeople for Xiaomi and local carrier China Unicom have so far declined to comment.

Xiaomi has been manufacturing more Xiaomi phones in order to satisfy the huge demand, and in September, Li Wanqiang, vice president of Xiaomi Tech, confirmed that the company was actively endeavoring to cooperate with telecom operators to expand its sales channels. The cooperation model between China Unicom and Xiaomi would be similar to the operator’s existing cooperation with Apple — bundle sales with subsidies. As far as we know, China Unicom currently offers a subsidy of up to 50% on iPhones, and if Xiaomi can negotiate a similar deal, its phone’s retail price would be further reduced. If everything is confirmed, the cooperation between the two companies would definitely shock the industry. According to Chen Xuetao, an industry expert, the cooperation with China Unicom would improve sales channels for the Xiaomi Phone as traditional distribution channels like mobile network operators and commercial agents account for the main share of revenues.

On December 18, Xiaomi will begin regular sales of the phone via its website, and the company is ramping up the shipment of units over the next month from 5,000 units per day (right now) to 15,000 units per day starting from December 5. For those people who do not want to get the phone though a preorder number, they can order the phone after December 18, so they can receive the phone within 24 hours. Shipping the Xiaomi Phone in 24 hours could really attract more people to purchase the phone with astonishing hardware specs and surprisingly cheap price tag at 1,999 yuan ($315).

Meanwhile, the Xiaomi Phone only supports GSM, there’s no 3G support at all, and since China Unicom is mainly a WCDMA provider, we wonder if Xiaomi will make a new version of its phone to support WCDMA, just like Apple’s iPhone 4. It may be hard for Xiaomi to challenge Apple if the company’s phone does not support China Unicom’s 3G network. However, since there are 10 million Chinese users who are using iPhones on 2G network, we hope Xiaomi could snatch a portion of these users to keep up with the pace in the smartphone industry in China.

On the other side, Xiaomi CEO Lei Jun is considering whether or not his company should release a CDMA version of their Xiaomi Phone. He set up a poll on the company’s official BBS forum, but the results still aren’t particularly clear. 38 percent of the 26,000 voters said they support a CDMA version, 46 percent said that it was unnecessary, and 16 percent gave no opinion. If a CDMA version is made, Xiaomi Phone will be able to be used on China Telecom’s 3G network, but not China Unicom. Anyway, we think the company will eventually release a WCDMA version for the phone, since the two million order from China Unicom is a VERY big deal.

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