Xiaomi's Red Rice Phone Popular in China, Costs Just $85 to Build

Xiaomi isn't a brand you're likely to be familiar with if you live in the United States, but there are a couple of reasons why that might change in the coming months. First, Google's ex-VP of Android, Hugo Barra, just tendered his resignation to become VP of Xiaomi Global. His face became a familiar fixture at press events and Google's annual I/O developer conference. Secondly, Xiaomi last month launched its least expensive smartphone yet, called Red Rice.

Qzone, a social networking website operated by Tencent, got its hands on the first 100,000 models produced. The phone sells for RMB799, or $130 USD, and no, Xiaomi isn't taking a loss on the hardware.

According to TrendForce, the Red Rice phone carries an $85 bill of materials (BOM), which means Xiaomi is enjoying a healthy profit on each handset it sells. The bulk of the cost comes from the 4.7-inch IPS display with a 1280x720 resolution. It accounts for 20 percent of the total BOM, followed by the phone's MediaTek MT6589 chipset, which accounts for another 20 percent.

Red Rice

"Red Rice’s groundbreaking price will inevitably have an influence on other smartphone manufacturers’ pricing strategies, especially for low to mid-end products," TrendForce says. "Currently, Xiaomi’s main market is China. The company is eagerly expanding on foreign markets as well, but results have been limited. Whether Xiaomi’s low prices will have an effect on smartphone makers in other markets will depend on the Chinese manufacturer’s foreign sales."

It's a respectable phone for the money. In addition to the 4.7-inch display, it also boasts a 1.5GHz quad-core processor, 1GB of RAM, 4GB of internal storage, 8MP rear-facing camera, 1.3MP front-facing camera, and 2,000 mAh battery.