We view Chinese Company, Xiaomi as a mobile Internet company, rather than a hardware company, mainly because Xiaomi captures a significant portion of user life time value (LTV) after hardware purchase through a 3-way monetization model (hardware, Internet service and software). On the contrary, hardware companies capture vast majority of the user LTV at hardware purchase.
Hardware, which includes various in-house developed Xiaomi devices such as Xiaomi smartphones, tablets, Xiaomi Router, etc. Xiaomi devices are priced at significantly lower prices vs. competitors, which should drive user acquisition.