Lin said Xiaomi's ultimate goal is to make a profit by selling its software or other mobile services instead of its hardware sales, though he acknowledged that effort is in its early stages.
"We're not here to just not make any money," Lin said. "Running a business long-term we will have to make money."
The rise of low-priced, high-performance phones will hit Samsung hard. The South Korean electronics giant has historically blanketed the market with models at every size and price backed by big marketing budgets.
That has worked out well for Samsung, but it's unclear how sustainable such high cost structures will be against the latest trend. Android phone makers at the low end, including those that use Microsoft's Windows Phone and Mozilla's Firefox OS, will also suffer.
The trend is being further accelerated by the multiple, competing phone chipmakers. Eager to make it as easy as possible for hardware makers to get in the game, Qualcomm, Taiwan's MediaTek and others create near-final reference designs that make getting in the business not much harder than choosing a logo and color.
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