Depending on where you live, Xiaomi is either huge in your country or hardly known at all. The 8-year-old company is currently the fifth largest smartphone brand in the world, and according to people familiar with the matter , is expected to go public with an Initial Public Offering (IPO) of 10 billion USD.

Assuming this turns out to be true, this would make Xiaomi's IPO the largest the world has seen so far in 2018. That may sound like exciting news for potential investors, but the way Xiaomi's going to handle itself as a public entity could present them with a difficult decision.

The majority of Xiaomi's earnings will come from software and services — not hardware.

As noted by Radio Free Mobile, Xiaomi will initiate a hardware margin limit of 5%. In other words, Xiaomi plans on earning little-to-no money on hardware and instead will rake in its cash through software and services. Xiaomi's often credited as being China's Apple, and while its hardware may take a lot of inspiration from the iPhone, MacBook, etc., this profit strategy is anything but.

Some of the services Xiaomi makes money through include advertising in its apps and paid subscriptions for digital book and video content. The company's work here shouldn't be discredited, but purposefully limiting itself to just 5% for hardware sales is an interesting move.

It's expected that Xiaomi will submit plans for the IPO by the end of this week and go public as early as June, but at this time, the company's yet to officially comment on any of this speculation. When that happens, we'll be sure to let you know.

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