Apple and Xiaomi’s rivalry in India is a juicy paradox.

In the financial year ending March 2018, the Chinese firm sold over 10 times more smartphones in the country than the iPhone maker. Apple’s revenue stood at Rs13,098 crore—just a little over half of Xiaomi’s Rs23,000 crore, according to regulatory filings sourced by data platform Tofler.

Yet, at Rs896 crore, the US tech giant made approximately three times the Beijing-based firm’s profits (Rs293 crore).

The Cupertino-based company can thank its steep price points and high margins for this.

Fewer 📱 but more 💸

The Chinese firm, with its cheap devices, is winning the sales numbers game in the country. “Xiaomi has a much bigger market to capture than Apple,” said Anchal Agarwal, co-founder and CEO of Tofler.

The market leader’s brands hope to build a strong installed base by selling value-for-money products at razor-thin margins, said Rushabh Doshi, research manager at Singapore-based market research firm Canalys. Eventually, Xiaomi looks to “generate revenue via services like advertising, OTT, and so on,” Doshi said.

Whereas, Apple’s business model is to purely target the rich who are looking for status based on their devices, according to Pavel Naiya, senior analyst at Hong Kong-based Counterpoint Research.

In short, Xiaomi may have the volumes but Apple is the higher-value player.

In fact, Apple, which generates over 95% of its revenues from products alone, is losing customers in India. By the first half of 2018, its market share had halved from 2.5% a year ago, according to Navkendar Singh of International Data Corporation (IDC) India. Still, it keeps making more money.

And this isn’t an India-specific phenomenon. The world over, Apple accounts for nearly 90% of smartphone makers’ profits despite controlling less than 20% of the market.

“With Apple, the aspirational value is very, very high. Consumers are paying for brand equity and are willing to pay more and more,” said Tarun Pathak, associate director at Counterpoint. “With Xiaomi, the moment prices increase, fickle consumers in the segment will buy an alternative.”

Though the iPhone remains Apple’s most lucrative bet in India, rising from 2.45 million units sold in the financial year 2017 to 2.85 million the next year, its other devices, too, are showing growth. Between April 2017 and March 2018, desktop sales may have grown at just 4%, but notebook and tablet shipments both rose by double digits.

Apple has also made a key move in curbing costs in India. Since earlier this year, it has consolidated distribution channels and cut back on the number of retail partners, multiple experts told Quartz.

Another change in Apple’s India narrative is that, earlier, even three- and four-generation old iPhone models in the sub-$300 price band used to fly off the shelves. “That is being stopped now,” Singh of IDC said. “Older models like the 6S and even the 7 are going to be phased out much faster now, driving up the average selling price.”