How Xiaomi Beat Samsung to Become India’s Largest Smartphone Brand
At the end of last year, Xiaomi accomplished a feat that no other smartphone manufacturer had been able to do in the past six years in India. Xiaomi surpassed Samsung to become India’s largest smartphone brand. This was an important milestone for the Chinese manufacturer, especially considering Xiaomi started selling phones just three years ago.
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Xiaomi started its business in India at a slow pace. Its financial situation in 2016 suffered due to other companies such as OPPO and Vivo taking market share. Xiaomi began to adjust early last year, following Samsung’s business model, and then rapidly rose to surpass Samsung by the end of the year.
Let us take a look at how Xiaomi bounced back and overtook Samsung as India’s largest smartphone brand.
Leading the mobile phone market.
At any given time, Samsung has more than 10 cheap smartphones on the market. Samsung provides huge amounts of equipment to the Indian market, and the differences between models are insignificant, helping it sell tens of millions of smartphones. Now, Xiaomi is doing the same.
Over the past six months, Xiaomi issued the A1 based on the Android One, the Redmi Y1 and the Y1 Lite, which are strong in selfies, the entry-level model Redmi 5A, the Redmi Note 5 and the Redmi Note 5 Pro.
Xiaomi will not change this tactic in the short term. Later this month, Xiaomi will release the Redmi 5, followed by the Mix 2S on March 27. The phone is likely to enter the Indian market as Xiaomi focuses more towards the high-end smartphone market.
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The Redmi Note 5 hardware is exactly the same as its predecessor. Its main change is the new 18:9 screen. In the past four years, Samsung has been selling smartphones with this screen ratio in India among a range of Galaxy J models. There are little differences in hardware configuration between the models.
Samsung have managed to sell tens of millions of Galaxy J phones, which has been the best-selling Samsung phone in India for many years. Xiaomi is now taking the same route, but with a key difference: the Redmi Note is popular and is not assembled with spare parts.
The Redmi Note 4 was ranked as the best cost-effective phone in India last year, and the Redmi Note 5 is priced even lower. This year, Xiaomi hopes to provide low-income consumers in India with a phone under 10,000 rupees ($153).
At the same time, Samsung insists on upgrading models. The On7 Prime, which rivals the Redmi Note 5, is priced at 12,999 rupees ($200) on Amazon India. Although Samsung launched the phone two months ago, its hardware specifications have barely changed from the 2016 model, which was named the Galaxy J7 Prime. Samsung also released an online-only version of the phone called the Galaxy On Nxt.
The Samsung On7 Prime is equipped with a 5.5-inch HD full-screen, an Exynos 7870 chipset with octa-core Cortex-A53, one 13-megapixel rear camera, 64 GB internal storage and a 3,300 mAh battery. For the new On7 Prime model launched in 2018, new additions include a 13-megapixel camera, 4 GB RAM and a Samsung Mall function to store multiple online store listings in one place.
When the J7 Prime was launched in 2016, it was not the fastest low-end smartphone, and the On7 Prime inherited all of its configurations. The phone is out of date and lacks the basic configuration of ambient light sensors and gyroscopes, and the display is a dull TFT screen.
Since the retail price of the On7 Prime is 3,000 rupees higher than the Redmi Note 5, it is easy to see why Samsung is losing to Xiaomi in the low-end smartphone market.
But it is not all smooth sailing.
Despite the rapid development in India, there is still a shortage of Xiaomi availability in some areas, which is a sales channel problem. Xiaomi continues to sell its phones through a time-limited purchasing model, which means that most customers who are interested in new models and have registered will not be able to buy the latest models.
For example, more than 2 million people signed up for Redmi Note 5 Pro when it was released, but Xiaomi only fulfilled 300,000 orders. The phones were sold out in a matter of a few minutes. That was the case each and every time. Xiaomi said it would increase its sales channels and supply, allowing customers to buy its phones offline, but it clearly has a lot more work to do in this area.
It is one thing to have a good product that millions of people flock to, and it is another to make sure that it can be purchased through a certain channel. Xiaomi also needs to work harder to ensure it does not lose out to rivals in this respect.
Strengthen local manufacturing capacity.
Another area that Xiaomi has focused on over the past two years is local manufacturing. All smartphone manufacturers are building local factories to compete effectively as the Indian government begins to levy taxes on imports from other countries.
With two factories in India, Xiaomi assembles all its Redmi phones locally. Xiaomi is preparing to build its third plant to boost production, while also investing in an independent factory that makes portable power sources.
Samsung was the first company to seriously consider building a local manufacturing plant. It has been selling locally-made phones in India for some time. Doing so gives it a unique pricing advantage.
Xiaomi is also focusing on local manufacturing to ensure it retains an edge in pricing.
Enter the new category of products.
Xiaomi is also trying diversify the range of products it offers the Indian market. Xiaomi‘s fans have been waiting for the Xiaomi TV for a long time. The 55-inch Mi TV 4 is equipped with a 4K HDR screen and priced at 40,000 rupees ($616), far below the prices of similar products from Samsung, Sony and LG.
Xiaomi did not position its product in the high-end OLED TV market. Instead, it aimed to compete with products made by Vu, Micromax and other cheap TV brands. This is a smart move because Xiaomi TV has better quality and a better recommendation engine.
Pave the way for more products.
The opening of Xiaomi‘s Mi Home in Chennai could indicate that the company is preparing to introduce its lifestyle products to India this year. Xiaomi launched air purifiers in India last year, but it sells much more smart home products in China. Like its smartphones, Xiaomi lifestyle products are affordable and provides a range of dazzling functions.
With its TV products and the imminent arrival of its eco-products, Xiaomi is preparing to meet challenges in various new product categories. It is rumored that Xiaomi will conduct an IPO later this year, so it will certainly try to increase its market share before it goes public.
Only time will tell if Xiaomi is able to compete effectively in the areas it wants to enter. If everything goes as well as its smartphone business, there will be no problem.
