Can anyone stop Xiaomi while it ups the ante in India?

Can anyone stop Xiaomi while it ups the ante in India?

Summary: With rock-bottom prices for phones that have superior specs in their class to begin with, Xiaomi is redefining what value for money means in India.

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TOPICS: Smartphones, India
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The Redmi 1S and the Redmi Note
(Image: Xiaomi)

Having fought one particularly ferocious border war in 1962, and tangled over numerous other border incidents in just this decade alone, Indian-Chinese relationships are never less than testy at any given time.

Given that China is Pakistan's ally, while India is host to the Dalai Lama, head of the Tibetan government in exile, which set up shop in the Indian mountain town of Dharamshala in the state of Himachal Pradesh in the 1950s, there is no love lost between these neighbours. Plus, China is forever trying to expand and exert its influence in India's backyard in areas like Burma and Sri Lanka, which drives India bananas.

While both nations will dictate much of what the world buys and sells, thanks to their low-cost manufacturing or service bases and gigantic consumer populations, and are often referred to in the same breath when talking about the economies of the future, the truth is that despite its vaunted legions of engineers and managers, India is hardly in the same league as China, thanks to its breathtakingly corrupt political system. India today is where China was 25 years ago. It used to be a hobby for Indians to constantly size their country up in comparison to their neighbor, but as of late, I have noticed that this doesn't happen as much anymore, perhaps because of a growing realisation of how far apart that gulf is. Still, there's no love lost between both nations.

This is why the sheer frenzy with which we Indians have embraced smartphone maker Xiaomi, or "the Apple of China", is astonishing. Maybe this says something about how Indians can separate their buying habits from their politics. And maybe there is enough realization that since practically everything we buy, from flat-screen TVs to computers to air conditioners to power plant turbines, is made in China, buying a Chinese brand isn't such a big deal. Or maybe it is just the sheer jaw-dropping value proposition Xiaomi offers that makes Indians forget about being nationalistic or patriotic and opting for an Indian brand like Micromax. The fact is that Indians haven't quite embraced a phone brand like they have Xiaomi.

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The Mi 3, which has sold 90,000 phones in a few seconds during six flash sales spread out over a month in India.
(Image: Xiaomi)

Xiaomi launched its flagship Mi 3 two months ago to a roaring response — 95,000 phones were snapped up in a matter of seconds through six flash sales over a month, exclusively via e-commerce site Flipkart. That's no surprise when you consider the terrific specs that the good-looking Mi 3 sports: A 5-inch 1080p display, a robust 2.3GHz Qualcomm Snapdragon 800 processor, 2GB of RAM, and 16GB Internal memory, as well as a 13MP rear- and 2MP front-facing shooter, all for the bargain basement price of a little over $200.

If these specs at the given price — around $250 cheaper than even the value-driven Nexus 5 and an infinitely better proposition than the similarly priced, uber-popular Moto G — weren't enough to make Indians drool, Xiaomi has been accused by its critics of very cleverly suppressing sales of its phones at around a tenth of the existing demand for it. Former vice president at Google and current VP-International at Xiaomi, Hugo Barra told the Economic Times that this wasn't premeditated. The problem lies in India's unusual hardware and antenna calibrations, which are different from those existing in any other country. This meant that it was impossible to use phone stocks in China or Taiwan, and so the units on hand were paltry.

"It will become more severe, since India has dual-mode LTE, so our devices will have to do 2G, GPRS, 3G, FDD-LTE, and TDD-LTE, making India the only market for us today where a five-mode device is required," Barra told ET.

Now, Xiaomi is planning to drop its next bomb on India. On September 2, it is launching the Redmi 1S, again a phone equipped with astonishing specs for its rock-bottom price of Rs 5,999 ($100). For this price, buyers will get a 4.7-inch 720p HD display, a 1.6GHz quad-core processor, 1GB of RAM, an 8GB internal memory (expandable up to 64GB), an 8MP rear camera, and a 1.6MP front camera. When Motorola introduced the Moto E at around the same price range, it seemed like a revolution. Now, I wonder how the E or phones like the Nokia Lumia 530, both in the "budget" category in India, can even begin to compete with the Redmi 1S.

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Hugo Barra, VP-International, Xiaomi
(Image: Xiaomi)

If this isn't enough to dominate the Indian smartphone space, Xiaomi will also flog the wildly popular Redmi Note phablet — legendary for selling 10,000 units in a single second in Taiwan. The Redmi Note has a 5.5-inch 720p IPS display, a 1.7GHz MediaTek MT6592 octa-core processor (also on the HTC Desire 616 and Micromax Canvas Knight), and 1.7GB of RAM, all for around $160.

The problem with most Chinese phones in India is that they have generally been cheap knockoffs with no service possibilities. If one goes kaput, you're left with a pile of worthless components with nowhere to go to fix them. Xiaomi's phones are sturdy. Moreover, to combat the perception of poor after-sales service — something that Indians are very keen on, since they pay full price for their phones, unlike their counterparts in the West who get them on heavy discounts from telcos along with a plan — Xiaomi plans on opening up 36 service centers in India across 20 cities. Two of them will be exclusively for the Mi range.

A final sign that Xiaomi is here to stay is that the Chinese phone company is investing in a development facility, something that not many foreign entrants have done or are thinking of doing. "We want to have an R&D centre with an actual engineering team, with designers, product managers ,and software engineers, who will build features for the Indian market within India, not just localise features," said Barra to ET.

In a relatively short time span, Xiaomi has sold an impressive 17 million phones in China, and is the number one phone brand there, outstripping even the likes of behemoth Samsung. Its flagship units are easily a fourth of what an iPhone costs, and it seems to be the best value proposition in whichever market it enters. If indeed it follows through with its articulated plans on India, a market that is going to see 80 million smartphones sold this year — roughly double last year's figure — I wonder who will realistically be able to stop this Chinese juggernaut in its tracks.

Topics: Smartphones, India

Rajiv Rao

About Rajiv Rao

Rajiv is a journalist and filmmaker based out of New Delhi who is interested in how new technologies, innovation, and disruptive business forces are shaking things up in India.

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5 comments
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  • The mentality of an Apple fanboy

    Any company that offers good value for the money MUST BE STOPPED! But ESPECIALLY if it's a non-American company. Hey, can't we just have the government say that they're spies or terrorists? It has worked before: Americans are naturally xenphobic and believe anything the media say...
    siskol
    • Hugo Barra sabe

      He was the motor behind Google. You can see some stagnation for Google after he left. Now at Xiaomi he is rocking the smartphone market to a point that others should pay attention.

      If Xiaomi reaches western countries in Europe or South America, it will hurt Apple, Samsung and LG in such a manner that most don't realize yet.

      The question is durability. The iPhone only button is a problem overtime. Samsung sim card error on GS4 has made it lose its premiere position. Samsung should have replaced these phones for free, they haven't, they are now losing marketshare. LG screens fade a bit overtime. Not sure that the LG3 week follow this situation. Motorola phones don't last two years, the never have, that's why it was hard for them to gain market share. The best built devices on Android are Nexus made by Asus so far. Only one gallery has failed me.

      How good ar Xiaomi phones? We need to wait and see, though I'll so up a few for testing.
      Uralbas
      • Sorry for the typos

        Swift is great fir fast typing, though horrible autocorrect. Been having provenance since I started using it. Swype here I come back.
        Uralbas
        • K, now the keyboard looks horrible, not Swift

          Though, grammar and spelling actually work. Not the worthless bable that Swift provides. Promise to do better from here on.
          Uralbas
  • Anything that is bad news for Apple is good news...

    NT
    rimpac99@...