​Xiaomi sells record 600,000 phablets in two months, prepares for India expansion

The Redmi Note 3 is a continuation of ​Xiaomi 's outsized hits in India and could pave the way for a services strategy that rivals will find difficult to match
Written by Rajiv Rao, Contributing Writer

Xiaomi's Hugo Barra launching the Redmi Note 3

In March and April, Xiaomi sold a staggering 600,000 Redmi Note 3 phablets ($135 each) according to its supremo for international business Hugo Barra.

The Redmi Note 3 phenomenon continues to underscore two trends in the Indian smartphone firmament.

Indians absolutely adore their phablets -- oversize phones with screens larger than 5.5 inches. They always have. If you're ever in a train, a metro or a shopping mall in the country, look around you and take note of the overwhelming number of men and women using this smartphone-tablet hybrid to browse, text or make calls. Much like the fondness for buying SUVs to navigate narrow, traffic-choked roads--bigger for Indians almost always means better--Indians like their phones in large sizes.

The second thing that Indians can't get enough of is all things Xiaomi. This Chinese company has wowed them by offering the one thing closest to every Indian heart: Value for Money. Xiaomi's sleek line of moderately-priced 'Mi' line of phones and budget phablets have made waves since being launched in the country two years ago. Its sub-five percent market share may seem underwhelming compared to the hype its products bring, but if you consider the fact that these strides have been made solely through intermittent flash sales on e-commerce sites and not through a retail presence -- which is how most of the country buys its phones -- it is an extraordinary result.


Redmi Note 3

All of Xiaomi's products have so far been scarfed up by the Indian public in seconds (roughly the amount of time their flash sales last) but none have achieved the spectacular success that the Redmi Note 3 has gotten so far. An instant looker thanks to its classy, all-metal, sandblasted, matte finish, the phone has attracted rave reviews for a good all-around show, outperforming most mid-range competitors in speed, design, photography, security and battery life.

Its 5.5 inch Full HD display (1920 x 1080) with a pixel density of 403 ppi has impressed with good colour reproduction as well as sunlight readability. Its Qualcomm Snapdragon 650 chipset with a hexa-core processor has racked up impressive AnTuTu scores on certain tests, outstripping the OnePlus2 and Google Nexus 6P among other rivals that cost more than twice the Redmi Note 3. Its fingerprint sensor is speedy and has a low False Rejection Rate. Its 16 megapixel rear camera and 5 MP front camera has more than satisfied. But the most impressive feature is in the battery department where the 4050 mAh juicer allows the phone to keep on humming for up to a week on idle.

Chinese companies have long suffered the reputation for being flimsy, unreliable units with little or no after-sales service. Yet, as smartphone sales have flatlined in China, Chinese companies--from the more established brands like Lenovo to new-entrants like Gionee and Oppo--have started making a more concerted effort to shed this image in India. Almost all of them have relocated assembly or manufacturing units to the country and Xiaomi is no different, having set up its manufacturing facility in 2015 and making over 75 percent of its phones here. (The Redmi Note 3 is made out of the Foxconn contract manufacturing facility in Andhra Pradesh).

Xiaomi has long realized that its hardware is only a base for how it will generate a stable source of revenue in the future, namely services. It churns a reasonable amount of cash through its website selling apps and games ($560 million out of the $12.5 billion in revenues in 2015) and will want to corner a large share of the Indian market doing the same.

Consequently, Xiaomi last week made its intentions clear by announcing its first-ever investment in an Indian company--it injected $25 million in popular media entertainment firm Hungama that is well known for its localized online gaming efforts.

This clever strategy of low-cost, non-retail, online sales of sought-after, value-for-money phones like the Redmi Note 3 coupled with a dominant, localised services platform through an established brand name could pose a tough act to follow for any Xioami competitor.

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