Xiaomi is going high-end in India, and 2021 will be its year of reckoning

2020 was a transformative year for Xiaomi’s high-end strategy in India. What began as a cautious tiptoe into a largely new segment has turned into warfoot. Xiaomi has lost its budget roots and has focused heavily on becoming a full service player.

When I last commented on Xiaomi’s India strategy in May 2020, the world, and India in particular, were in the early stages of the ongoing pandemic. It was hard to imagine the huge impact COVID-19 would have on the country’s economy. Nevertheless, Xiaomi managed to increase its market share.

In fact, research company Canalys reports that Xiaomi has a leading 27% share of the Indian smartphone market.

Counterpoint Research’s report for the first quarter of 2021 said Xiaomi continued to hold pole position as smartphone shipments in India rose 23% year over year to 38 million units. This was of course mainly thanks to entry-level smartphones, but Xiaomi has also used the advantages in the growing upper price range.

Xiaomi’s current strong market share is based on the back of the Redmi 9 series, but also on a strong performance in the premium mid-range segment with the Mi 10i.

At this point, it is obvious that Xiaomi has mastered the entry-level success formula. However, there is considerable growth potential in the upper segment.

Build customer trust

Xiaomi’s previous attempts in the high-end segment, mostly with the Mi Mix 2016, didn’t win many fans. The phone sold a dime, and years of waiting for another flagship didn’t build confidence in the company’s high-end credentials. On the contrary, Xiaomi’s relentless focus on the entry-level market had the side effect of building a reputation for itself.

In 2020, the Mi 10 was the first high-end Xiaomi phone to come to India in a long time, and Xiaomi quickly followed suit with the Mi 10T series. That one-two punch marked a long-imminent return to the company’s affordable flagship. Xiaomi set out to compete against the fan-favorite OnePlus 8. He also played another role – he demonstrated a commitment to the Indian market.

Three flagships in a row? That changes the equation and Xiaomi has kept the charge with the budget Mi 11 series. In the premium mid-range segment, the introduction of the Mi 11 range has reinforced Xiaomi’s commitment. You have the Snapdragon 870-toting Mi 11x, starting at Rs. 29,999 (~ $ 410), a steal compared to the much more expensive OnePlus 9R. Then there is the Mi 11x Pro starting at Rs. 39,999 ($ ​​550), which again undercuts the OnePlus 9 and offers a better camera for booting. And of course there is the Mi 11 Ultra, which also gives you a lot more gear for your money than direct competitors.

Flagships are only part of the story, however. From a broader perspective, it is clear that Xiaomi is trying to get its entire portfolio up the price ladder. An example of this is the Redmi Note series, the price of which has traditionally been well below the Rs. 20,000 (~ $ 260) mark. The Redmi Note 10 Pro broke this barrier and raised prices for the entire Note 10 series. Customers have broken it down further.

The range for the high-end doesn’t stop with phones. Xiaomi has expanded – and scaled – across various industries, from the Mi Robot vacuum cleaners to laptops to high-quality QLED TVs like the recently introduced 75-inch giant.

Timing and execution are critical, and Xiaomi’s expansion into more premium products has taken a long time.

It’s a good time for Xiaomi to get moving. The entry-level segment is full of options in India. Realme has flooded the market with derivatives of the Realme and Narzo brands. In this environment, Xiaomi only has so much room for diversification, and premium components come at a cost.

Connected: The best Xiaomi phones you can buy

In addition, the average retail price of smartphones is slowly but surely increasing. In this market, you can only get so far with high sales and wafer-thin margins. Xiaomi had to gain a foothold in the premium smartphone market to maintain profitability.

Components are important, but a premium phone isn’t just defined by hardware. Software and support are also trademarks.

As my colleague Hadlee pointed out recently, MIUI inconsistencies across the Xiaomi portfolio can affect the user experience. Take the Mi 11 Ultra for example: scaling issues with notifications are not what you’d expect from a Rs-priced phone. 69,999 (~ 950 USD). The quick introduction of MIUI updates usually fixes most bugs, but first impressions are important.

It’s also about updates. Apple’s four to five year support is unbeatable, and Samsung closes the gap with three years of support for many of its phones – not just flagships. The (at best) two-year-long updates that Xiaomi offers are rather poor in comparison.

Fixing these issues will be key to Xiaomi’s continued growth.

Ecosystems are important, as are innovations

It couldn’t be said that Xiaomi is not an innovative brand. Experiments like the Mi Mix Alpha show that the company is constantly busy with big ideas, even if they don’t always make it to market. Xiaomi is also part of the selected club of companies that have released a foldable: the Mi Mix Fold.

It is just as important to make this innovation known beyond China. When it comes to phones, Xiaomi has grown steadily in India, but the trickle approach towards new industries could be folly. Between robotic vacuums, laptops, smart speakers and many other devices, Xiaomi is not risk averse. But if it doesn’t accelerate time to market in India, it threatens to be overtaken by all other brands upgrading IoT portfolios.

A solid ecosystem creates touchpoints for users to talk about the brand and increase visibility. Xiaomi’s broad TV portfolio is a great example of how much of the Indian smart television market can be cornered. The latest version, the QLED 75, is set to make waves and have an industry-wide impact.

That means there has to be more. Xiaomi’s expansive ecosystem, only partially available in India, fits in perfectly with the country’s growing purchasing power and the company’s premium ambitions.

This is all the more important in India, where smartphone sales are expected to take a nosedive in the second quarter due to the second wave of the pandemic. While smartphone sales may decline, it is the surrounding ecosystem that has the potential to increase Xiaomi’s revenue.

Xiaomi in 2021: ready to jump

It took 10 years and many hits and misses for Xiaomi to prepare for this moment. However, the company cannot afford hold back now. The playbook is easy to copy. Indeed, the BBK-backed Quadfecta from Oppo, Vivo, OnePlus and Realme is aiming for the same price and can further lower prices by sharing components.

Xiaomi has momentum. To really go premium in India, all it takes is a steady cadence of releases across price segments and indeed across industries.