My Thoughts on Technology and Jamaica: Xiaomi in India after success in China - Xiaomi Looks to the West as the World is theirs for the Taking


Monday, January 19, 2015

Xiaomi in India after success in China - Xiaomi Looks to the West as the World is theirs for the Taking

As is now well, known, Samsung has launched the US$90 Samsung Z1 in India, their first smarphone using Tizen OS as I'd reported in my blog article entitled “US$90 Samsung Z1 Launches in India - Xiaomi Redmi and Google Android One competition with Tizen OS and Samsung Galaxy S5 stylings”.

I'd predicted that they did it in fear of Google and their US$100 Android One smartphone, but I realize I'd completely forgotten about the huge 100 pound Gorilla in the room: Xiaomi. The smartphone maker also has plans to conquer India, said to be the second largest market after China as noted in the article “How Xiaomi plans to take over India’s smartphone market in 2015”, published 19.1.2015 by Saptarishi Dutta, Quartz India.

I've actually pointed out in an earlier article that India is a rapidly expanding market that's yet to fully even taste feature phones as noted in my blog article entitled “US$90 Samsung Z1 to launch in India - 1.2 billion Indians up for Grabs as Tizen OS hints competition against US$100 Google Android One”.

Xiaomi only has about 1.5% of India's martketshare.

25% is in Samsung's clutches, with Micromax pulling in a close second with 20% according to analyst CounterPoint Research in the article “Market Monitor Q3 2014: Welcome to the Million smartphone Club of India”, published 11.01.2014, CounterPoint Research. Take a gander at the graph below showing the smartphone and handset marketshare in India as of the Third Quarter of 2014

Clearly, Xiaomi and Samsung are going to come to a head with Xiaomi coming out the winner for two reasons: price and quality. Worse, that Fight might be coming to the West and eventually Jamaica sometime in 2015.

Xiaomi in India - Success for China's Small Rice that's the Apple of the Far East

In case you've been living under a rock Xiaomi is a Chinese smartphone maker started by Billionaire Founder and CEO Leu Jun as explained n this quick primer article “Xiaomi: It's China's Apple, though you've probably never heard of it”, published Friday 16 January 2015 12.37 GMT by Charles Arthur, The UK Guardian.

Founded in 2010 by Leu Jun, Xiaomi, which in Chinese means “small Rice”, was from the outset accused of cribbing Apple's Style, both in terms of their smartphones and presentation styles, especially with their most recent smartphone, the US$322 Xiaomi Mi4 smartphone launched in August 2014 as noted in my blog article entitled “US$322 Xiaomi Mi4 smartphone – The World is Not Enough as Chinese Small Rice James Bond Copycat copies Apple’s design”.

Possibly he got that style from his years working as an Executive at software maker Kingsoft and then the develpement of Joyo which Amazon bought from him for US$75 million August 2004. Currently the chairman of browser maker UCWeb, his wealth and knowledge of the Chinese Supply chain gave him the knowledge capital he needed to start his venture into making low cost smartphones.

His method of designing smartphones based on user suggestions from online forums and selling smartphones exclusively online in rapid fire sales is a strategy that they used with the launch of the US$134.07 Xiaomi Redmi smartphone in Singapore back in February 2014 as stated in my blog article entitled “Xiaomi launches US$134.07 Xiaomi Redmi smartphone in Singapore - Perfect Storm for Apple and Samsung as the Xiaomi Redmi is Katy Perry's Dark Horse”.

Flurry and Xiaomi in China - Apple is outgunned by the No. 1 smartphone maker in China

It seems to be having a marked effect. In January 2014, analyst Flurry did a study of smartphone users in East and South Asia, specifically China as noted in the article “Xiaomi Brings Apple’s Magic to China‘s Young Business Professionals (…and to Android)”, published July 8, 2014 by Simon Khalaf, Flurry.

Flurry discovered that users of a Xiaomi smartphones were more likely to be Millennials (age 128 to 28) a target group of most products from Apple bottom jeans to Zappos shoes. The graph illustrates this most dramatically.

In China, the Millennial demographic is one to watch:

1.      7 million added to this demographic each year
2.      195 million just in China by 2020 will number

This is more than the forecasted US workforce! Even more telling is the engagement level using these Xiaomi smartphones that sport Xiaomi's custom Android MiUI (User Interface) when compared to the more premium brand Apple iPhone as show in the graph below.

In numbers, the engagement levels of the various smartphone competitors are telling:

1.      107 minutes on the Xiaomi smartphone
2.      100 minutes on the Apple iPhone
3.      86 minutes on Samsung smartphone
4.      73 minutes for HTC smartphone
5.      71 minutes for other Android smartphones

With such high engagement levels thanks to the customization based on feedback from forums, the competition really doesn’t stand a chance. Add to this dangerous cocktail prices that are less than half of the price of unlocked Samsung smartphones and Apple iPhones.

Aside from the US$134.07 Xiaomi Redmi smartphone, there was also the US$130 5.5” Xiaomi Redmi Note Phablet , whose prices is far cheaper than any unlocked smartphone yet have a fairly high quality build as noted in my blog article entitled “US$130 5.5” Xiaomi Redmi Note Phablet goes on sale in China on Tuesday March 26th 2014 - Low-cost Unlocked Phablets the next Tablet in China's Year of the Horse”.

The most recent smartphone release in August 2014, the US$322 Xiaomi Mi4 smartphone, is a close competitor to the Apple iPhone and costs far less as noted in my blog article entitled “US$322 Xiaomi Mi4 smartphone – The World is Not Enough as Chinese Small Rice James Bond Copycat copies Apple’s design”.

By comparison, the Apple iPhone 6 and Apple iPhone 6 Plus, which was launched in September 2014, is priced way higher, with an unlocked 16GB Apple iPhone 6 coming in at around US$649 as stated in my blog article entitled “Apple iPhone 6 and iPhone 6 Plus - No Sapphire Screen but 128GB Storage and NFC-powered Apple Pay in Apple's Biggest iPhone Launch”.

BOTH Apple and Samsung are seriously outgunned in China by this smartphone maker that makes quality smartphones at cut-rate prices thanks to their like to Chinese manufacturers and their use of the same parts with each model as explained by Xiaomi Vice President Hugo Barra as explained in the article “This Is How Xiaomi Keeps The Cost Of Its Smartphones So Low”, published Jon Russell, Techcrunch.

Xiaomi's Long term Ambitions - China is saturated and the World is theirs for the Taking

Xiaomi's long term ambitions are to reach the West i.e. USA, Canada, UK, Latin America, Canada. Right now they're focus on conquering China and expanding to South East Asia. That means at some time in 2015, we might see Xiaomi Smartphone being sold by Telecoms Provider Digicel or LIME here in Jamaica.

This is now more urgent than ever as signs are emerging that suggest that China is becoming saturated based on the 2014 report coming from China’s telecoms regulator, the MIIT (Ministry of Industry and Information Technology) as reported in the article “Smartphones At Tipping Point In China”, published 1/15/2015 @ 1:58AM by Doug Young, Forbes.

Samsung is already experiencing contraction in their Third Quarter of 2014 thanks to this saturation in China, one of their bigger markets as noted in my blog article entitled “Samsung’s declares 60% Profit and 20% Sales decline - Tizen OS Response needed as India’s Diwali may Light a Path in November towards Future Prosperity”.

The Fourth Quarter report for Samsung suggests that the past five (5) Quarter of decline may be slowing as stated in the article “Samsung Earnings Hint at Recovery”, published Jan. 8, 2015 12:46 p.m. ET By JONATHAN CHENG, The Wall Street Journal and “Samsung expects fourth-quarter profit to drop 37 percent from year ago”, published January 7, 2015 4:46 PM PST by Steven Musil, CNET News.

This as they focus on India.....the same market that Xiaomi is also headed to as the Chinese market, albeit growing, becomes more and more saturated and prone to razor-sharp pricing wars. India remains the last battle ground worth fighting over. Xiaomi is on their way to India and Samsung, now in recovery mode, must make sure that they can secure the market before Xiaomi establishes a bigger foothold.

I’ll be doing more review article on Xiaomi smartphone in a later article on my other blog MICO Wars: The Teacher force Awakens.

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