Sarah Pekala

This month, the Chinese mobile manufacturer Xiaomi celebrates their one-year anniversary selling smartphones in India. The world’s third-largest smartphone maker does significant business—they’re valued at $46 billion, higher than Uber, Snapchat, and Flipkart. While their expansion into India has created a lot of buzz for the mobile manufacturer, it has not been without some bumps in the road.

Who is Xiaomi?

Xiaomi is a Chinese electronics company with headquarters in Beijing, China. They manufacture and sell smartphones, mobile apps, and consumer electronics. Unlike their competitors, Xiaomi does not spend money on traditional advertisements. Instead, they rely on social networking sites and customer word-of-mouth to expand brand awareness. In 2014, the company sold 61 million smartphones, up from 18.7 million in 2013.

When Xiaomi sold its Mi 3 model on Flipkart in July 2014, the high demand crashed Flipkart’s website. Within six months, Xiaomi had already sold around one million handsets in India. Xiaomi plans to sell 100 million smartphones in India in 2015, but they will have to do more to get there.

Despite Xiaomi’s growth, Samsung still reigns supreme in India

Company's Percentages of Handset Market Share in India

 

We measured handset market share based on the number of screen views by brand among our mCent members for the month of May 2015. While Xiaomi entered India with a bang and is beginning to gain market share, the company is still behind many other manufacturers in the country. Growth for Micromax is driven by their budget smartphones, which are giving many in India access to their first connected device. When we looked at our sample of mCent members, we detected 64 different smartphone models in India, and Xiaomi ranked well among the top 10 at seventh.

Xiaomi devices match Samsung for data and app usage

Xiaomi vs Samsung Phone Usage in India

 

When we reviewed data usage and app usage by mobile brand among mCent members for May 2015, Xiaomi devices had the same average number of apps used and almost as much data usage as Samsung. Although Samsung had 12 times more market share, Xiaomi users are using their phones just as much.

More models does not always lead to more market share

We also compared brands available in India by the number models available, their average selling price, and brand market share. Xiaomi currently sells eight different smartphone models in India:

 

  • Xiaomi Mi 4i at Rs. 12,999 (~$204)

  • Xiaomi Mi4 at Rs. 14,999 (~$235 )

  • Xiaomi Redmi 2 at Rs. 6,999 (~$110)

  • Xiaomi Redmi Note at Rs. 9,999 (~$157)

  • Xiaomi Redmi Note 4G at Rs. 9,999 (~$157)

  • Xiaomi Redmi 1S at Rs. 5,999 (~$94)

  • Xiaomi Mi4 64GB at Rs. 23,999 ($377)

  • Xiaomi Mi Pad at Rs. 12,999 (~$204)

 

Top 10 Handset Brands in India

 

Though they offer far fewer smartphone models, Xiaomi currently has more market share than Lenovo, Karbonn, and Intex (who have 37, 55, and 43 devices, respectively.) Xiaomi also has a lower average device selling price than market share leader Samsung, at an average of $28 cheaper. But Xiaomi is also far from the cheapest brand—with Karbonn’s average price at $63, Lava at $91, and Micromax at $95. Since we know the Indian smartphone market is craving affordable devices, decreasing their price point could help Xiaomi climb the list even further.

Xiaomi is making changes and focused on the future

Now that Xiaomi has been in India for a year, they’re beginning to shift their business model in India. In order to grow their device catalog and reduce their prices, Xiaomi is focusing on these strategies:

 

  • Increased spending on marketing: Even though they typically spend almost no money on marketing, Xiaomi is launching traditional newspaper advertisements in India to try and sell more smartphones and reach rural users.  Xiaomi is also opening 100 experience stores across India where users can try out Xiaomi devices, but they will continue to sell the devices through flash sales on Flipkart. As users get a chance to test run the smartphone before they buy, their interest in the device could drive more sales.

  • Manufacturing in India: Xiaomi is also expanding their physical footprint in India, Foxconn will soon begin manufacturing Xiaomi phones in India.

  • Cutting device prices: Xiaomi is reducing the price of their top-end device in India, the Mi 4, at a 2,000-rupee discount to reach many of the smartphone users in India who would normally not be able to afford it.

While Xiaomi has a long way toward becoming the largest smartphone manufacturer in India, their country-specific strategies make them a formidable player in a crowded space.

 

Our analysis is based on our data from a sampling of mCent users in May 2015. Interested in learning more about our data?

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