Xiaomi goes premium: Is this bad news for Samsung and Apple?

Xiaomi goes premium: Is this bad news for Samsung and Apple?

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When Xiaomi entered the Indian smartphone market back in July 2014 with its flagship slaying smartphone, the Mi 3, it was the pricing that caught everyone’s attention. The handset packed in a Qualcomm Snapdragon 800 with 2GB RAM, all encased in a metal body, one that was priced at a super low Rs 13,999. Back then, it had its fair share of competitors with LG G3 sitting right up there thanks to its Quad HD display and hardware chops. Xiaomi managed to sell plenty of its low-priced handsets and made a killing out of the same, but also became popular for the very same reason.

Flash sales make for great marketing strategies. Take a smartphone that is priced really low compared to current market scenario and everyone will flock to your brand, even more so because of the hype and exclusivity that brands manage to build up with them. While this sounds like a brilliant idea for a smartphone brand making its entry into a crowded smartphone market (not to mention one of the biggest ones as well), it can also turn out to be a problem if a brand wants to evolve and go beyond the same.

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Today, Xiaomi co-founder, Liwan Jiang commented that the company would be releasing a premium smartphone, one that is not just priced high, but also goes big with features. The smartphone is expected to be priced at 4000 Yuan (approximately Rs 40,000). While we do understand that Xiaomi now has plans to evolve out of its low-cost, value-for-money brand image, this one is going to be a really tough nut to crack.

Pricing

Out here in India, Xiaomi is known for its value for money smartphones. The Chinese brand’s most expensive offering is the Xiaomi Mi 5. A smartphone that features a premium looking (glass and metal) construction and packs in the right hardware and software bits to make it an attractive package at Rs 24,999. And that is exactly what Xiaomi’s customers have come to expect. The best flagship hardware (at least on paper) with great software at a low price. Price it any higher, and we don’t think it will find any buyers. This is because when Xiaomi entered the market, it captured its fair share of fans and converts who moved from other similarly priced brands to its own.

Pricing the Mi 5 even at Rs 30,000 would be a bad move, because of the norms and standards Xiaomi (and other Chinese smartphone manufacturers) itself has established. This is because the premium smartphone buyer now looks at Xiaomi as a brand that caters to the value for money segment.

Brand

A business class flyer today has his own choices and limited set of options when it comes to flying. He will always prefer a certain airline depending on the journey, no matter what the price. All users care about is the service, food and comfort levels that he is used to. Cheaper airfares and or even flying on a cheaper airline is a strict no.

Similarly, a customer who has been paying plenty for an international brand of smartphone (LG, Samsung and the lot) will know the setbacks that come with the other brands and chooses to follow one because he/she believes that it matches his/her societal status. An Apple iPhone buyer would never look at an Android smartphone, in the same way a Samsung S7 edge owner would not look at a Xiaomi, Meizu or any other Chinese brand; no matter how RAM it offers or how many megapixels its camera can cram in. The hardware comparisons will only make your product look attractive to your current customers.

Stores

Walk in stores, service centres and customer care matter as well. While Samsung was new to the same when it stood up against Nokia, back in the early 2000s, it managed to setup quite the service network. Today there are plenty of Samsung’s very own service centres all over the country. Add to this the number of retail stores and galleries that showcase its products. While Xiaomi went purely online at the beginning (and still is), it may not be the right step if it plans to introduce such expensive hardware (especially in India). All of these worked for an online brand, but offline is a completely different animal, especially when your smartphone is priced this high. So far Motorola is the only company that seems to have got the mix right, but has a much larger reputation globally as brand so it is a lot easier to leverage some of it when you move to a lower price range.

The need to innovate

Xiaomi seems to have done so much to please its fans, that it’s going to have a hard time selling its products in markets other than China. In fact, with Apple already selling plenty of products in China, Xiaomi’s 4000 yuan smartphone may be a tough sell out there as well. It is going to take a lot more than Xiaomi’s Mi 5 with a Snapdragon 820 chipset or Mi Max with a 6.4-inch display along with its current marketing expertise to change its perception in the eyes of its faithful consumers (forget others). This is, if it wants to move up the ladder and even think of building and selling premium smartphones.

Unless, of course, it comes up with path-breaking innovations (gimmicky or not), similar to what Samsung has in store with a bendable display or its Project Valley device due to be out next year. Xiaomi is not a bad brand, but building a Rs 40,000 smartphone will require a lot more than a dual lens camera, 6GB RAM and a Qualcomm Snapdragon 823 in the premium segment. HTC tried the same trick, but now seems lost with nothing new to show with its 10 flagship. All of sudden, the idea of premium Xiaomi smartphone, even before its launch, seems to be stuck in the doldrums.

Source By tech.firstpost…

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