2023 is the year for a reset, says Xiaomi India president Muralikrishnan B - Hindustan Times

2023 is the year for a reset, says Xiaomi India president Muralikrishnan B

Jul 21, 2023 07:05 PM IST

Xiaomi India president Muralikrishnan B believes a streamlined phone portfolio, affordable 5G devices and localised manufacturing, will show results in 2024 and beyond

It is not often that businesses have the luxury of choosing a moment in time to reconfigure focus areas and approach. Tech company Xiaomi is in the midst of navigating exactly such a juncture, coincidentally as it completes nine years in India. They are no strangers to defining seminal moments in India’s journey to achieving the 1 billion smartphone users milestone this year. There is an important, strategic shift in the way Xiaomi wants to approach business over the next few years, according to Muralikrishnan B, president of Xiaomi India.

In May, Xiaomi India announced they have signed a deal with the Argentine Football Association to sponsor the country’s national football team (Photo courtesy: Xiaomi India)
In May, Xiaomi India announced they have signed a deal with the Argentine Football Association to sponsor the country’s national football team (Photo courtesy: Xiaomi India)

This will be the common theme for all of Xiaomi’s product lines in India, including smartphones, internet of things (IoT) devices, televisions and tablets. “The focus is on efficiency, sustainability and built on a secured foundation,” said Muralikrishnan, in a briefing, of which HT was a part.

In terms of the global picture, Xiaomi is venturing into newer domains. Smart manufacturing is one, with the smart factory in Beijing. There is also the electric vehicle development. The company said it is in an advanced stage, with plans to launch the first electric vehicle in China, next year. There are no plans, at present, to launch any electric mobility vehicles in India.

Last year, Xiaomi also built a humanoid robot, CyberOne, which has since also learnt to play drums. This is a space the company will pursue further development.

“This is the beginning of what could be interesting times ahead. Very early days, but it’s important to put some of these out there,” said Muralikrishnan, but he warned these aren’t commercial products yet. “But it’s important to at least start establishing that, we also do this and intend to do this on a large scale, if things pan out in the right manner,” he added.

Existing and new domains will require significant investment, which the company has plans for, globally. This includes investment of over 100 billion RMB (Renminbi) through till the year 2026 and the acquisition of 32,000 patents.

Smartphones: Getting rid of the bloat

In India, the company is embarking on a simplification of its smartphone line-up, that covers different price points under the Redmi and Xiaomi umbrellas. At as now, there are as many as 15 phone models under the Redmi banner, and this is before we get into the specifics of storage and memory configurations. The Xiaomi line-up has 9 different phones, with further variants for each.

One of reasons why this happened over the past couple of years, was the shortage of chipsets that began during the pandemic.

Anuj Sharma, chief marketing officer at Xiaomi India explained. “What did we do when we were not getting enough chipsets? That’s where we started expanding our portfolio. If we only get a particular number for a specific chip, and while the demand is bigger, we got another chip option as well. That unfortunately led to a bloated portfolio,” he said.

This simplification will be completed in the next few months, as some older devices get phased out, and some get replaced with newer, upgraded options. Xiaomi’s India leadership is taking inspiration from the early days, which involved a much smaller number of phone models on sale that helped propel them to the number one position in smartphone shipments for many years.

Anuj Sharma remembered the journey that started with fair excitement with the Mi 3 phone in the summer of 2014. He believes the method used then, of flash sales to make up for limited inventory, helped at the time. In a sale in early August that year, a reported 15,000 units were sold in two seconds on e-commerce platform, Flipkart.

It was later that year, Xiaomi switched focus to the Redmi 1s phone, a line-up from 2014 that Sharma admitted didn’t live up to the excitement created by the predecessors. “Normally, we tend to remember the good stuff when we think of the past, but there were many mistakes that we made,” he said.

The first visible transition to the new strategy will be affordable Redmi 12 smartphone, which launches in early August, which is expected to include variants with 5G network support. The company has not confirmed the pricing of this phone.

Of the billion-strong smartphone user base in India, more than 100 million are already using 5G smartphones, according to the latest data by Counterpoint Research. Reliance Jio and Airtel are offering 5G upgrades to 4G users, at the same prices and also have optional unlimited 5G data bundles.

Make in India: More comes under the umbrella

Muralikrishnan said Xiaomi has been manufacturing phones in India since 2015, but that’s a mission which is “getting more intensified and accelerated today”. He said every single Xiaomi or Redmi smartphone sold in India, is made in India. The same is true for all smart TVs.

“There is enormous progress that’s already been made in terms of localising components. Battery charger and cable were done three years ago. Then we got camera modules as well as the front and back cover, among other things,” said Muralikrishnan.

Xiaomi has a contract in place with Dixon Technologies to manufacture TVs. Last month, a deal was struck with Optiemus to manufacture true wireless earphones in India.

The plans for the next two years involve expanding the domestic value addition scale, for every phone that’s made in India.

“Some of the things that we’re working on this year include display modules, fingerprint sensor, vibration motors and multiple die cuts. We’re looking at PCB bare-board and battery cell too. These are the kinds of conversations that we are having to localize and increase domestic value addition,” he added.

Xiaomi confirmed to HT that if these plans materialise over the next few years, the domestic value addition component for each smartphone on sale in India, should increase to around 30%, from the present 17%. The company calculates this basis the ex-factory price of a phone, less the cost of inputs from components.

“I think we are reasonably ahead in the race as compared to many other brands on make in India, and it is something that we will continue pursuing and working on with domestic partners,” he added.

Reclaiming the top spot: A long road ahead

The challenges of the last year and a bit more, including the scanner of investigative agencies in the country, meant the smartphone maker lost the top spot in the market share metrics. Something that must have felt like unchartered territory, after significant stretches of time at the top.

According to the Q1 2023 data by IDC, Xiaomi’s market share dipped to 16.4% in India, from the market leadership standpoint of 23.4% in the same quarter in 2022. That now puts it behind Samsung (20.1%), Vivo (17.7%) and Oppo (17.6%).

Market share is calculated by the number of shipments.

“We knew very clearly walking into Q4 2022 that we will lose the number one position. It was a conscious call. We have prioritised sustainability and profitability,” said Muralikrishnan. He is clear that Xiaomi isn’t expecting to regain the number one spot in the remaining quarters of 2023, something he calls a process that must be undertaken.

“Some of the changes that we are making and getting this foundation in this cleaner portfolio, focusing on democratising 5G, focusing on customer experience and in ensuring channel harmony and growth online and offline, are long term bets which is what will help us in 2024 and beyond,” he said.

That’s the long and painful road, which will possibly include more bumps and tough competition from other Android smartphone brands, but one that a leaner and more focused Xiaomi may be better prepared to navigate.

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