While Xiaomi was pushing its affordable smartphones to its user base in India, the country was already moving away from such devices giving Samsung the opportunity to literally fill the gap.
The Chinese tech giant’s strategy in India where it focused on selling smartphones within the US$120 price range made a lot of sense from an economic standpoint.
However, consumers are reportedly seeking better devices with more features even if they could cost a little bit more than the usual price.
Samsun took advantage of these new needs and was able to scoop up new customers in the country.
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The report was made known by Counterpoint Research which made it known that Xiaomi’s previous 20% market last quarter compared to the current company’s 18%.
“The Indian market is witnessing a ‘premiumisation’ trend. (But) Xiaomi has been caught underprepared for the shift with a budget phones-heavy portfolio,” said Tarun Pathak, a research director at Counterpoint.
The loosening of Xiaomi’s vice-like grip on the 626 million Indian smartphone users – the second biggest after China – shows how companies that fail to cater to changing consumer preferences in a fast-growing economy with rising disposable incomes are being punished.
Relative to the situation with Xiaomi currently is Tata Mtor’s US$1200 Nano, the world’s cheapest vehicle which has now been rejected by many consumers who equate low price with an inferior product
As technology continues to improve so is the need for devices capable f using those technologies. That is one of the complaints of the Indians who want devices that can be used to consume videos and other forms of content.
On the other hand, Apple would have easily won over the make but has a tiny market share due to the humongous price tags of its devices ranging from US$608 to as high as US$2,304.
Counterpoint also stated that the market share for devices within the US$120 price point fell to 26% from 41% a couple of years ago while premium smartphones with a US$360 price tag saw an 11% increase within the same period.
Both Xiaomi and Samsung have been making lots of sales in India. Take Xiaomi as an example, the company recorded a total revenue of US$4.8 billion in 2021 – 2022 in India only while Samsung made about US$6.7 Billion in smartphone sales.
Another issue with Xiaomi in India is due to the continuous government scrutiny of the Chinese tech company as well as the departure of five of its senior executives.
The company has $674 million of its funds frozen by the country’s financial crime agency for alleged illegal remittances to foreign entities, which Xiaomi denies.
A Reuters check on product listings on Xiaomi’s website showed the mismatch between consumer needs and the products the company has been offering.
Xiaomi has about six smartphone models that fall within the US$360 price range while Samsung has about 16. Even with the ultra-cheaper ones within the US$120 mark, Samsung still beats its Chinese counterpart in the category with about 7 different models.
And premium phones accounted for only 0%-1% of Xiaomi’s total India phone shipments in the last two years, when Samsung’s higher-end phones more than doubled their share to 13%, Counterpoint data showed.
But Xiaomi, which has acknowledged it introduced “too many” models in the past, is revamping its product line-up to focus on premium smartphones.
The Chinese company released a couple of expensive devices in India such as the Xiaomi 13 Pro which had a US$970 price tag, making it the company’s most expensive smartphone in India.
Also, remember that Xiaomi also owns the Redmi brand which released the Note 12 around the same period as the Xiaomi 13 Pro. The device on the high-end costs above the US$360 price mark; something which many have called a strategic move considering the device’s sales hitting around US$61 million within two weeks of its launch.
“We have laid out a streamlined and cleaner portfolio with a focused approach to building expertise in the premium segment, and the launch of our latest flagship, Xiaomi 13 Pro, is a step in that direction,” said its India President Muralikrishnan B.
“We understand that we have a long way to go in this journey, and therefore are bringing in much stronger products.”
How Samsung gained India’s market leader crown
Samsung in partnership with some institutions in India has made acquiring its devices much easier by offering them as loans to potential customers who want them.
This scheme helped the company to generate a whopping US$1 billion in device sales last year alone.
In fact, the company was willing to bet on those with no loan history, low credit scores, or those without salary slips.
The growth in premium segment phones was much higher in small towns than in big cities, Samsung’s India mobile unit head Raju Pullan told Reuters in February, adding almost half the consumers who opted for its financing scheme were first-time loan seekers.
Samsung made it known that its financing app bundled with loan devices is able to lock r block outgoing calls for those who have missed payments.
Xiaomi has also tapped partnerships to offer loans, calling them a key growth driver for sales of phones priced above US$183 and adding it will explore more such offerings.
Analysts also believe that implementing the new strategy could help Xiaomi return to its previous growth state in India
“Xiaomi has historically enjoyed a strong brand equity, has a robust online and offline channel presence, and can spring a comeback with a potentially strong premium and value-for-money product mix,” said Prabhu Ram, head of industry intelligence at CyberMedia Research.