“It is too expensive.”
Those words ran across Twitter and social networks as the price of the Mi phone was announced. “Do they actually think people are going to pay that much for a Mi device? They are known for lower prices” was another statement that was heard. Judging from the people who had followed the launch, Xiaomi had quite a challenge on its hands. It had to shrug off the image of being a super affordable phone brand and convince users to pay more for one of its flagship products.
This happened on January 28, 2015.
The phone in question was the Mi 4.
Its price was Rs 19,999.
The low price albatross
Fast forward five years and although Xiaomi has been the country’s number one smartphone brand for more than two years now, the reactions were very similar when it announced the pricing of the Mi 10. Agreed, the Mi 10 at Rs 49,999 was an out and out premium flagship, rather than a budget flagship, which the Mi 4 unabashedly was. That said, there is no denying that there is a belief in some quarters that Xiaomi simply cannot convince consumers to pay a premium price for its devices. This line of thought had come to the fore last year as well at the launch of the Redmi K20, whose pricing of Rs 21,999 received such widespread criticism on social media that the company’s MD, Manu Jain, chose to write an open letter explaining the reason for the pricing.
The consensus in a part of the tech community is that Xiaomi does not have the “brand image” to command a premium for its devices.
To be honest, Xiaomi itself sowed the seeds for this perception. When it launched the Mi 3 in India, its flagship device (although almost a year old), at a stunning Rs 13,999 in July 2014. The device was a staggering hit and got Xiaomi a lot of attention, something the brand really needed at that stage. It also, however, saddled it with a reputation of being a “cheap” brand, as some analysts chose to term it.
So much so that barely six months, people were complaining about the Mi 4 being too expensive. The accusation of being too expensive was slapped on the Mi 5 as well, a year and a half later when it was launched at Rs 24,999, and many feel that the relative lack of success of those two phones saw Xiaomi shut the door on its premium segment ambitions in India. The brand did try one more time, surprising many by launching the Mi Mix 2 in 2017, but at Rs 35,999, it again came up against the “too expensive” accusation, which many felt led to its less than impressive performance. In most people’s eyes, Xiaomi had stepped away from the flagship business and had left the ground for the likes of OnePlus.
Working its way back into the higher price zone
The fact, however, was that, even after that, Xiaomi continued to very gently dip its toes in premium waters. It showed signs of doing so with the Poco F1 in 2018, whose best-specced variant was Rs 28,999, although, in one of the most clever pieces of pricing strategy we have seen, it actually began at Rs 20,999. Then in 2019 came the Redmi K series, with the K20 Pro having a variant at Rs 30,999. Ironically, however, it was the (much) lower-priced K20 that got accused of being overpriced.
The interesting point to note, however, was that unlike in the past, where the Mi 4, Mi 5 and Mi Mix 2 had got mixed results at best, the Poco F1 and the Redmi K20 series actually did well, being the bestsellers in their segment for a while, against some very formidable competition, mostly from OnePlus.
What had changed? Well, judging from what we have heard from retailers and consumers, it actually was the perception of the brand on the ground, if not in social media. There are many who were irritated by Xiaomi’s constant repetition of the fact that it was the number one smartphone brand in India when it dethroned Samsung in 2018, but the fact is that that repetition seems to have struck a chord with many consumers. Xiaomi’s very successful foray into televisions has also managed to get it some recognition as a brand that can make more expensive products (even though their televisions are super affordable for their spec sheets). “They are now being seen as a bigger brand,” a retailer told us earlier this year. “A consumer no longer thinks Xiaomi is just about flash sales and online availability. They know they have got TVs, Air Purifiers, and showrooms…it is a bigger brand now.”
A different brand now, but will that change things?
And there are many who feel that it is this “bigger brand” image that might help Xiaomi make a move into a really premium zone in smartphones. “In 2017, people did not even know we had service centers and we had hardly any offline presence, and no ad campaigns. It is different now. We are no longer that company which only the geeks really know,” a Xiaomi executive told us late last year. “The problem is that some of the geeks have not figured that out – for them, we are still the same company fighting purely on price. Which is why perhaps they get shocked at what they see as high prices.”
This gap between the perception of the brand in one section society and another came to the fire during a recent briefing when Manu Kumar Jain responded to a remark about the brand struggling at higher price points. “I perhaps need to spend more time with you guys explaining this,” he said, laughing. “But the fact is that we have been doing well at higher price points too.”
Another point that is notable is the fact that even in the mid and lower priced segments, Xiaomi no longer holds the sort of price edge it did – it has competition, most notably from Realme – and yet, it continues to dominate that zone. In essence, it is able to command a slight premium even in that extremely price-sensitive zone, something that was not the case a few years ago, when many still preferred to pay a premium to the likes of Motorola in spite of relatively inferior specs.
Of course, all this does not guarantee Mi 10’s success. It is the most expensive phone Xiaomi has launched in India. By some distance. But it would be equally unwise to write it off solely because of that reason. No matter how much the angst on social networks, Xiaomi of 2020 is a very different kettle of fish from the one in 2015. It is a bigger brand, with a wider appeal.
As a retailer told us last year when we asked him about the prospects of the Redmi K20, given the outrage against its pricing on Twitter:
“Twitter pe sale nahin hota hai, bhai sahab. Yahaan hota hai” (“Sales do not happen on Twitter, sir. They happen here.”)