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Decimated by Xiaomi-led Tsunami, Indian Smartphone Makers Toil to Survive

"Micromax, Intex, Karbonn and Lava have had deep reach and presence across offline retail counters. They can leverage on this strength and come back to market with good quality, high-rated specifications at affordable prices," said Joshi

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Xiaomi
Xiaomi refreshes 'Mi TV' series in India. (Wikimedia Commons)

Once the darling of Indian smartphone users, desi brands like Micromax, Karbonn, Lava, Intex and few others have nearly been decimated by affordable-yet-powerful devices from the Chinese vendors that have flooded both online and offline channels.

In the 2013-2014 period, the domestic brands gained great traction and enjoyed 40-45 per cent market share — till the time Chinese behemoths entered the fray.

Led by Xiaomi, the China-based manufacturers registered 58 per cent market share while Indian local brands had a mere 13 per cent market share in the third quarter (July-August-September) of 2018, according to latest figures shared by Counterpoint Research.

Riding on the success of its budget Redmi series, Xiaomi touched a new high in the third quarter of 2018 in India. According to International Data Corporation (IDC), Xiaomi shipped 11.7 million units and became the top brand with 27.3 per cent share in the third quarter.

Today, smartphones contribute to over 90 per cent of the sale volume for Xiaomi in India and recently, the company entered into new segments like TVs, routers and air purifiers etc which got popular too.

Despite the government push “the local vendor fell prey to China-based vendors owing to powerful specifications at a very affordable and aggressive pricing, thus leading to these vendors almost fading away from the Indian smartphone market,” stressed Upasana Joshi, Associate Research Manager, Client Devices, IDC India.

According to Prabhu Ram, Head-Industry Intelligence Group (IIG), CyberMedia Research (CMR), the rate of change of smartphone technology is phenomenally swift and today, disruption is the rule of the game.

“Smartphones are becoming incredibly sophisticated with decreasing costs. With increasing adoption of Artificial Intelligence (AI) and Machine Learning (ML), it is imperative for smartphone brands to ramp up their internal research and development, and product engineering capabilities,” Ram told IANS.

Xiaomi has managed to generate a strong pull for its brand through aggressive product specs and pricing which very few brands can match.

“This has helped the brand to gain mind share, followed by market share and become the top smartphone brand in India in its third year of India operations,” said Tarun Pathak, Associate Director at Counterpoint Research.

Later, Pathak added, the strong demand for Xiaomi’s products during flash sales further spiked consumer interest with retailers too started showing interest in stocking Xiaomi products as they sell very fast.

Xiaomi
Xiaomi.

Aiming to help domestic smartphone manufacturers recover lost ground, the government has taken several measures in the recent past, like easing norms for local manufacturing and hiking customs duty on mobile phones.

The government also came up with a phased manufacturing plan to boost indigenous production of mobile phones by providing tax relief and other incentives on components and accessories used for the devices.

However, most of the Chinese vendors are now manufacturing and locally sourcing parts so they are not affected by changes in the policy.

Unless the Indian vendors ramp up research and development, they will not succeed at the smartphone wars. ”

“They cannot simply rely on just contract manufacturers to get them their competitive edge,” Ram noted.

There is, however, a thin silver lining for the Indian players.

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In the less than Rs 5,000 segment lies a huge potential for FTBs (first-time buyers) of smartphones and the ones migrating from feature phones to smartphones.

“Currently, there is no vendor in the market who is focusing on this segment as availability of easy financing schemes has raised the overall average selling price (ASP) of smartphones.”

“If local vendors focus on this less than 5K segment and launch products which are equivalent in all means to China-based vendors (quality, pricing and promotions) along with some subsidies from Telco players like Reliance and Airtel, it might help them make a comeback,” explained Joshi.

With the revised government policies on e-commerce players and level-playing game for all ecosystem channel partners, offline will continue to remain relevant along with a power-play game in the online channel too for all the smartphone players.

“Micromax, Intex, Karbonn and Lava have had deep reach and presence across offline retail counters. They can leverage on this strength and come back to market with good quality, high-rated specifications at affordable prices,” said Joshi. (IANS)

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Xiaomi to Expand its Offline Presence in India

At present, its rival Samsung leads the offline smartphone sales

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Xiaomi
Xiaomi.

Chinese handset maker Xiaomi, which is the biggest smartphone seller in India, aims to continue expanding in offline channels as it competes against the likes of Samsung in the country, Manu Jain, Vice President, Xiaomi and Managing Director, Xiaomi India, said here on Tuesday.

“Our biggest success story has been our offline journey, including setting up more preferred partners, more Mi Home stores.

“One of the biggest focus areas for us would continue to be the offline business. We want to hold the 50 per cent share in online and continue to build our share in offline,” Jain told IANS on the sidelines of an event in the Capital.

The smartphone maker currently has more than 50 Mi Home stores and 500 Mi Stores across the country and over 4,000 preferred partner stores in 50-plus markets.

At present, its rival Samsung leads the offline smartphone sales.

The company’s Mi.com portal is the third largest e-commerce platform in India.

Xiaomi
Xiaomi refreshes ‘Mi TV’ series in India. (Wikimedia Commons)

“We’re also launching new categories. Overall, the company is doing exceptionally well in India. From a smartphone business perspective we are now the No. 1 brand for six consecutive quarters by a huge margin.

“For the entire CY 2018, according to IDC numbers, we were almost 30 per cent bigger than the second largest brand. In Q4, we were 50 per cent bigger than the second biggest brand,” Jain added.

The company currently has a combined manufacturing capacity of up to three smartphones per second during operating hours and 99 per cent of its phones sold here are made in India.

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The handset maker launched 500 Mi Stores across 470 villages in 14 states in October 2018. It had said that to cater to the demands of smartphones and TVs in rural areas, it would increase this number to 5,000 Mi Stores by the end of 2019.

“The government is super excited about what we’re doing. Officials in Meity ask us what else can we do to facilitate this further. We’re in constant conversation with “Invest in India” programme too,”

The company on Tuesday introduced its Android Go smartphone — the Redmi Go in India for Rs 4,499. It is a quad-core Qualcomm Snapdragon 425 chip powered device. (IANS)