Analysis: How BBK Electronics is countering Xiaomi in India


Xiaomi is one of the most widely recognised mobile brands in India today and it’s no surprise they control almost 26% of the market. Thanks to aggressive pricing and on-point marketing, it has managed to dethrone legacy giants like Samsung within a short span of time.

Motorola was the first brand to pioneer online-only sale in India and Xiaomi piggy-backed on the same strategy a few years later. The Chinese brand literally controls the affordable segment and ships millions of units every month. Even brands like OPPO and Vivo haven’t been able to capture such a huge chunk of the market, despite spending hundreds, if not thousands of crores on marketing. But, Xiaomi’s position is being challenged by a fairly young brand.

In May 2018, a small event was organised at Amazon’s Gurgaon office where a new brand called “Realme” took the stage and launched its first smartphone. Barely anyone took them seriously and it was literally named to mock Red-mi as Real-me. It was kind of weird to see the phones running OPPO’s ColorOS, a UI that isn’t really an ace as far as reviews go.

This new company will soon go on to launch a new phone every other month, following the footsteps of Xiaomi. Within a year, it manages to grab a huge chunk of the online-only market and according to latest estimates, has about a 16% market share, recording a jump of 7% in just one quarter. It’s far from dethroning Xiaomi, but there’s no doubt it has been a pain in the ass. Realme often compared its products with Xiaomi’s offerings, created a fan following, and mimicked pretty much every marketing campaign.

Considering how big Xiaomi is, you’d expect it to be unmoved by a new player like Realme. But, recent Twitter discussions between the two company’s employees say a different story. They’ve accused Realme of stealing marketing creatives and Realme has countered these claims by another set of accusations. There was a time when Redmi products would be compared to flagship offerings of Apple and Samsung at launches. But, are now constantly compared to Realme’s offerings.

Why is Xiaomi so unnerved by Realme?

Realme has been a product-focused company since inception and listens to its users. Instead of spending heavily on marketing, the brand and its employees directly reach out to the user via social media, events, and meet-ups. It lets the product do a majority of the talking.

The brand has been quick to roll out fixes and improvements and just recently announced opening up of bootloaders for a wide range of devices. It has also been reaching out to developers to improve its software and indirectly encouraging the XDA community to support Realme. All these points ultimately provide the user with more options and improves confidence.

Though the brand has been limited to the affordable segment and shows no sign of breaching the Rs 20,000 mark. That being said, almost all the products it has in the price segment have very strong specifications something Xiaomi has been known for.

If we look upwards, there is another brand that follows a similar philosophy. Formed in 2014, OnePlus has been on a roll ever since and managed to grab a whopping 43% market share in the premium segment, taking over the reign from Samsung and Apple.

All of this doesn’t even include the likes of Vivo and Oppo which are already established players with hooks into Indian pop culture with the former sponsoring the IPL and the later till recently being the premier sponsor for the Indian cricket team.

Realme has aped Xiaomi’s playbook to a great effect with its own twists and garnered great initial success which definitely rankles the Xiaomi management. 

How Xiaomi’s premium ambitions have been tempered by OnePlus 

On the other side of the spectrum there is OnePlus which doesn’t even as much as look at Xiaomi but entered the Indian market 5 months after the brand and now has eaten up the most profitable segment of the market with utter ease. 

  1. OnePlus started out as an affordable brand, but smartly kept on increasing the price and within no time, it transformed into a “premium” player. To justify the price rise, it had some unique technology offerings like Dash Charge (now Warp Charge), this was something completely unheard of a couple of years back and every other brand was scrambling to offer a similar solution. Secondly, it understood that Android wasn’t as responsive an OS as iOS when it started so it worked with CyanogenMod in its early days and then developed the Oxygen OS as Android user experience which is now known to be even better than stock Android. 
  2. All this while, Xiaomi did try to enter the Rs 30,000+ space but failed time and time again. The Mi-series never took off in the beginning due to basic shortcomings like lack of 4G on the Mi 4, buggy UI, and illogical memory configurations on the Mi 5. It later tried with the MIX series, but sales failed to take-off. So much so, that aside from the Android One based Mi series of smartphones, Xiaomi has pulled its Mi branding in India from phones and reserved it for other products like TVs. Xiaomi was a victim of its own success as it became the Maruti of smartphones in India, it struggled to move upwards in the food chain as it’s branding prevented it from being a maker of premium consumer electronics. In part because of its branding and mass-market image and in part because of product stumbles and lack of differentiation at the high end, Xiaomi has struggled to operate in the high margin premium segment of the market.
  3. BBK was smart with OnePlus. Sequentially with every release, the average selling price of OnePlus hardware was being increased minutely. A brand which started selling phones in the sub Rs 25,000 range, now starts selling at sub Rs 40,000 going up to almost Rs 60,000. BBK also went to great lengths to not let OnePlus be projected like a Chinese company. It was projected like this slick brand which was making premium hardware. Whenever it was repurposing technology like the VooC charge from other BBK group companies, those innovations were rebranded as OnePlus innovations. This was the brand benefited from the BBK scale, R&D and supply chain while publically being projected as an innovative startup. It also pioneered the idea of special edition phones with slick partnerships with Disney for Star Wars and Avengers and more recently with McLaren technologies for aspirational special editions that spoke to fans in a poignant way.

What’s common between Realme and OnePlus?

Both stuck to one segment and understood the buyer. Realme portrays itself as a young brand that’s leading a rebellion. Its user base comprises of college students who are on a strict budget. While OnePlus is a premium brand that’s built for those who get things done in the boardroom. Their marketing is also adjusted accordingly and it’s no surprise to see Robert Downey Jr become OnePlus’ brand ambassador. There is a commonality which goes beyond their ties to the BBK electronics group. 

  1. The two also know how to build a brand. On one side we have OnePlus organising a music festival with leading artists like Katy Perry and Dua Lipa, and on the other, we have Realme, who’s sponsoring college festivals with popular stars like Guru Randhawa and Divine as a part of its Sundowner’s. Both know the target audience and are zeroing in on them with a laser focus. OnePlus is looking for a more cosmopolitan crowd that’s exposed to International acts while Realme is going for a younger and more desi crowd with aspirational local heroes. 
  2. Even though both are investing a lot in marketing, both the brands are portrayed as product-oriented brands with a focus on bringing innovations first to the market. With Realme 5 Pro, it beat Xiaomi to get a 64-megapixel camera in a quad-camera configuration first to the market, while OnePlus is the first brand to democratise 90Hz screens while boasting cutting edge specs and having features like a pop-up camera which was first introduced by BBK Electronics owned Vivo.

So how Xiaomi is getting affected 

Xiaomi is finding it difficult to breach the 30% mark because the market is very saturated and there are a lot of other players like Samsung, LG, Asus, Nokia, Moto, Honor, Huawei, Meizu, Vivo, OnePlus, Realme and OPPO involved. Despite so many brands, Xiaomi managed market leadership pushing 30% of market share. And almost all of this was achieved at the sub Rs 30,000 segment of the market. 

  1. This means while Xiaomi has a lot of users, but none of them is high paying customers. Xiaomi has very low margins and it has almost saturated its growth in the sub Rs 30,000 segment of the market. That’s why Xiaomi is aggressively expanding to other product categories like TVs and smart homes to fuel its growth in India because it knows unless it starts selling expensive smartphones, it wouldn’t have a lot of room for growth in India with phones.
  2. And to compound problems, in the market segment, Xiaomi dominates, for the first time, in a very very long time it has competition which is fighting fire with fire. Realme’s specs oriented philosophy is resonating with consumers. It has already gained 9% of the market share which it has probably scrapped off brands like Honor, Lenovo, Motorola and to a certain extent Oppo and Vivo, this means Realme is in their crosshairs. Even older brands like Samsung have also started responding with their online M-series of smartphones.
  3. If you see, its products are also not having the wow factor that they used to command at one time. For instance, with the Redmi Note Pro 8, they are using a MediaTek Hello GT 90T processor which is their first MediaTek based device in 5 years and offering a quad-camera setup with a 64-megapixel sensor. But there is no way to state that the MediaTek chip is the best chipset in the price segment and in the camera department Realme beat Xiaomi to the punch with the specs and there isn’t a huge gulf in performance. 
  4. Similarly, with the Redmi K20 Pro, it wasn’t resounding clear that it was a better offering than the OnePlus 7. In fact, Xiaomi had a backlash from its fans as many rejected the idea of a Xiaomi phone that was more expensive than Rs 25,000 even though the phone was great value. Selling a more expensive phone is a challenge for Xiaomi — not just because of the product, but also brand. 
  5. After reaching such high market share, to grow, Xiaomi has been forced to something it never did till recently — heavy-duty advertising. Look at cricket matches, you’ll have Redmi branding, look at TV you’ll have TVCs, look at hoardings you’ll find Xiaomi everywhere. It is now forced to fight on BBK’s terms apart from the fact that there are old school players like Samsung in the mix. It’s not doing a bad job, but it is having to stress it out.
  6. Xiaomi has all but vexed its Mi branding for smartphones because of all of this. In fact, we don’t even know what happened to the Poco brand which was supposed to be its alternative brand. With the Redmi K20 series, Xiaomi is now hedging all bets on the Redmi brand which is also the brand of its best selling smartphone. 

Long story short, Xiaomi is stuck in a king-size BBK chokehold. On the low end, Realme keeps it honest and at the high-end which is where the money is to be made, it has OnePlus which is a dominant force but also iconic brands like Apple and Samsung to contend with. And 2020 will be harder with reports of an affordable iPhone incoming on top of the recent success Apple has found in India.

Make no mistake, Xiaomi is doing really well in India, but its smartphone business will now start having some growth problems. Xiaomi needs a win at the high-end of the market and it needs to keep doing what it is with exponential growth in the offline segment of the market and new product categories. But regardless, it is interesting how BBK owned companies have corned Xiaomi in different segments with different strategies and perhaps the only failing on Xiaomi’s part was to not have a multi-brand strategy till recently.