The Xiaomi of India

The smartphone companies that shook up India and China are ready to colonize the world

October 25, 2013
October 25, 2013

You’ve never heard of Micromax (slogan: “Nothing like anything“) but in just five years it’s gone from a standing start to commanding over a fifth of the Indian smartphone market, behind only Samsung. Its stated ambition to is to control a third of the market. Its swift rise mirrors that of China’s Xiaomi (slogan: “Just for fans“), which within three years overtook Apple for the number six spot in China’s much more competitive marketplace. (Even their orange logos spelling out “Mi” look similar.) Now both companies are looking beyond their national borders to take their explosive growth to the world.

Encouraged by early successes in Sri Lanka and Bangladesh, where Micromax “tested the waters,” the Indian firm will launch phones in Russia and Romania by the end of the year. “If I am able to crack Russia, we will also able to capture the whole [of] Europe,” co-founder Rahul Sharma told India’s Business Line newspaper. Xiaomi is also looking to expand beyond China, Hong Kong and Taiwan, though its boss says he hasn’t yet decided where to go (it definitely won’t be the United States).

How low can you go

The two companies have a lot in common: Both can trace their swift rise to innovation and low prices. Xiaomi’s flagship Mi3 costs $327 and a cheaper model is just $130. Despite its obvious focus on hardware, Xiaomi thinks like a software company, rolling put weekly updates and paying close attention to users’ suggestions. The idea is to make phones cheap and profit from app and content sales. Call it the Amazon model. Micromax also gained marketshare with low prices. Its new high-end model, the Canvas Turbo, retails for 20,000 rupees ($324), or half of a Samsung Galaxy S4. Its innovation is a remarkable supply chain that allows it to manufacture and distribute its phones with thin margins.

Yet both companies might find venturing into foreign territory harder than conquering their own. Xiaomi may have trouble finding new “fans” in countries with established favorites, different needs, and an aversion to hard-to-pronounce brands. Micromax may find it hard to maintain control of its low-cost logistics operation as the supply chain grows more global and more complex. It will also need a better brand image; where Xiaomi has a charismatic CEO and a growing mythology around it, Micromax’s advertisements in India feature unmemorable European models with unplaceable accents.

It will also be hard for both Xiaomi and Micromax to explain to potential customers what sets them apart from South Korean and Taiwanese manufacturers. Harder still will be explaining to new markets what sets them apart from each other.

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