Xiaomi could become the first foreign mobile company to give Samsung a serious run for its money in India.
The Chinese handset-maker launched its new mobile device, the Redmi Note, in India on Monday with a price tag of Rs8,999 ($145)—sticking to its tradition of launching inexpensive smartphones.
The phone has a 13-megapixel rear camera, dual SIM, alongside 8 gigabytes of storage space that can be extended up to 32 gigabytes. And there will also be a 4G variant, available in partnership with Airtel at 100 stores across six cities.
More importantly, the Redmi Note—one of the best-selling smartphones in the world this year—will give Xiaomi more firepower to challenge the dominance of Samsung in India, something that Apple and almost every other foreign mobile phone market has failed at.
“I don’t think about Samsung, HTC, Micromax as competition. The only thing that keeps me up at night is product quality. If your product is good, one of the natural consequences is that people will start buying your product,” said Hugo Barra, vice president of Xiaomi Global.
Samsung controls 29% of India’s smartphone market, according to research firm IDC, followed by homegrown brands, Micromax (18%) and Karbonn (8%). The only other foreign brand in the top five is Motorola.
Xiaomi, China’s number one—and the world’s third largest—smartphone maker, had an explosive start in India selling entire stocks of its Mi 3 and Redmi 1S smartphones in seconds. The company is holding another flash sale for its Redmi 1S on Nov. 25.
“They have managed to spread the word about their brand in tier 2 and tier 3 cities in India,” said Tarun Pathak, an analyst with Counterpoint Research. “That’s pretty impressive.”
By the end of Oct. 2014, Xiaomi said it would be selling over 100,000 phones per week in India, the company’s main focus after China.
With Redmi Note, Xiaomi enters the phablet—straddling a smartphone and a tablet—segment in India, competing with Apple’s new iPhone 6 and iPhone 6 Plus, and Samsung’s Galaxy Note series. India’s smartphone market has grown 84% year-on-year, with phablet sales increasing by 20% every quarter.
Apple always had a small set of buyers of India mainly because of iPhones are expensive and out of the reach of most people—and analysts don’t have high hopes from its new handsets either.
Xiaomi’s cheap price tag give access to a much larger market than Apple—its Mi 3 is priced at Rs13,999 ($227) and Redmi 1S comes for Rs5,999 ($97). Samsung, on the other hand, has launched multiple smartphones over the years that start from Rs3,000 ($49) and can go up to Rs58, 300 ($945).
“It (Xiaomi) is a strong contender in the league to challenge Samsung,” said Faisal Kawoosa, an analyst at CyberMedia Research. “Growth is coming from the segment that Xiaomi is targetting.”
Although Motorola was quickly able to make inroads into India’s smartphone market when it was part of Google, it’s acquisition by Lenovo in October could likely hurt the phone maker.
“When a brand becomes big, then vanishes and comes back in a different avatar,” said Kawoosa, “consumer confidence is shaken.”
And while homegrown brands such as Micromax and Lava have deeper access into the Indian market, they lack the technological teeth.
“Although they have become big brands they are not very big on R&D (research and development). Technology is still bit of a distant skill,” added Kawoosa. “Xiaomi is very strong in R&D.”
Earlier this year, Xiaomi displaced Samsung from the number one spot in China, grabbing a 14% share of the market while growing 240% year-on-year.
“Samsung needs to do something very quickly,” Pathak said, “Time is running out.”