Xiaomi to focus on premiumisation, AIoT in India: Xiaomi India President Muralikrishnan B

Chinese smartphone maker Xiaomi entered the Indian market in July 2014, when 4G networks were still being rolled out. By launching the Redmi Note 4G, the country’s first 4G device below Rs 10,000, followed by the Redmi 5A for Rs 4,999, Xiaomi democratised technology for the masses. And within a few years, it expanded its portfolio beyond smartphones by introducing ecosystem products including fitness bands, headphones, smart TVs, security cameras, and more. As the company competes for a decade in India, the strategy isn’t about chasing the top spot on the leader board again. Instead, the focus is on premiumisation and being present in every household in India with its AIOT devices.

Muralikrishnan B, President, Xiaomi India, told Business Today, “When we entered this market way back in 2014, I don't think anybody would have envisaged the kind of impact we created on the social and digital fabric of the country. All the various Redmi Note Series, Redmi Note 4, and Redmi Note 5, each one was a chart buster, which quickly led us to play a key catalyst role in the 4G revolution in digital India. And very soon, we became the largest smartphone brand in this country. While smartphones were a significant part of our business, we launched a whole host of artificial intelligence of things (AIoT) products like power banks, earphones, air purifiers, and so on, and entered the smart television segment in 2018.”

But in 2022, the company hit a bunch of hurdles. As the smartphone market contracted in 2022, especially in the entry-level to mid-level segment, Xiaomi faced multiple challenges on the business side, including an inventory challenge. This soon led to it slipping from the pole position to the fourth position in the smartphone market share. That tough experience in 2022 gave the leadership of Xiaomi India the opportunity the opportunity to step back and reassess what's going well, what's not going well.

“We took a few key decisions. First, for the longest time, we became focused on retaining market leadership. As a result of this, the portfolio got bloated, which is not good for anybody. It’s not good for Xiaomi because we are carrying excess inventory. It's not good for channel partners, retailers, and Xiaomi promoters in the store because everybody's confused.” Realising the problem, Xiaomi reworked its strategies for 2023, starting with a significantly cleaner product portfolio. “The number of SKUs that we launched in 2023 came down by 40%. The number of models came down by 40%,” says Muralikrishnan B.

Going forward, in its multi-year road map, aligned with the increasing price trends and Indians' shift towards premium products, Xiaomi has also focused on premiumisation. “Since the market is growing up the price curve, we want to focus on what we are calling total experience driving premiumisation because people today use the smartphone for a lot of things. Earlier, it was merely WhatsApp and maybe making phone calls. But today, you bank, shop, watch entertainment, communicate on it, and do everything on it, and therefore, people are willing to pay more for their phone. And Xiaomi needs to step up to meet the aspirations of such customers and do that not just with great products but by enhancing the quality of the entire experience,” adds Muralikrishnan B.

As a result, in late 2023, Xiaomi initiated a premiumisation strategy by conducting extensive consumer surveys, interviews, and research to comprehend its target audience. Identifying the tech-savvy trendsetter mindset among consumers, the company introduced the Xiaomi 14 and Xiaomi 14 Ultra, focusing on delivering exceptional smartphone photography capabilities.

Furthermore, having initially established itself as an online-only brand and gradually expanding into offline retail, Xiaomi is now concentrating on simultaneous growth across both offline and online channels to leverage the strengths of each.

The strategy seems to have worked for Xiaomi. “If I were to look at Q1 of this year, the markets have grown. The smartphone market in India, after quite a few years of dull growth and negative growth, has grown by about 15% year over year. I’m glad to report that we’ve actually grown almost twice as fast as the market, at 29%. We’re now the second-largest smartphone brand, but I think the game is still underway,” he adds.

Xiaomi is also utilising the advantage of not just being a smartphone brand but a smartphone into an AIoT company, and with its products across ecosystems, including tablets, televisions, smartwatches, air purifiers, robot vacuum cleaner, and more, it wants to be the preferred choice for a connected ecosystem.

“There are about 200–350 million households in India. Now, our AIoT strategy is a way to ensure that every household in India has at least one Xiaomi product. Now, it could be anything—a smartphone, television, power bank, an air purifier, or a smart lamp. But every home in India and every household in India having at least one Xiaomi product is that larger aspiration,” says Muralikrishnan B.
For Xiaomi, while the majority of the revenue continues to come from smartphones, TV and tablets have become substantially large categories for the company.