In what appears to be a bid to maintain its golden run, Xiaomi has introduced its new Redmi K20 series in the Indian smartphone market. The K20 Pro is a premium flagship with a Snapdragon 855 processor and a triple camera setup, with prices starting Rs 27,999. There is also the K20 with a similar design, but with the mid-tier Snapdragon 730 processor and a more affordable Rs 21,999 price tag.
Xiaomi’s move to bring two new premium phones to its biggest markets outside of China under the newly-created Redmi sub-brand shows a change in the company strategy to enter the high-margin smartphone segment.
Core Redmi users will be excited with the new phones and that would be the target audience for the Redmi K20 and K20 Pro handsets. Xiaomi India MD Manu Kumar Jain and his team are hoping the move will help gain ground in a segment, where OnePlus and Samsung have remained dominant.
For one, this will give the Xiaomi brand greater visibility and help build consumer loyalty which is tougher with the more affordable phones as price is a bigger consideration of the brand. One of OnePlus’ strengths is the image of a high-end smartphone maker and the ability to convince consumers to buy its phones despite increasing price tags.
While this might explain the change in strategy, it will not be all so simple. Yes, Xiaomi is a champion at selling mid-range smartphones, but the Redmi K20 series presents a whole new ball game. While Xiaomi is giving consumers more choice, it is also pushing the envelope when it comes to pricing.
The Note 7 Pro at Rs 16,999 was till now Xiaomi’s most expensive smartphone in the Redmi series. Now, it remains to be seen if Redmi customers are up for this jump in price to get their next phone and prove their brand loyalty.
It is also clear that Xiaomi wants consumers to perceive it as a premium brand, which it is not at the moment. The market for premium smartphones is growing in India and going beyond brands like Apple and Samsung who used to rule the segment earlier.
Brands like OnePlus, Oppo and Huawei are making their presence felt in the premium smartphone segment and is it natural for Xiaomi to feel that it is missing out on this high margin, low volume play. This is the sort of segment that will make investors happy, more than overall domination in the budget segment where the margins are low, despite the massive volumes.
The competition in the mid-range segment has become intense with the arrival of players like Realme. Xiaomi has to work harder at the top to maintain its Number 1 position in India. The company would be hoping that with the K20 series it has found a pricing sweet spot that can help it dominate a segment that could change its fortunes significantly.