There is something different about Xiaomi

Hugo Barra says they can afford to take a price cut, primarily because they don't need to spend on advertising

Written by Nandagopal Rajan | Updated: August 26, 2014 11:02:16 pm
Hugo Barra, vice president, XIaomi “We will never spend on a full page newspaper ad… unless someone offers it for free,” says Hugo Barra categorically.

There is something different about Xiaomi. In fact, more than a tech company, it is a tech startup… a rarity in the mobile phone business. Why else would the vice-president of a global company be camped in Bangalore to oversee the launch? Why else would he be giving out his email address to everyone from journalists to customers? And why would he be replying to those queries personally? But then that is kind of company that Xiaomi is. The kind of company that cuts the prices of its cheapest smartphone by 15 per cent hours before announcing its India launch. The kind of company that dresses up its mascot in Indian attire. Not one, but representing eight different states, some of which are a bit too tough to guess even for people coming from there. But that is inconsequential. What is important is the message, the message that “we are trying to be India”.

Still basking in the success of its first launch, the Xiaomi Mi3, of which it has sold over 95,000 units in a handful of weekly flash sales, you would have expected the company to charge a small premium for its next phone, or at least hold on to its price. But Xiaomi’s very visible vice president Hugo Barra, who had an equally visible role during his celebrated stint at Google, says they can afford to take this cut, primarily because they don’t need to spend on marketing or advertising. “We will never spend on a full page newspaper ad… unless someone offers it for free,” Barra says categorically. That is the Xiaomi business model, a business model that believes in milking the social media to the fullest. When faced with a crisis of sorts after it came to light that the company could be sending some data to its servers in China, Barra took to Facebook to explain the matter. Resemblance to the present government at the Centre is purely coincidental. Or it isn’t. May be, just like the BJP, Xiaomi seems to believe that the pulse of this nation can be felt on social media.

But not everyone is happy with Xiaomi in India. For the 90,000-odd Mi3s that the company has sold since late July, it has also made thousands of buyers queue up virtually for a sale that lasts seconds, literally. India operations head Manu Kumar Jain, who earlier  founded Jabong, says they have at least a couple of hundred thousand people waiting to buy the phone on at 2 pm every Tuesday. This mad rush is now going to be replicated for an even cheaper smartphone from Xiaomi, the Redmi 1S, which will be available for pre-booking today for the first sale on September 2. If Moto E made the Flipkart servers crash, then expect a repeat, maybe a in a lesser time for the 4.7-inch Redmi 1S is Rs 1,000 cheaper and packs much better specs than the budget phone from Motorola. Or so Xiaomi hopes.

Barra is convinced that this is the simplest model around. “The flash sale model we have in India is most similar to the model that we have in China where you do a pre-booking a week in advance,” he says. Buyers in Singapore and Malaysia don’t need to register as the “demand is predictable” enough for Xiaomi to handle. Both Barra and Jain agree that they underestimated the demand in India and won’t repeat the mistake with the Redmi 1S.

Barra knows that a lot of buyers, put off by the endless wait for the phone of their choice, are turning to Plan B and buying other models. Jain confirms that they have data to back this phenomenon, see after 2 pm every Tuesday. But Barra thinks it is great for e-commerce. After all, Xiaomi thinks of itself as a e-commerce company. “It would be an amazing thing for the country if we can contribute to the growth of e-commerce.” Yes, there is something different about Xiaomi.

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