$10 billion valuation
Xiaomi is starting sales in 10 new markets including Brazil and Russia. While the company started its own websites in Singapore and Taiwan, India has proved more difficult because its infrastructure for delivering packages and collecting payments is underdeveloped.
"Building an e-commerce effort in India is a lofty effort, not something we would be able to do quickly," Hugo Barra, vice president of Xiaomi, said in a phone interview.
Xiaomi Mi3. Photo / Twitter @Yahya_Roxstar
Xiaomi also is partnering with local e-commerce operators for its expansion to the Philippines and Indonesia, Barra said.
The Mi3, which sells for less than a third of the price for an iPhone 5s, still sports high-end specifications with a full high-definition screen, 13-megapixel camera and a Qualcomm Snapdragon processor.
Apple, Samsung
Even as it focuses on new markets, Xiaomi is stepping up competition with Apple and Samsung at home with the Mi4, featuring a 5-inch high-definition screen. The Mi4 starts at 1,999 yuan ($322) for the version with 16 gigabytes of memory, Lei said at a press conference in Beijing on Tuesday.
Xiaomi will sell the phone through its website and carrier China Unicom (Hong Kong) beginning July 29.
Xiaomi's success in selling smartphones in China, where it was No. 3 in the first quarter according to researcher Canalys, has seen its valuation surge. Xiaomi said last August that a fundraising round valued it at $10 billion.
Xiaomi, now the No. 6 producer globally, has no plans for an initial public offering within five years, Lei said in September. The company shipped about 10 million smartphones in the first quarter, according to IDC.
Xiaomi's strategy may help it gain exposure in India's smartphone market, which is growing faster than China's. About 250 million smartphones will be sold in India this year, according to Brad Rees, chief executive officer of Mediacells, a London-based marketing company.
Micromax, Karbonn
Samsung accounted for 35 per cent of India's smartphone sales in the March quarter, while homegrown brands Micromax Informatics had 15 per cent and Karbonn Mobiles held 10 per cent, according to researcher IDC.
Nearly 80 per cent of smartphones purchased in India cost less than $200, according to IDC. Cost matters in India as the phones are bought upfront, unlike in the United States where they are typically sold with a service contract.
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Flipkart's experience with smartphones was a key reason behind Xiaomi's decision, according to Barra.
The Indian company partnered with Motorola Mobility to exclusively sell the Moto smartphone series in India, with 1 million of the phones sold in five months, Flipkart Chief Executive Officer Sachin Bansal said.
"Motorola is a known brand, people here know what Motorola is, so buying those devices online would be easier," said Anshul Gupta, an analyst with Gartner. "Initially, it's going to be a challenge for Xiaomi."
More models
The company hired Manu Jain, the co-founder of clothing e-commerce site Jabong, to run the India operations, and it plans to increase workers at the business to about 20, including staff to run two service centres, by the end of the year.
Xiaomi will contract other companies for a further 34 service centres and hire software developers to build applications focused on Indian users. Barra declined to say how much the company is investing in India.
After starting with the Mi3, Xiaomi will offer the Redmi 1S at 6,999 rupees and the Redmi note for 9,999 rupees, according to its Indian website. Even at those prices, Xiaomi will have its work cut out to win sales in the world's second-most populous nation.
"Xiaomi is really a new company, people are not aware of the brand, so there will be some hesitation," Gartner's Gupta said. "This is a very competitive market."
- Bloomberg