How BBK Electronics is countering Xiaomi in India
Xiaomi is one of the most widely recognised mobile brands in India today and it’s no surprise they control almost 30% of the market. Thanks to aggressive pricing and on-point marketing, it has managed to dethrone legacy giants like Samsung within a short span of time.
Motorola was the first brand to pioneer online-only sale in India and Xiaomi piggy-backed on the same strategy a few years later. The Chinese brand literally controls the affordable segment and ships millions of units every month. Even brands like OPPO and Vivo haven’t been able to capture such a huge chunk of the market, despite spending hundreds, if not thousands of crores on marketing. But, Xiaomi’s position is being challenged by a fairly young brand.
In May 2018, a small event was organised at Amazon’s Gurgaon office where a new brand called “Realme” took the stage and launched its first smartphone. Barely anyone took them seriously and it was literally named to mock Red-mi as Real-me. It was kind of weird to see the phones running OPPO’s ColorOS, a UI that isn’t really an ace as far as reviews go.
This new company will soon go on to launch a new phone every other month, following the footsteps of Xiaomi. Within a year, it manages to grab a huge chunk of the online-only market and according to latest estimates, has about 9% market share. It’s far from dethroning Xiaomi, but there’s no doubt it has been a pain in the ass. Realme often compared its products against Xiaomi’s offerings, created a fan following, and mimicked pretty much every marketing campaign.
Considering how big Xiaomi is, you’d expect it to be unmoved by a new player like Realme. But, recent Twitter discussions between the two company’s employees say a different story. They’ve accused Realme of stealing marketing creatives and Realme has countered these claims by another set of accusations. There was a time when Redmi products would be compared to flagship offerings of Apple and Samsung at launches. But, are now constantly compared to Realme’s offerings.
Why is Xiaomi so unnerved?
- Realme has been a product-focused company since inception and listens to its users. Instead of spending heavily on marketing, the brand and its employees directly reach out to the user via social media, events, and meetups. It lets the product do a majority of the talking.
- The brand has been quick to roll out fixes and improvements and just recently announced opening up of bootloaders for a wide range of devices. It has also been reaching out to developers to improve its software and indirectly encouraging the XDA community to support Realme. All these points ultimately provide the user with more options and improve confidence.
- Though the brand has been limited to the affordable segment and shows no sign of breaching the Rs 20,000 mark. That being said, almost all the products it has in the price segment have very strong specifications something Xiaomi has been known for.
If we look upwards, there is another brand that follows a similar philosophy. Formed in 2014, OnePlus has been on a roll ever since and managed to grab a whopping 43% market share in the premium segment, taking over the reign from Samsung and Apple.
- OnePlus started out as an affordable brand, but smartly kept on increasing the price and within no time, it transformed into a “premium” player. To justify the price rise, it had some unique technology offerings like Dash Charge (now Warp Charge), this was something completely unheard of a couple of years back and every other brand was scrambling to offer a similar solution. Secondly, it understood that Android wasn’t as responsive an OS as iOS when it started so it worked with CyanogenMod in its early days and then developed Oxygen OS as Android user experience which is now known to be even better than stock Android.
- All this while, Xiaomi did try to enter the Rs 30,000+ space but failed time and time again. The Mi-series never took off in the beginning due to basic shortcomings like lack of 4G on the Mi 4, buggy UI, and illogical memory configurations on the Mi 5. It later tried with the MIX series, but sales failed to take-off. So much so, that aside from the Android One based Mi series of smartphones, Xiaomi has pulled its Mi branding in India from phones and reserved it for other products like TVs. Xiaomi was a victim of its own success as it became the Maruti of smartphones in India and struggled to move upwards in the food chain as its branding prevented it from being a maker of premium consumer electronics. In part because of its branding and mass-market image and in part because of product stumbles and lack of differentiation at the high end, Xiaomi has struggled to operate in the high margin premium segment of the market.
What’s common between Realme and OnePlus?
- Both stuck to one segment and understood the buyer. Realme portrays itself as a young brand that’s leading a rebellion. Its user base comprises of college students who are on a strict budget. While OnePlus is a premium brand that’s built for those who get things done in the boardroom. Their marketing is also adjusted accordingly and it’s no surprise to see Rober Downey Jr become OnePlus’ brand ambassador.
- The two also know how to build a brand. On one side we have OnePlus organising a music festival with leading artists like Katy Perry and Dua lipa, and on the other, we have Realme, who’s sponsoring college fests with popular stars like Guru Randhawa and Divine as a part of its Sundowner’s.
- And lastly, both of them are product companies. Investing more in the phones, than marketing. With a long-term outlook, they aren’t making the same mistakes that OPPO and Vivo did.
- Xiaomi is finding it difficult to breach the 30% mark because the market is very saturated and there are a lot of other players like Samsung, LG, Asus, Nokia, Moto, Honor, Huawei, Meizu, Vivo, OnePlus, Realme and OPPO involved. Despite so many brands, Xiaomi managed market leadership pushing 30% of market share. And almost all of this was achieved at the sub Rs 30,000 segment of the market. This means while Xiaomi has a lot of users, but none of them is high paying customers. Xiaomi has very low margins and it has almost saturated its growth in the sub Rs 30,000 segment of the market. That’s why Xiaomi is aggressively expanding to other product categories like TVs and smart homes to fuel its growth in India because it knows unless it starts selling expensive smartphones, it wouldn’t have a lot of room for growth in India with phones.
Have you heard of BBK Electronics? It’s a Chinese electronics company that runs the Realme, OnePlus, OPPO, and Vivo brands. Yes, they’re all owned by one entity. It’s rare to see BBK’s mention anywhere directly outside of China.
Following a very complex legal structure, it’s difficult to even technically say that Realme is a “sub-brand” of BBK. The parent prefers to be discreet and the children never mention its name anywhere.
In this equation, BBK Electronics has played a smart game with multiple brands to take over control of the Indian market. This is ultimately choking Xiaomi and it’s no surprise that the brand is quickly expanding to other sectors like home appliances, lifestyle, as well as wearables.
Not to forget, BBK Electronics is also slowly pushing out Samsung with its multi-brand strategy. Interestingly, Samsung is securing its future by focusing on components, playing both sides of the game.
At the end of the day, Realme can dictate the affordable segment, OnePlus can lead the premium segment and OPPO-Vivo can rule the offline sales of India. It’s a win-win for one company, BBK Electronics.
Originally published at https://warpcore.live on October 25, 2019.
Words by Shivam Vahia