Why is Xiaomi reviving the POCO brand after a long sabbatical?

In 2018, Xiaomi launched a new brand called “POCO”, and its first smartphone took everyone by surprise. For almost $300, it came equipped with a flagship-grade Qualcomm processor and focused just on performance, not things like design, cameras, and display. While all other phones with similar specs cost upwards of US$ 500, POCO carved a new segment for itself. A segment that goes on to remain untouched to date.

But that was the first and last phone POCO launched. Considering the brand is owned by Xiaomi, everyone expected a successor to launch soon but that never happened. Sure, the company’s social media accounts were always active, replying to users, engaging, and often joking about the next POCO phone. It always kept adding features through software updates to the phone. But it was clear. Xiaomi kept the brand in a dormancy stage until it could figure out its long-term future, while many naysayers thought that the brand was dead as many executives left.

At the beginning of 2020, it was announced that POCO is all set to launch its second phone. It’ll be called the POCO X2 and the launch event has been scheduled for February 4. In classic Xiaomi style, all social media accounts and online advertisements were filled with teasers about the upcoming phone, along with the hashtag #SmoothAF.

So how did POCO come back?

  • To understand this, we first need to know how POCO was born. Since 2017, it was clear that OnePlus was taking over the premium market and within a year, it had dethroned Samsung. It continues to control the segment due to aggressive pricing and constantly improving products. Xiaomi has tried to breach the Rs 20,000 price tag in India but it has failed to garner the type of sales OnePlus has managed. It had to counter OnePlus’ rise, and it did so with the POCO F1. Even though the two belonged in completely different categories, the F1 did try to cannibalize OnePlus’ sales as well as propel Xiaomi slightly past the 20K mark.
  • However, the pricing of the POCO F1 was ridiculously cheap. And everyone expected Xiaomi to follow its history of making good products even more affordable after a period of time. With the POCO F1, they wanted to go up, but market dynamics expected them to come down. Coming any lower could directly harm Redmi sales. They just decided to take a step back, had a few high-profile executives like Jai Mani leave which led to POCO going into hibernation.
  • In 2019, things started to change though. A very young brand like Realme was able to capture 14.3% of the market in Q3 2019, barely a year after it launched. Realme is backed by BBK Electronics and operates as an independent brand. BBK Electronics also owns the OPPO, Vivo, and OnePlus brands. According to the latest reports, the Chinese conglomerate indirectly controls more than 40% of India’s smartphone market by units shipped. Even though Xiaomi is still topping the charts, it has just a 27.1% share. Far lesser than BBK Electronics.
  • One important thing to note is, POCO operated under Xiaomi up till now. With the 2020 announcement of a new phone, POCO has been turned completely independent. This means it can decide its own strategy, market audience, marketing, and literally everything. When OPPO and Vivo reached their saturation level, BBK floated the Realme brand which worked wonders for them. Xiaomi is following the same gameplan. POCO will have its own office, marketing, sales, product, while they will lean on Xiaomi for supply chain, software, and distribution.
  • While Realme had the daunting task of developing itself as a brand and create an image, POCO already has it. Users recognise the brand as an affordable option for fast phones that can play high-end games geared towards nerds who swear by assembled PCs. Xiaomi already enjoys a very friendly fan following in the country, and it did the same with POCO. Hence, the new brand is also ready with its own army of people who can spread the word, organically.
  • Interestingly, BBK too took a few hints from the creation of POCO and started a new lineup of products under the “Reno” brand. While POCO was always known for speed and agility, OPPO used Reno to define low-light and zoom photography. Companies are purposely creating more brands to define themselves in a more particular way.
  • And most importantly, the creation of POCO will help Xiaomi make way to the premium side of the spectrum. Last year, Xiaomi tried to breach the INR 20K pricing barrier by launching the Redmi K20 series. Unfortunately, the pricing of the K20 series received a lot of backlash from users, including fans. Xiaomi thought users will understand that K-series is supposed to be premium and will carry a price tag accordingly. However, the brand forgot that users have been waiting for a POCO phone for a long time and wished the K20 series was a replacement for the F1. That being said, the K20 Pro did better than any other Xiaomi phone that sold upwards of Rs 20,000.
  • The backlash proved that it’s going to be very difficult for Xiaomi to go premium in India. All their brands are already synonymous with affordability. And that’s exactly why the POCO brand is being spun off. Redmi can handle the affordable segment, POCO can hover around INR 20K, and the Mi branding could be propelled further.

It’ll be interesting to see how POCO is able to take on Realme as well as other offerings from OPPO, Vivo, and even Nokia.

Words by Shivam Vahia

Originally published at https://warpcore.live on February 4, 2020.



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