Interview | Industry

We do have the perfect smartphone: Manu Jain

Manu Jain, vice-president, Xiaomi and managing director, Xiaomi India.

Manu Jain, vice-president, Xiaomi and managing director, Xiaomi India.

India is the biggest and fastest growing market outside mainland China for the Chinese smartphone giant Xiaomi. In an interview, Manu Jain, vice-president, Xiaomi and managing director, Xiaomi India says that four years ago a lot of brands made fun of the firm saying that its strategy won’t work in India but the company proved all of them wrong. Edited excerpts:

The phones in recent years are getting incremental improvements, but are not game changers. How far are we from building the perfect smartphone?

If you look at a customer who is upgrading from a feature phone, I really think this [low-cost smartphone] is a perfect smartphone. The reason we launched Redmi 5A is that we realised that a large number of people in India, hundreds and millions of them, are still using feature phones and for them, the budget is [up to] ₹5,000.

But there is no good smartphone available for [about] ₹3,000 to ₹5,000. Other brands like [Samsung] J2 was the best selling phone in India but was selling at about ₹8,000 -₹9,000. We said we want to launch something which is better than J2 and at a lower price. That is how we started selling [Redmi] 4A and 5A.If you are really looking at power users then Poco F1 is the best device... of course, I think as technology keeps moving, there would be changes in smartphones for the next many decades [and] they will keep evolving. But given whatever technology is available in the world [and] the customer segment, I believe we do have the perfect devices.

Xiaomi’ recently unveiled Poco F1 with high-end features like Snapdragon 845 processor and large 4,000mAh battery also found in Samsung’s much-hyped Note 9. Are we going to see more of these budget devices in the market forcing others to rethink their prices?

We believe product specs (specifications), quality and price go hand in hand. We are the only company which can do all these things together. Other companies provide [product with] good specs and quality but [sell them at] horrible price...So whether it will lead to a price war? Maybe. But most of them I don’t think will be able to change because they have a different DNA…We sell mainly through, Flipkart, Amazon or Mi Home stores directly to the customers…Our distribution is very lean. Other companies spend hundreds and thousands of crores in marketing. We spend an almost negligible amount of money on that. You know how much we spent on marketing for the first three years? Zero...Also, our profit margins are low. All other brands have 10% - 60% profit margin. It is always 5% or less for [our] hardware business but we do make money from our software and Internet service business. So we are a new species...When other brand sells you a smartphone their job is done [and] when we sell a smartphone our job has just started.

How do you view competition from OnePlus, Samsung, Huawei and Apple which are also betting big on India?

All these brands that you mentioned are older than us, except maybe OnePlus. Four years ago when we started do you know how many brands were there in India? There were 300 brands in India, all of them had more distribution muscle and marketing dollars than us. And still, in four years, we have become the number one smartphone brand. Today we have 30% market share [combined] all over India [55% online and 20% offline] without spending any marketing dollars…Four years ago a lot of brands made fun of us. They said Xiaomi’s strategy can never succeed. Xiaomi would shut down its shop and go away. I personally went to many CEOs who were my mentors or friends. They said [Xiaomi’s] philosophy would never work, you have to spend a lot of marketing dollars before you start selling any phone in India. And we were able to prove each one of them wrong. In fact, many of these brands have tried to copy our strategy by launching sub-brands or products... which is a proof point of how successful we have been. At some level, my suggestion to the team is let’s not lose our sleep over competition.

What are your plans in terms of expansion and hiring people in India?

India is our biggest and fastest growing [and most successful] market outside mainland China. It plays a very strategic role in the overall Xiaomi journey... Our focus is to create killer products, specifically designed for India [both hardware and software]. Today, we have six manufacturing plants across three campuses, 1000 service centres... and we [would] continue to build each of these things over the next few years.

This would create jobs...We have 20 Mi fan [clubs] across the country and have five million active users on Mi community. We want to further scale it up because these Mi fans are our brand ambassadors. The other big focus areas are our Internet services, start-up investments [and] team and people. Would you believe the average age of our [employees] is less than 30? They are very young and passionate people who are willing to challenge the status quo and try different things.

What impact is rupee-dollar fluctuation going to have on the phone industry?

I can’t talk about the entire industry. But for us, it is really massive. Our hardware profit is never more than 5% and rupee [has] already depreciated more than 10% from ₹63-₹64 to ₹71-₹72 which is pretty scary. Because we buy the majority of the components in dollars…[and] we earn money in rupees. Of course, we had more profit margin thanks to our software business. But if the dollar remains at this level, it would be very difficult for us to absorb the cost. So, we will have to increase the pricing [of our products].

How is Xiaomi gearing up for the Personal Data Protection Bill 2018?

We have [already] been thinking about moving our data servers to India. Because we think psychologically, it’s more comforting for Indian users from data privacy point of view. Let me clarify this, it has nothing to do with the data protection bill. The [data] will sit on AWS [Amazon Web Services] and Microsoft servers, but now in India, so people are a little bit more confident. It also helps us improve the speed of accessing data because the servers are now locally situated in India. I [also] want to clarify we never collect data without user consent… Also, when the data [is collected], it is encrypted 100% and that too at multiple levels... Let’s say somebody goes rogue in the company and gets hold of the data.

He or she cannot [decrypt] it, because you have multiple levels of encryption.

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Printable version | Aug 12, 2022 3:37:24 am |