Friday, August 8, 2014

Xiaomi - The Rise of “Little Rice”



Xiaomi, which literally means "little rice" in Mandarin, just became the largest smartphone manufacturer in China, edging out none other than Samsung.

Add to that on the world stage, Xiaomi has also upped its market share from a little under 2% to just above 5% and has leaped upward to become the 5th largest smartphone manufacturer in the world, after Samsung, Apple, Huawei & Lenovo, based on handsets shipped (source: Strategy Analytics).

So, what could be the reasons behind this fairytale rise of the Chinese electronics company in the seemingly saturated smartphone market dominated by international giants like Apple & Samsung, the same marketplace that was fickle enough to dump once market leaders Nokia and Blackberry?

IMO, we can break it down to two major reasons, one is their basic philosophy and the other is their business strategy.

The Xiaomi Philosophy

While trying to study the meteoric upsurge of Xiaomi, it is important to understand their beginnings. Their founder and CEO Lei Jun, a self-styled Steve Jobs version 2.0 right down to the trademark blue jeans and black t-shirt, is said to follow a Buddhist concept that "a single grain of rice is as great as a mountain". They founded the company in 2010 on this basic philosophy with a view to creating little grains of rice that will be perceived as gigantic as mountains. The philosophy also keeps them grounded in terms of attitude and yet be aggressive in a humble way, after all it is about a grain of rice!

The Xiaomi Strategy

Business Strategy is only as good as its execution. But for a strategy to be executed there should be a plan. In my mind, Lei Jun and his team have a well-planned and well thought out business and market strategy that they are rolling out with great precision. Let’s look at some of these:

Clear product road-map

Their overall and product road map seems to follow the principle of “one-year goal”. They announced their arrival in the month of August of 2010 with the launch of the Mi1 Android phone that is notorious for resembling Samsung and Apple's products. I would call “grain of rice 1”. Exactly a year later they launched Mi2 and then a year down the line from then, they announced the Mi3. Cut to the present, again one year from the launch of Mi3, they are going international with their products. To this end, they have already set up their offices in Singapore and, as I write, they have also established local presence in Malaysia, Philippines and India. They also announced the LTE-ready Mi4 in July 2014.

So, obviously they are looking at a year on year product launch, giving each product the time to settle in and the market enough time to understand and accept the product. They are not rushing with too many variants which not only would spread themselves wide and thin but also tends to confuse the market.

Direct sales

Their play is very simple in this regard. They are not setting up a huge network of brick and mortar stores, instead going with the contemporary model of virtual or online stores. This saves them big on overheads and that makes them agile and price competitive. Even in India, the product is sold through Flipkart. They also rely more on social networking communication than spending on traditional advertising methods.

Differentiator

The price sensitive markets including India have many smartphone brands that have similar hardware and they rely mostly on their marketing efforts to differentiate. In the case of Xiaomi, they present a key differentiator – MiUI, their killer feature. This is a specialized UI based on the Android OS and designed by getting online feedback from users, updated & released once a week based on the feedback from users.

Tight Demand-Supply equation

They have an interesting approach to the market. Veering from the traditional “availability” concept and flooding the shelves (virtual or otherwise) with inventory, they seem to prefer to capture the attention of the prospective consumer and create demand. They address the demand with initial low supply and then ramp up shipments. This makes for an interesting situation and play on the consumer behavior where the prospects are left yearning for the product so, the consumers chase the product instead of the other way around. In fact, according The Economic Times, their Mi3 is selling like hot samosas in India creating what it calls a "supply challenge".

Price

The products are priced practically at Bill of Material costs with razor thin margins that they offset with the decrease in price of components over a period of 18 months. They are able to stay price competitive also because of their avoiding traditional expensive advertising and sales methods. In addition, they also profit from selling apps, games and special Android themes and Internet services by which they are able to balance the P&L and maintain the attractive pricing. Result: they are able to sell high quality products at very low prices.

Branding and Market Strategy

As mentioned earlier, they are using the more contemporary social media to communicate to their target audience rather than traditional modes. They have a fan club of users called Mi fans that Xiaomi interacts with new MiUI releases / updates, product announcements, etc. They also use native festivals as a platform for marketing and communication.

Additionally they believe in hunting in the right market segments with the right weapons or horses for courses. For example, their first three models Mi1, Mi2 and Mi3 do not have LTE capability because the markets targeted do not have LTE presence.

Their entry to the Indian market is a long haul approach. They want to lead with the advantage of price and features combo that can better Indian phone brands, but they seem to be willing to play the patient game.

Having tamed the Dragon, it seems very conceivable that they might win over the Tiger too!

Tuesday, May 14, 2013

Whither Tablet - Phablet?

All of us who have received (or sent) emails that contained "Sent from my iPad" or something similar, know that the tablet is much more than an electronic version of the one on which the Ten Commandments were written. But what about the phablet? Is there such a term or is it like a person from New Delhi, saying "tablet - phablet" in much the same way they would "chai-shai" or "bank-shank"? Ok, you got me there, a Delhi-ite would most likely say "tablet - shablet" and not phablet. So let me try and connect this to what I am talking about.

Months back, when I got off the flight at Mumbai, I saw a woman dressed in a business suit talking on a mobile device held to her side of the head, something that looked more like a mini tablet and not at all like a mobile phone. I chuckled quietly and said to myself that this was the other end of the "one black coffee please" mobile phone promoted by Ericsson back in the 90s. Now I know that this kind of a device is called a phablet - a mobile device that has a cell phone and the tablet converged into one! Whatever will they think of next?

But that is not the intention of this post.

The kinda tortuous preamble to this post is basically to wonder that given there are these 3 types of handheld devices - the Smartphone, the tablet and now, the phablet, how would you position each of these in the target market?

A couple of weeks back the CEO of Blackberry said that the tablet would be dead in 5 years! I don't know about the time frame and frankly I am not qualified to agree or disagree with Thor Heins, but, I can say this much - I have a smartphone, a tablet & a notebook, but I find that I use one one of these more than the other 2 for writing emails, blogs and stuff and use the smartphone for calls, messaging and PDA stuff. No marks for guessing which gets left out in the Venn diagram of these two sets of activities. So that set up my curiosity and I asked the product marketing manager of a (now) top global mobile devices and consumer electronics corporation to gimme some dope on the tablet. Where & how they are positioning it what the kind of road map. He answered me honestly and off the record that they "really didn't know"!

He went on to say that a tablet by definition is something that is in between a smartphone and a notebook or laptop. That it has the ability to do all the stuff that a notebook can do yet be smaller so that it can be carried around instead of "lugging around a laptop". But isn't today's smartphone exactly that, well excepting maybe the screen size? It didn't convince me in the least.

To me, a smartphone is something that is small & handy enough to be carried and if you were to make it with a 4-5 inch screen and load it with many of the stuff that you can get in a notebook or tablet, then you know that you have the attention of the device-hungry Indian. And if you want to read something substantial like breaking news or your co-workers presentation sitting in the toilet or watch a streaming movie, play some game, etc., then the notebook does very well - it has a large screen - say about 12 inches at least and it has lots of memory, CPU power or graphics capabilities and all that. It is also very easy to pick up and use, especially if you leave it set for "go into sleep mode when lid is closed".  The smartphone can be carried around easily in the pocket or purse and kept unobtrusive. The tablet cannot be carried in your pocket but can definitely be carried in a handbag or backpack, but isn't the same true for the notebook as well? That it can be carried around in a handbag? And the argument that the notebook requires net connectivity holds good for the tablet as well, that it requires a SIM card for connectivity to 3G. Actually the notebook scores over the tablet hands down in this aspect because you can hook it up to the net using a mobile broadband USB data card that can give fantastic speeds.

So, is the tablet only to show off and make a statement that you have arrived? That for this very reason, you don't want to carry it around in your pocket, instead you want to flaunt it?

I am not sure what it is but until someone writes in with some decent argument that positions the tablet in the useability scale, I will go with just "tablet-phablet" or perhaps even "tablet-shablet"!

Tuesday, May 29, 2012

From Smart to Super



The mobile growth story in India should really be looked at as a course of multidimensional evolution. When this evolution started, it was mainly aimed at addressing and overcoming the great challenge of staying connected. This was very effectively accomplished in record time. ‘From no connectivity to wireless connectivity’ was the earlier push that created a big bang in the Indian telecom market. Over a period of 10 odd years, a better quality of service evolved that encompassed changes such as voice clarity , quicker delivery of text messages & emails. This was an important but basic step.
Today, voice is almost passé. The mandate of the common mobile user nowadays is loud and clear – Social Networking, Instant Messaging, Entertainment and multimedia content and, perhaps, a bit of email. A good way to look at this is to consider that even if voice calling was free, you probably wouldn’t call your friend multiple times a day. On the other hand, data services are a window to a whole lot of content that the user wants through the day. The great thing here is that the mobile phone is not only something that is personal but, added to that, if it can perform well enough to meet most of your immediate requirements, then you don’t need to fire up your PC or laptop to surf the internet or see the latest cricket scores. There has also been a distinct change in consumption patterns. A lot  less people are watching long TV shows, while a lot more want  to “snack” on 3 minute videos off the net, which they don’t mind watching on their small screen. It is no wonder then that, almost across all social classes, the mobile phone has become the ubiquitous & personal media & communication device!
While the consumption preference   seems to be inclined towards going the way of data over voice, it is being complemented by the advent of smart phones. This is leading to people quickly upgrading and replacing their feature phones with new touch screen-enabled multimedia-playing, 3G-compatible smart phones. But, this shift in the Indian mobile user’s buying behavior, towards better features like, enriched multimedia experience and entertainment comes with a big drawback. Although Smart phones are better compared to feature phones they are more complex to use and come nowhere near the easy usage characteristics of the trust old feature phones.
Therefore, the conundrum is a toss-up between features vs. ease of use / convenience.
Mobile Devices & handset manufacturers have already taken note of this big poser and are already spending many dollars on “uncomplicating” the smartphone without compromising on features and speed. They are coming out with what the industry is beginning to call the Superphone. I believe this will be another game changer in the industry.
Google coined the term “superphone” when they launched their Nexus One. The company described the device as optimized from a silicon perspective, a hardware perspective and a software perspective. What we must however remember is that the end users are least interested in the silicon, hardware and software application inside the phone. What they want is a phone that is powerful, yet easy and convenient to use.
So, if we were to sum up what mainly appeals to the mobile user in general terms, it is: a superphone that has deeper access to hardware capabilities, where the hardware is a step above what you would  see in a smartphone; screens that are larger, in excess of four inches, in some cases; there is an  impressive camera, generally between five and eight mega pixels, that lends itself to high-quality photo and video capturing; has multiple microphones with noise cancellation for better sound, both for calls and video recording. In other words, the multimedia capabilities are well placed in this generation of mobile phone. The software applications that drive the enhanced hardware connect the various features seamlessly and are highly intuitive to bring you a unified super experience. For example, the camera takes a high res picture, then offers tools to help you modify the picture as per your needs, then out pops an interface that helps you share the modified picture with your social network via email, Twitter, Facebook, etc., and also connects you to that particular application for you to further interact with your network. Not too bad for something that fits in your pocket.
The scenario in India is not too far behind the West as some Indian brands are becoming very active on this front. After all, the Indian mobile market in the top 20 cities of India is considered to be action packed and mature. Although the users are drawn to features offered by the mobile device, ultimately how these features are presented to them could be the key differentiator. Can they put together this bundle of magic in an uncomplicated package with enhanced but easy user experience?
That is the million dollar question.

Sunday, February 26, 2012

What stops the 3G & 4G Lifestyle?

To an average mobile user, perhaps even a mobile user who is well-aware of the latest mobile technologies, I would venture to say that roll out of technologies such as 3G, 4G, LTE and even 5G will only be a piece of news! Because, these technologies, while they provide a fantastic realm of faster, cheaper and stronger mobile usage, do nothing much to the user, because the end user is more interested in what is happening on the mobile phone, and would rather not be bothered about what is going on in the big background of the mobile network, unless it fails!

Rather, the user is more interested in what new & interesting things that their shiny new feature phone or smart phone can provide. In fact, the very reason for the rise in the smartphone sales in India nowadays is primarily because the user:
  • Wants to climb the social and aspirational ladders to own something that the “high rollers” have, or even because they come under a sort of peer pressure like "my friend or colleague has one so I should get one, too"
  • Has heard about the wonderful things that one could experience with the smartphone such as streaming video & multimedia content, mobile internet browsing, and so on, in an interesting and exciting way.
However, having got the new device, the user soon finds out that it is not that great because you have a lot of “irritants” such as:
  • Tedious process to access even the native apps
  • Search takes more time than to read an update! For example – Having to go through multiple clicks just to get a quick update on the latest cricket score.
  • If you want to know about trends and stuff, it is more time consuming & frustrating to look for them. There are no intelligent, profile-based recommendations, or pushed content.
  • Typing URLs, even the short ones is time consuming & annoying.
  • There are no intuitive or adaptive content that you expect out of a smart device
  • Typing for say, 3 minutes to look at a 1 minute video clip, etc.
All these just seem too complex and so inconvenient that you get frustrated using the mobile device. And the funny thing is that data speeds or any other “back end” technology is not the problem. There is a humungous amount of content available out there covering differing geographies, cultures, languages, topics, serious to humorous, and these are the latest and trending content as well. The user knows that he can get to all this, but let us not forget that the DNA of the user is – instant gratification, “snack” type consumption pattern, fast moving from topic to topic of content, etc. In essence, everything has to be quick, like, “I want to be entertained, I want to know what is going on in the world & in my group, I want it now but I don’t want to spend any time or effort looking for it”.

So, even the most sophisticated smartphone becomes a kind of a passive, multimedia, touch screen phone; even to the educated, smart and savvy user because they have to put in effort and time to get all the goodies. The other argument is “why call it a smartphone when all it does is provide mobile browsing, multimedia & gaming capabilities & expects the user to do all the work!” Well, that’s it, isn’t it? The smartphone is not smart; it is only high tech and pretty. And worse, it expects the user to make the effort & be intelligent and adaptive. Now, that isn’t very smart! That is the real problem!

If we were to take the television ecosystem as an example of success at the user end, then there are many reasons for this. While TV in India has graduated from the black & white and "Krishi Dharshan" days of yore, thanks to cable and its proliferation, the TV companies realized very quickly that content sells. Of course, it also helped that newer technologies of TV sets like plasma, LCD, LED, HDTV, Digital broadcast, etc., coupled with interesting accessories like the Home Theater Systems made TV viewing much more entertaining and exciting. However, the most interesting thing to happen (or rather something that didn't change!) was that at the user end, the operation of the TV. It has remained as simple as it has always been! That is to say, while the TV set & the back-end technologies have become very advanced and high-tech, for the end user, operating all this has remained exactly the same as operating an old CRT tube-based TV. Now that is what I call smart! In fact, one could extend this to so many things in life such as automobiles, IVR systems, Airplanes, etc., where the technological improvement has increased user comfort while reducing the effort required by the user, to consume whatever is being served.

Therefore, IMO, the biggest challenge that mobile technology faces today, is not the technology itself, but the delivery - whether it is convenient, smart and easy or complex and cumbersome!

Tuesday, November 15, 2011

Google's Search in the Mobile Space

Google, which started as an internet search engine, has over its dozen years of existence, steadily added more products and services not exactly related to search. Some of the better known products are Gmail, Google Earth, Chrome, Picassa, Orkut, Youtube and even the blogger tool used in this post, to name a few.

Now the big eye in the Internet space is training itself on the mobile space and is seriously looking at Mobile Marketing, more of Android and Mobile Commerce. What is the real strategy behind this move? Follow this link to get a perspective -->  Understanding Google’s mobile ambitions

Thursday, November 10, 2011

Combining Human Emotion with Technology

Lauren Johnson, an editorial assistant on Mobile Marketer follows an interesting and important aspect of doing business in the Mobile World. She picks up inspiration from William Isaacson’s new book which basically says that “To reinvent the school industry, we need to reinvent the textbook industry.”

Tap here for more.

Wednesday, November 9, 2011

QR you?

QR codes are like the web page of information that we had back in the mid 90's. Everybody is talking about it yet nobody can call it a killer app. This is mainly because QR codes are perhaps used ineffectively in marketing campaigns.

Quite simply, if you expect people to run behind a bus or hold a magazine page straight to capture the QR code which then links to a marketing video, then the marketer has quite literally missed the bus. Instead, you might as well have a tiny URL for the mobile user to link to the video. There is nothing exciting to a user about scanning QR codes to see a video commercial.

What marketers should strive to do is to have a strategy to engage the mobile device user in ways that would make the QR code an effective marketing tool.

Tap here for an interesting article --> Are marketers killing consumer enthusiasm for QR codes?

Thursday, October 6, 2011

Independent Obsession

When you ask a controversial question like "‘India attained Independence from British colonial rule on August 15, 1947’. True or false?" then you are setting yourself up for the long haul, with the kind of not-so collegial debate, irrespective of whether you answer "True" or "False".

However, Pankaj Phadnis, Group Vice-President of the Wadia Group of companies, seems to have this well and truly under control and has his own political, historical and technical reasoning to back the significance of this question.

If you are still wondering what the answer is, or should be, read what he has to say here http://www.thehindubusinessline.in/life/2007/12/28/stories/2007122850010100.htm

Steve Jobs, RIP

1955 - 2011
Steve,

You haven't left us, nor have you gone anywhere. You will live on, in our minds, forever! May your journey to the unknown be peaceful. Rest In Peace!

ps: those who want to share your thoughts, memories, and condolences, please go to http://www.apple.com/stevejobs/ or directly email rememberingsteve@apple.com

Thursday, January 5, 2006

Copyright Clearance

Read today that an IIM-B prof had to resign because he was caught plagiarising. What a shame that!

Plagiarism, whether it is shrouded in the cocky expression of "inspiration" or smart-alecky "translation", is plain and simple copying aka cheating. First of all, it shows a lack of respect that the plagiariser has for the author and secondly, it shows the absolute ineptitude of the copier.

Perhaps all of us bloggers should safeguard ourselves through some copyright clearing agency such as this