Chinese Company, Xiaomi is looking to win over India with its app strategy
Xiaomi, one of the leading smartphone manufacturer, is doing a quite good business in the market.They pledged to invest over $1 billion in 100 Indian startups over the upcoming five years as it looks to speed up growth outside of its domestic market, according to Xiaomi CEO Lei Jun. Lei Jun said, “Xiaomi’s strategy is to build out an ecosystem of mobile apps that can be used on its smartphones and will increase mobile time spent and act as a retention tool to keep fickle smartphone users in India on Xiaomi devices.”
Xiaomi has been practising and has seen success with this strategy in China, where Xiaomi had invested $4 billion in 300 other companies in a time span of four years and has become the Fourth-largest smartphone brand in terms of shipments worldwide.
Building out an extensive app ecosystem is crucial to staying competitive in the crowded global smartphone market. Here’s why building out Xiaomi’s app ecosystem is significant:
(i) The ecosystem for Android apps is highly fragmented and app availability can determine consumers’ phone selection. One byproduct/result of the open Android market is that it’s created a fragmented market where individual vendors build their own forked versions of the OS and compatible app stores. The Chinese market, for instance, is dominated by Android OS, with numerous app stores that consumers can choose between. By financially backing apps that are compatible with its devices, Xiaomi aims to make its smartphones more appealing to consumers. Xiaomi’s app store is the third most popular Android app store in China, with a market share of 12%. Their main aim is to provide a wide range of features in a minimum price.
(ii) Xiaomi needs its smartphones to gain traction in India to support its ancillary products. The ecosystem effect — when consumers prefer to use devices and services from one purveyor — means adoption of Xiaomi’s smartphones could spur uptake of all of its connected devices. Xiaomi currently offers various products including smartwatches, smart speakers, and smart TVs, which Xiaomi plans to bring to India in the coming months.
(iii) By ensuring functional and diverse app and mobile services products for its smartphones, Xiaomi could better compete with Apple as international tech giants look to gain in India. As of Q3 2017, Xiaomi is the fifth-largest smartphone vendor in terms of shipments, behind Apple which ranks number two. Xiaomi’s smartphones typically have similar specs to Apple iPhones at significantly lower prices. But Apple is likely the first choice for consumers due in part to its vast app ecosystem and notable brand name. A more robust app ecosystem could help Xiaomi shore up against Apple in the overall smartphone market.
Xiaomi’s increased focus on India comes as it looks to capture the enormous and growing smartphone market the country represents:
(i) India is the company’s biggest market outside of China. Xiaomi is tied with Samsung as India’s top smartphone vendor in terms of shipments, according to IDC. Xiaomi nearly tripled shipments year-over-year (YoY) in India and accounted for 24% of India’s total smartphone shipments.
(ii) India recently became the world’s second-largest smartphone market in terms of shipments after China. This growth is expected to continue as data and devices become more affordable in the region. Smartphone shipments in India, which reached over 39 million units in Q3, accounted for 10% of the global shipments for the first time ever in a quarter.
Xiaomi is thinking of taking their business to next level. Let’s see what happens.
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Source: Business Insider