From 15 January, the landscape of value-for-money smartphones has changed, and not exactly for the better. Ironically, it’ll be led by Xiaomi, a company that challenged the norms of premium prices for high-end devices.
In a few short hours since the Xiaomi Note was announced, I’ve heard a few friends hurling abuses at the Chinese company for the high price tagged to it. Okay, I’ve kind of exaggerated the abuses part, they were making disgruntled comments than really flipping tables over this.
To be honest, it’s actually justifiable rage. For the last two years, the Chinese company that’s often compared to Apple for its similar looking products and culture has followed one very important mantra - affordability. The Mi smartphones pride themselves on not just that, but also the above average hardware and exceptional user experience they deliver.
So what if the Xiaomi Mi3 wasn’t using top-notch processors or packed with a crazy amount of memory? The important thing was, it worked, and it worked damn well without busting your budget.
READ MORE: Xiaomi Mi3 review
The Xiaomi Note unveiling, however, has created a brand new perspective - the base model is equipped with a Qualcomm Snapdragon 801 processor, 16GB of internal storage, 5.7in full HD display, 13MP rear camera (by Sony) and a 4MP front camera. Awfully familiar specs, if you compare it against another hot favourite amongst Android users - the OnePlus One.
The slightly larger screen, dual-SIM support and that crazy thin 6.95mm body? Probably explains why the Xiaomi Note’s CNY2299 (S$495) is pricier than the US$300 (~S$400) OnePlus One.
The other surprise would be the Xiaomi Note Pro, a behemoth of a device that puts everything but the kitchen sink in. That 5.7in 2K screen, 4GB of RAM made possible by the latest 64-bit Snapdragon 810 processor, and massive speed boost from the LTE-Cat 9 support are definitely epic. And so is the CNY3299 (S$710) price tag for it.
From all perspectives, it seems like Xiaomi, now firmly cemented in the minds of consumers, is on a route to reap the long-awaited profit with its new pricing strategy. For the last two years, the brand loyalty and awareness it has built, both in China and globally, came with a steep price though - a wafer-thin profit margin of 1.8 per cent, which is nowhere near Apple or Samsung’s massive 28.7 per cent (in 2013) and 18.7 per cent respectively.
For its global expansion plan to really take off, Xiaomi has to fully utilise its popularity and increase its profit margin. That moment is now, with the Xiaomi Note and Note Pro’s pricing strategy.
To be fair, getting the same class of hardware from other Android makers like Samsung, LG, Sony or HTC is going to cost nearly S$1000. So Xiaomi hasn’t really lost track of its initial mantra - to make high quality smartphones that are crazy affordable.
Case in point, the Xiaomi Note Pro's pricing is still in line with the same mission statement that made it the third largest smartphone maker in the world and crushed Samsung’s hope of being the top dog in China.
Plus, its customised MIUI interface is still the reason why Mi fans remain staunch supporters of the Mi smartphones. Frequent updates, new features based on user feedback and the strong engagement towards its fanbase by Xiaomi have become an amazing case study for loyalty retention among consumers.
Smartphones aside, the Chinese company has also shown that it still has affordable, and more importantly, interesting gizmos under its wings. The Mi Headphones, priced at CNY499 (S$107), and the compact Mi Box mini that costs a mere CNY199 (S$42), are definite proof that Xiaomi still has the consumer’s interest in mind.
But change is definitely coming. Because while Xiaomi is still on track to provide the best smartphones at affordable prices and fiercely loyal to its fanbase and receptive to their feedback, it is still, first and foremost, a company that needs to maintain a healthy profit margin. I won’t be surprised if a few Mi fans leave the fold and decide Xiaomi is no longer their favourite brand once the company begins to value profit over user experience.
But don’t cry foul when the next Xiaomi device might exceed your limited budget - because you can't please everyone, and Xiaomi has done a fantastic job pleasing the majority of its fans.