November 10, 2014 by ...
Xiaomi is making waves with killer handset sales. As shown here, They shipped 15 million phones last quarter garnering them the #1 spot in China. What they have not done, however, is to translate that to success in the tablet market. For example, Xiaomi ships only 1 Mi Pad for every 30 cell phones. Yeah, they have sold a paltry 550,000 Mi Pads since rolling them out.
Xiaomi Mi Pad sales lagging
In order to see how poor those numbers are, consider that Xiaomi trailed Lenovo by 2.5 million units for the same period, AsusTek by 3 million and Samsung by 9.4 million. Simply put, nobody wants a Mi Pad. The reasons for this lukewarm reception are related to technical issues, product positioning and perceived value. Lets look at them on-by-one.
Xiaomi’s choice of using Tegra K1 chips is great for running PC games on tablets but not for mobile phones. The best choice for mobile phone based video games is an ARM or x86- architecture processor. Choosing the Tegra makes no sense as Xiaomi has thousands of Apps which are geared for mobile phone gaming, not PC. As a consequence, user experience suffers. Aside from this, the Xiaomi software is incompatible with all tablet lines but the Nexus.
Xiaomi is best known for its phones which attack the lower end of the market. Companies signal value and position with price. Xiaomi sells phones on the cheap. Customers then associate Xiaomi kit with low prices, this is their position.
In China the Mi Pad retails for about $250, which is just about what you would pay for an original Ipad Mini, or ipad as well. Pay an extra $30 and you have the Mini 2. Sure it is smaller than the Mi Pad, but you are buying the real McCoy. Pricing a ‘Mi too’ at anything close to the range of Apple gear is a fools proposition at best.
Setting aside Apple, Xiaomi is also priced above the rest of the tablets on the market. This is especially true of Chinese manufacturers. Due to quality differences, these firms disdain charging more than RMB 1000 or $170. This price delta makes such a purchase palatable when compared to higher end models. Once again, Xiaomi is positioned itself out of the market.
Closely associated with this and potentially the most telling thing about how Xiaomi is perceived is that customers do not see the value. Sure Xiaomi phones are good and cheap, but based on my research they are widely seen as ‘starter smart phones’; something you buy until you can afford an Iphone, Samsung or Nokia.
People are not willing to pull the trigger for a product which so openly mimics others in the market. Once again, why by a Xiaomi tablet, which borrows greatly from an Ipad when you can buy the original?
Aside from that, Xiaomi’s strategy is inconsistent. Either they are high end or low end. Customers set expectations of quality with price. You go to McDonalds to get a cheap quick meal. You are not going there for prime rib, after all. Mickey D’s does not position itself that way. And if they did decide to sell prime rib, customers would be wary. Would anyone really expect to get a quality steak at a McDonalds? Well the same is true for Xiaomi cusomtemers, they do not believe the quality merits a higher price point.
Remember, only 23% of Xiaomi customers even like the brand. They buy it because it is cheap and will last them until they can move up the food chain. Aside from the untra-loyal fanboys, Xiaomi customers are agnostic. They are chasing price. When Xiaomi fails to acknowledge this and prices their kit otherwise, the market sends them a message-‘stick to your knitting and save us a buck.’