Chinese technology major Xiaomi’s move to start selling televisions could lead to a change in the pecking order in this category. Top TV brands such as Sony, LG and Samsung could face a situation which mobile phone players faced when the Chinese brand entered India in 2014 with phones that had the specifications of high-end devices but priced much lower than the then dominating brands.
Xiaomi, which has climbed to the top spot in the Indian smartphone segment in three years, is following a similar game plan to disrupt the TV segment. For starters, it has adopted disruptive pricing to sell high-end TVs through Flipkart (its exclusive online partner), Mi.com (its own site) and its 30 exclusive Mi Home Stores. The Beijing-based company expects it to be a matter of time before its dominates the television category with its ‘predatory’ pricing strategy to lure the price-conscious value-obsessed Indian consumer.
Flipkart is already exhausting its weekly sales inventory and expects the pecking order of televisions sold online to change.
Sandeep Karwa, Senior Director and Head of Large Appliances at Flipkart, said, “The top three brands which occupy 75 per cent of the television category will soon change. Just like it happened in the case of mobile phones when the top five brands changed between 2014 and now, a similar trend is going to play out in the television category as the value-conscious Indian consumer embraces the disruptive pricing. While we have been been selling out Xiaomi’s inventory every week, it would not be fair to compare it with others since it has only 3 SKUs with a different cost structure compared to the leading brands like Samsung, Sony or LG.” Xiaomi has been selling its 55-inch 4K Mi TV sets at ₹39,999 unlike the rest of the players which peddle the same sets upwards of ₹85,000. It is now readying itself for a more aggressive on ground execution strategy and working on its after-sales, logistics, retail and warehousing capabilities for an offline splash with its televisions.
But its rivals do not think that the Chinese company can replicate its small screen success in smart phones to the big screen television segment. Vu Televisions, which was among the first to disrupt the TV segment with high quality products, says the customers buying TV sets are wary about lower priced products.
Devita Saraf, Founder & CEO, Vu Televisions, which has a majority of its sales coming from online channels, said, “Till date Xiaomi at best would have sold about 3,000 televisions. Our feedback is that the customer reviews are not positive as it is a low priced, low quality and low cost product and it has had no impact on our latest high android television sales.” Even leading television brands like Sony, LG and Samsung are not too perturbed. These are top three brands in the global markets as well where ‘disruptive’ pricing has not changed their dominance.
Officials at Korean cheabols like LG and Samsung claim the Chinese players are all about a lot of hype and some, including Xiaomi, even source their television panels from them.
“We have been here for the past 22 years and manufacture ‘make for India’ televisions. Now with import duties going up, players like Xiaomi will never be able to match our costs and are here to temporarily push some volumes in the Indian market,’’ said an official from Samsung.
Rishi Tandon, Business Head, Flat Panel Display, LG India, added, “There are already a host of smaller Chinese brands operating with a disruptive strategy and these are basically commodity products with low prices while players like us invest behind R&D with new technology products. Unlike mobiles, television is a long-term buy of at least five years and hence needs a robust services network and experience zones, which is our core strength at LG.’’
Innovative biz model
But Manu Jain, Global Vice-President, Xiaomi, has the last word. “We believe the concoction of our truly disruptive product, Xiaomi’s philosophy of best specs, highest quality and honest pricing mixed with the Xiaomi innovative business model will help us propel the Smart TV industry in India. Mi TV’s would change the way TV’s are seen in India .”
Competition will continue to get intense in the smart television category through the e-commerce space. The latest to join the fray is Europe’s electronic and home appliance brand Thomson, which is planning a comeback to the country through the online channel with its Thomson smart TVs.