Mi5 Strikes Fear Into Hearts of Apple and Samsung: Xiaomi Turns Focus Towards US and EU [Updated]

Image Credit: Phonedroid

In an industry where Smartphone OEMs have pushed out newer versions of their devices, even before the previous one has been made available in all markets, Xiaomi stands out as a company that takes its time in between releasing flagships. A good 18 months after the launch of their previous flagship, the Mi4, the successor to the Mi lineup, the Mi5 made an appearance at MWC 2016 in Barcelona. While the specifications have been typically good in all Xiaomi products, a feat that landed them at the top of our budget smartphone awards last year. The special ingredient is neither the hardware list nor the price point, that has caused such a ripple among tech enthusiasts everywhere.

Xiaomi has typically restricted itself inside its parent country of China, only recently branching out to India, Africa and a few Latin American countries. However, due to various reasons, like their software and hardware having some pretty blatant ‘inspirations’ from a certain fruit company impending patent lawsuits and a lack of LTE bands for Europe and the USA, have kept them from exploring two of the most lucrative and mature smartphone markets. All that is set to change as this year’s launch of the Mi5 was not an isolated event in China, but a global unveiling at MWC Barcelona, where Xiaomi took to the stage with the other bigwigs of the smartphone industry. This seems to be a clear indication of Xiaomi’s plan to breach the Western Markets, and this very thought sent shudders down the spine of traditional OEMs like Samsung Electronics Co. Ltd. (KRX: 005930), LG Electronics Inc. (KRX:066570) and even, Apple Inc. (NASDAQ:AAPL). But can Xiaomi justify all the excitement it has managed to generate with the Mi5 global launch?

Mi5: A Phone That is Uniquely Xiaomi

Over the years, accusations have been levied at Xiaomi for ripping off various successful devices from other manufacturers like Samsung and Apple. However, the Mi5 has a unique look and feel to it, something that Xiaomi has been striving towards in the last couple of years. While the curved glass at the back is definitely reminiscent of the Samsung Galaxy Edge, one must remember that Xiaomi developed a similar design cue for their Mi Note series earlier last year.

Underneath the hood, the latest flagship from Xiaomi carries top of the line hardware. Powered by a Snapdragon 820, the regular variant of the phone comes with 3 GB of RAM and 32/64 GB of storage while the pro version comes with 4 GB of RAM and a jaw-dropping 128 GB of storage. All the other connectivity features are present and well accounted, including NFC and a Fingerprint Sensor that has been embedded inside the physical home button up front!

This phone combines top of the line specifications and goes toe to toe in almost all aspects with current generation flagships like the Galaxy S7 and the LG G5, except in the screen department. On paper, the 5.15-inch screen at 1920×1080 resolution seems to have fallen behind the curve with most flagships from other OEMs toting a 2k Display. This compromise may actually work out for the better for the Mi5 though as most recent surveys have shown battery life to be a chief concern for people looking to buy new devices. And talking of buying this device, the price of the Mi5 is one of the factors that has traditional OEMs of the Android space wary of this new Xiaomi offering. We find out just how disruptive the Mi5 can be at the mid-range segment in our next segment!

Price vs. Performance: The Perfect Balance

premium smartphone price

Even a quick look at the chart above will tell us that the Mi5 outperforms every other flagship on the list in a Value for Money ratio. In fact, the 128 GB iPhone 6s Plus is nearly 2.2 times the price of the similarly decked out Mi5. But many will argue that the comparison is unfair as Apple and Samsung and even, Google with their Nexus branding charge a premium for their brand recognition. Brand loyalty is something that will come with time, and that might be the only saving grace for the flagships. But what about the mid-range market? We turn our glance to that in the next part of this segment.

The Average Selling Price for smartphones was $293.61 in 2015. Taking this as a metric for defining the mid-tier category of smartphones, we have pitted the Mi5 against some of the most popular phones in this price range of $250-$350, and the results, unsurprisingly, have found the Mi5 as a ubiquitous winner.

And with that, we have covered the offerings of the almost all the top tier smartphone manufacturers in the world right now, and the Mi5 has bested all of them in the experience it offers at a bargain price point. However, as we have often seen in the past, great hardware and even sometimes a lucrative price point is not enough to make a best selling device. Thus, in our final segment, we shall quickly glance over some of the hurdles that Xiaomi will have to face in their foray into the western world.

Final Thoughts

IDC report claims that Xiaomi managed to sell 18.2 million devices in Q4 2015, capturing 4.6% of the worldwide smartphone market. While an impressive feat on its own, what is, even more surprising, is that Xiaomi has managed to gain an almost equal number of interested customers from China alone for their first flash sale of the Mi 5. However, 16.8 million registrations doesn’t equate to that many devices sold and thus, while the Mi5 has given us some reason to be excited, we should keep our hopes in check.

In fact, Xiaomi’s strategy which has worked so well in China may require a revamp to be equally successful in western countries. Interestingly, they would do well if they keep these factors in mind as they move forward on their foray into US and EU:

  • The recent lack of an app drawer in LG’s latest offering has caused much uproar in the Android community. It remains to be seen how well the iOS like MIUI is received by the western world.
  • Xiaomi entirely depends on ‘word of the mouth’ and social media presence for marketing to keep their product costs low. When competing with giants like Samsung that spent $14 billion on advertisements alone, this marketing strategy may fall flat!
  • Xiaomi sells their hardware almost at cost and aims to make money off their MIUI ecosystem. In China, in the absence of Google Play, Xiaomi’s App store has worked out brilliantly for them. However, it remains to be seen if the US and EU consumers will buy into Xiaomi’s ecosystem.
  • One of the chief reasons why Xiaomi has failed to penetrate the US market is because of the lack of LTE bands in their smartphones. While including the hardware bands is easy enough, getting the four major carriers on board will be a different ball game altogether.

Operating on wafer thin margins has strained Xiaomi’s profit margins and in order to boost some life into their waning bottom line, Xiaomi needs to expand their market. Can the Mi5 be the one to do it? Only time will tell, for now, we remain cautiously optimistic.

Update: 28 March 2016: Xiaomi has officially confirmed the launch date of Mi 5 in India. The company is busy in setting up the stage for 31st March in New Delhi, India.

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