Xiaomi the difference: Chinese smart device maker vows to disrupt UK market

Xiaomi launched Mi 8 Pro, the first time it has unveiled new products outside of Greater China, a sign of its ambition to expand in more mature markets.

At a Hollywoodian event (as almost all smartphone launches are nowadays) in Barbican Centre on Thursday, Xiaomi became the latest Chinese smartphone maker to introduce their latest products in London, following recent launches by Huawei and OnePlus. The company unveiled Mi 8 Pro, an upgrade version of its Mi 8 model launched earlier in China.

After registering impressive growth in India and other markets in Asia, as well as consolidating its position in China, Xiaomi, like some other Chinese brands, is eyeing the mature markets for new growth. Western Europe is an attractive option as the market is not flooded with hundreds of smartphone brands as in India and China, and there is a sizeable open market that is easier for new brands to set a foot in instead of having to crack the carrier market as in the US.

“Today we witness a new chapter in Xiaomi’s global expansion journey, underpinned by our global ambitions. We are thrilled to make great strides by announcing our arrival in the UK,” said Wang Xiang, Senior Vice President of Xiaomi Corporation.” By bringing a range of our amazing products at honest pricing we want to offer more choices and let everyone in the UK enjoy a connected simple life through our innovative technology.”

The newly launched Mi 8Pro and its predecessor share exactly the same hardware and software, powered by Qualcomm’s Snapdragon 845 CPU, 6.21” AMOLED display (yes, need to go to the second decimal digit), 8GB RAM and 128GB onboard memory,12MP+12MP AI dual camera on the back, and 20MP selfie camera, Dual 4G SIM, Dual frequency GPS (to minimise coverage dead zones, like near tall buildings), infra-red facial recognition (to unlock with facial ID in the dark).

On the software side, Xiaomi overlayed a light MIUI skin on top of the latest Android release, plus a couple of its own preloaded apps (browser, messaging, etc.). Presumably the main point is not how many people will use its apps but rather to gather usage data. The Xiaomi executives did stress the number of active MIUI users in the world and in Europe (its products are already being sold in Spain, Italy, and France). It has also preloaded a MS Office suite, one of the first offers Microsoft made to the Android ecosystem back in 2016.

Under the spotlight was its photography technologies including the so-called “4-in-1” super-pixel, that is combining 4 pixels into 1 to take in more light, therefore to capture more details even in low light environment. Also being boasted is the speed the phone focuses (using the so-called Double Pixel Auto Focus, DPAF, technology, demonstrated in a video as faster than both the iPhone XS and the Samsung S9+). Nowadays, no presentation of smartphone cameras is complete without talking AI, and Xiaomi is no exception. The main talking point here was on the analytics capability to separate foreground from background, making post-shot processing easier.

The only genuine upgrade the Mi 8 Pro offers over the Mi 8 looks to be the fingerprint reader. It is at the back of the phone on the Mi 8, but is upgraded to on-screen reader on the Mi 8 Pro.

All the bells and whistles aside, what Xiaomi most wanted is to stand out in two areas: design and price. It is clearly successful in one, maybe less so in the other. Xiaomi claimed to go down the minimalist route for its design, claiming that it was inspired by the exhibits at the Helsinki Design Museum. It even got the director of the museum to go on video to endorse an earlier product. But what it got to show its innovative design on the new product is a transparent back-cover where the upper part of the inside of the phone is visible. But to those of us old enough to remember the 1990s, this is more a retro than inno. Swatch’s Skeleton series, anyone?

Xiaomi Mi 8 Pro_Front resized Xiaomi Mi 8 Pro_back resized

But when it comes to pricing the strategy is much bolder and more likely to succeed. Xiaomi broke through in the device market in China in 2011 by offering smartphones with decent specs at a very affordable price. This strategy has carried them through ups and downs all the way to London. The Mi 8 Pro will be retailed at £499.99. This is vastly lower than other smartphones with comparable hardware specs. Xiaomi is clearly targeted at the so-called “affordable premium” segment.

On the distribution side, Xiaomi started in China exclusively using online distribution channels. There have been followers with mixed success, but at the same Xiaomi is also diversifying to brick-and-mortar retail outlets in markets like India, Malaysia. Xiaomi also aims at a mixed channel strategy in the UK, it opens its own online shopping channel, getting online and offline channel partners (Amazon, Currys, Carphone Warehouse, Argo, John Lewis, etc.) on board, as well as opening its own authorised retailer in southwest London on 18 November. It also tied a partnership with 3UK, though Xiaomi executives would not tell more details of the terms or the packages 3 plans to offer.

Also introduced to the UK market at the event are a smart wristband (Mi Band 3, main feature being its display larger than previous generations) and an electric scooter, to deliver the “ecosystem” story—the executive stressed Xiaomi is more than a smartphone company. On display in the experience area were also smart speakers, set-top boxes, smart kettle, and smart scale.

Our overall feeling is that, the Mi 8 Pro smartphone is decent but not fantastic. However the price point Xiaomi sets it on is disruptive. This strategy has worked for the company in China and other Asian and European market, taking them to commendable market positions and financial success. It may stand a chance.

Xiaomi event pic2

Super-complaint targets claimed telco customer exploitation

The UK Citizens Advice Bureau (CAB) has launched a super-complaint with the Competition and Markets Authority (CMA) asking the regulator to outline plans on how it will protect the consumer from loyalty penalties.

The super-complaint does not target the telcos specifically, though the industry has been given its fair share of attention. Research released by the CAB last week suggests the loyalty is being penalised across five ‘essential’ markets (mobile, broadband, home insurance, mortgages and savings), with service providers over-charging customers to bring in an extra £4.1 billion a year.

“It beggars belief that companies in regulated markets can get away with routinely punishing their customers simply for being loyal,” said Citizens Advice CEO Gillian Guy. “As a result of this super-complaint, the CMA should come up with concrete measures to end this systematic scam.

“Regulators and Government have recognised the loyalty penalty as a problem for a long time – yet the lack of any meaningful progress makes this super-complaint inevitable. The Government’s price cap in the energy market will protect some loyal customers. However, there’s still a long way to go in other sectors. The loyalty penalty is clearly unfair – 89% of people think it is wrong. The CMA needs to act now to stop people being exploited.”

While the claim from the CAB is a damning one, it is supported by additional research. Research commissioned by Broadband Genie has found many over 55s could be paying too much for their broadband service, but lack the knowledge or confidence to choose a new package. 51% of respondents said they had been with the same provider for more than five years, 41% had never changed supplier, though price rises would have certainly been applied during this period. The Broadband Genie research reinforces the claim consumers are being penalised for loyalty.

A super-complaint is a complaint made by a government-approved watchdog organisation on behalf of consumers, which is fast-tracked to a higher authority such as the CMA. Since being introduced as part of the Enterprise Act 2002, the CAB has exercised the right four times, including the complaint against payment protection insurance (PPI) in 2005 which helped to generate at least £32.2 billion in refunds and compensation for customers.

This complaint not only follows up research from the CMA, which claims four million people in the UK are still paying back phone subsidies after the device has been paid off, but also an Ofcom consultation which is investigating the pricing strategies of the telcos for the very same issue. As you would imagine, the telco industry is not particularly pleased with the busybody consumer protections group escalating the issue to the lofty offices of the CMA.

“With a consultation ongoing, we feel that Citizen Advice is jumping the gun in relation to the broadband market and we are concerned that the narrative of a ‘loyalty penalty’ conflates customer loyalty with ill-informed or unengaged customers,” the Internet Services Providers’ Association (ISPA) responded. “Loyalty to a provider does not necessarily mean that a customer is not content with their service, especially as in the broadband sector there are a range of non-price issues that the customer may value, including performance, service quality, and reliability.”

This is hardly a surprising statement from ISPA, as while the telco industry will not want to found out for ripping off consumers, it will certainly not want to give up the ‘free money’ generated through the lazy behaviour of consumers. Unfortunately this is not only an issue for the telcos as the complaint could also impact brand credibility and trust as well as bank accounts. Time and time again the telcos have been shown to employ dated business practises, not presenting themselves as customer centric organizations. Telcos are generally pretty bad at managing their brand or presenting themselves as forward-looking, consumer orientated businesses, and this noise surrounding the super-complaint will not help.

Aside from the money and the brand credibility, long-term consequences of the super-complaint could also be quite damaging. According to Stuart Murray, telecoms specialist and a partner at UK law firm TLT, government intervention on pricing could have a knock-on effect for investment.

“The CAB’s super-complaint goes to the heart of how a market-led economy works and any interventions that have the effect of regulating prices in competitive markets like telecoms may result in significant and unintended consequences,” said Murray. “If the CMA took steps to regulate pricing in the telecoms industry, this could have a negative impact on investment, reduce innovation and give consumers less choice, as well as dis-incentivising consumer engagement as people come to rely more on regulatory intervention.

“In a market-led economy, people who actively engage in markets benefit from discounts paid for by higher charges paid by those who are less engaged. The government and private sector have launched several campaigns in recent years to raise awareness of the benefits of engaging in these markets and encouraging consumers to exercise their rights to switch providers if another company is offering a better deal. This is a positive step – as long as measures are also taken to protect the truly vulnerable, who find it difficult or are simply unable to engage.”

This is certainly an area telcos should be keeping a keen eye on, as the long-arm of the government has been searching for ways to gain more authority in the industry. Should the super-complaint lead the CMA towards more stringent pricing regulations it will inhibit new ideas and innovation at a time when the telcos need it the most. Unfortunately, this does seem to be another step made down the path of utilitisation.

Ofcom reveals UK consumer telecoms value for money is improving

UK telecoms regulator Ofcom has published a report into what people pay for their communications services and it implies we’re getting better at shopping around.

The report is titled ‘Pricing trends for communications services in the UK’. Among its headline findings are that, while some people are still paying a fair bit more for their broadband, mobile, etc, they’re getting less ripped off than they were a few years ago.

For example, around four million UK homes with ADSL are outside their lock-in period and could upgrade to a better service for less money. Standard BT ADSL is apparently £42.99 per month, while BT’s superfast services start at £24.99 per month. The same goes for mobile, with a lot of people staying on plans that included handset subsidies even after the lock-in period is over.

“Broadband and mobile firms often target their best offers and discounts at people who negotiate or switch provider,” said the Ofcom announcement. “So, consumers who shop around, and know when their initial contract period ends, typically pay less than those who don’t.” The usual suspects such as uSwitch said much the same.

The implication of some of Ofcom’s findings is that the CRM/BSS and general customer care systems of communications providers are geared towards exploiting people who lack the inclination to shop around. Presumably some are more proactive than others when it comes to informing their customers about the best deals and it would be interesting to see if they’re rewarded with greater customer loyalty.

Ofcom pricing infographic