China Underestimates India: Xiaomi Mi3

Xiaomi underestimated India demand

Even as the fourth batch of Chinese mobile device manufacturer Xiaomi’s Mi3 handset was sold out in 2.4 seconds on Flipkart on Tuesday, the company's India head Manu Kumar Jain defended the sales strategy. He said that Xiaomi grossly underestimated the demand in India and now plans to ramp up production of the handsets.

“We are changing the production plan at the factory (in China). We are slowing down the production of some other handsets meant for other countries and ramping up the production of Mi3 in India. Hopefully, the quantity would be higher in a few weeks. We understand a lot of people are disappointed and I apologise for that,” Jain told FE.

Xiaomi sold 20,000 units in the latest sale on Tuesday — the fourth in less than a month since its launch in India on July 22. Flipkart, its sole distributor, had asked users to register in advance for a chance to buy the phone. But even as there were over a lakh of registrations, only 10,000 units were available in the first and second flash sales. The company ramped it up to 15,000 units in the third sale on August 6, but still couldn’t keep up with the demand. In fact, Xiaomi’s first sale in India saw Flipkart website crashing for a while, before returning to normal.

The next sale of the handset, priced at R13,999, is on August 19. “We are talking to disgruntled customers to see how we can do this differently. This is not a strategy. We did not do any marketing,” said Jain. He added that the registration process helps the company draw up a weekly demand forecast and plan better.

The company’s India Facebook page had less than 10,000 likes before the first sale on July 22, currently it stands at 33,000, and Xiaomi thought the phone would only appeal to tech enthusiasts. “We knew India was going to be big, but we grossly underestimated the demand. No one had any clue. This was a new geography. These are India-specific handsets and there is a limitation to ramp up the production line in China,” said Jain.

According to Jain, the handsets made for India come with country-specific stickers, software, box, user manual and pricing label. Jain added that countries have different specifications and regulatory requirements. “Units dispatched to Thailand or the Philippines or India are all different. We are changing the production line according to the demand,”

Raided Again: Microsoft And Accenture

Microsoft, Accenture offices raided again in China

A Chinese anti-trust regulator conducted new raids on Microsoft Corp and partner in China Accenture PLC, the agency said on its website, after saying last week Microsoft is under investigation for anti-trust violations.

The State Administration for Industry and Commerce (SAIC) raided offices in Beijing, Liaoning, Fujian and Hubei, it said. The SAIC also raided the Dalian offices of IT consultancy Accenture, to whom Microsoft outsources financial work, according to the regulator.

Microsoft and Accenture declined to provide immediate comment.

Last week, the SAIC said it was formally investigating Microsoft for breach of anti-trust rules and had raided four of the software firm's offices in China.

Microsoft has been suspected of violating China's anti-monopoly law since June last year in relation to problems with compatibility, bundling and document authentication for its Windows operating system and Microsoft Office software, the SAIC said last week.

Microsoft deputy general counsel Mary Snapp was in Beijing to meet with the SAIC, where the regulator warned Microsoft to not obstruct the probe.

But industry experts have questioned how exactly Microsoft is violating anti-trust regulations in China, where the size of its business is negligible.

The US company has taken a public beating in China in recent months. It has been subject to wider scrutiny against US technology firms in China in the wake of former US National Security Agency contractor Edward Snowden's cyberespionage revelations.

It has also seen service for its OneDrive cloud storage service disrupted in China, and had its latest Windows 8 operating system banned from being installed on the central government's new computers.

The Microsoft investigation comes amidst a spate of anti-trust probes against foreign firms in China, including mobile chipset maker Qualcomm Inc and German car maker Daimler AG's luxury auto unit Mercedes-Benz.

China is intensifying efforts to bring companies into compliance with an anti-monopoly law enacted in 2008, having in recent years taken aim at industries as varied as milk powder and jewellery.

In recent months, regulators have ramped up probes in industries ranging from pharmaceuticals to electronics. A number of multinational companies including Mead Johnson Nutrition Co and Danone SA have been slapped with substantial fines following similar investigations in the past.

China on Wednesday said it will punish foreign car makers Audi, owned by Volkswagen, and Fiat SpA's Chrysler as well as some 10 Japanese spare-part makers for anti-trust violations.

China's Xiaomi Tsunami

Flipkart crashes after Mi 3 goes on sale

Indian shopping site Flipkart crashed temporarily on Tuesday, minutes after Xiaomi's Mi 3 went on sale, as customers rushed to order the Chinese vendor's much-awaited Rs13,999 smartphone. The phone, which is only being offered through the site, was sold out in under 40 minutes, according to Xiaomi.

At around noon, when sales began, Flipkart site showed a 404 error, meaning the webpage wasn't found. An hour later it showed an out-ofstock message on the page promoting the device.

The price offered by the online retailer is about Rs1,000 lower than the Rs14,999 Xiaomi had announced at the launch earlier in the month. According to Xiaomi's Facebook page Mi India, the company got more than 100,000 registrations until July 21 from people seeking to purchase the Mi 3.

The Flipkart site said registrations for the phone will restart on July 28 and sales at noon on July 29. "The demand is much higher than anticipated. We have already started work on ramping up the supply chain to meet the demand for the Mi 3 and for other devices. We are still figuring out ways to handle the future demand," Manu Kumar Jain, head of Indian operations at Xiaomi told ET.

"We will ensure that customers who missed out on today's sale are automatically registered to buy a Mi 3 on 29th," Jain added.

In a separate statement, Flipkart said the company had anticipated a traffic spike and scaled up its services, but the number of customers who logged in immediately after the sale went live caused the process to slow down for a while. "We are expanding our capacity in order to provide a smoother shopping experience the next time."

The Flipkart website had previously experienced similar issues when it offered Motorola's Moto E smartphone for sale. That and the Moto G were launched in India solely through Flipkart.

Jain said the company is working with Flipkart to ensure the technical issues are resolved. "We underestimated the demand we would receive and we are taking steps to ramp up the supply as soon as possible."

Flipkart and Jain didn't comment on the number of units sold in India, but a person familiar with the matter said that Xiaomi has brought very low numbers under 10,000 of the smartphone to India. Jayanth Kolla, analyst founder at Convergence Catalyst, believes that bringing a small stock could be a part of Xiaomi's strategy to get the initial response.

"We have seen in China Xiaomi bringing in very low numbers of devices for the first three days just to get the feedback... It seems that the company's strategy is working for them," he said, adding that Xiaomi is targeting the urban audience.

The price of Rs13,999 pits Mi 3 against mid-segment devices such as the Moto G and BlackBerry's new Z3 device. The Moto G and the Moto E were big hits in India while Z3 is also having a decent run. Flipkart has sold close to one million Moto G smartphones in the country, an insider said.

Conclusion: Wow what a sale,  even I tried to buy but no luck.... This Tsunami has hitted already market but think what happen when Xiaomi Mi 4 releases.....wait and watch...