Are Redmi K20 Pro, Redmi K20 overpriced? Xiaomi’s Manu Kumar Jain silences critics in open letter

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New Delhi | July 19, 2019 1:23 PM

Xiaomi has landed in hot water after it launched the Redmi K20 Pro and Redmi K20 phones

Xiaomi has reckoned that its success in India’s smartphone market is phenomenal. The fact that the Chinese company made big strides in the country in a matter of years, powerful enough to throw Samsung from the top position, is largely an outcome of the pricing strategy for the phones. But the recent launch of Redmi K20 series has got Mi fans and loyalists infuriated over the ‘bizarre’ pricing that does not go with the brand’s image in India.

The Redmi K20 starts at Rs 21,999 while its bigger sibling with full-throttle specifications is priced at Rs 27,999. The pricing is, obviously, much higher than what Redmi phones are sold at. This discrepancy in the pricing has divided the Internet between those who are justifying it and those are just livid because they feel ‘cheated’ by the brand. The second set of people held the expectation that Redmi K20 will be priced in line with the Realme X, which starts at Rs 16,999. Even the Redmi K20 Pro price did not live up to their expectations.

Honestly, Xiaomi is gradually moving on to become a premium phone seller, even if it means undercutting the bigwigs by losing out on big profit margins – something Xiaomi has been openly vocal about. Propositions are rife that if Poco F1 can be launched at Rs 20,999, why this dramatic surge in Redmi K20 pricing. Well, Xiaomi knows the answer to this better than anyone else because it has to sustain its business while making sure customers are satisfied, the way they have been all this long.

And amid this outcry, Xiaomi India MD Manu Kumar Jain has penned an open letter addressing the top concerns on the Redmi K20 series pricing. Of course, the justification to the pricing has to be based on what Redmi K20 and Redmi K20 Pro bring to the table. Jain has mentioned the blood, sweat, and tears that have gone into building the Redmi K20 phones. A large team “dedicatedly” worked towards “perfecting the product.”

But that’s just the prelude. Jain tried to strike at the root of the problem here – the pricing of Redmi K20 and Redmi K20 Pro. Jain has explained that procuring a processor as latest as Snapdragon 730 is not cheap, which led to the rise in the pricing. While Xiaomi could have either waited for the price of the processor to come down over time or could have gone with an old series processor, Jain explains, it would have been contrasting to the company’s “philosophy of bringing the latest innovation” to the customers (and Mi fans). Here’s his full statement:

Redmi K20 Pro is a true flagship; it is powered by Qualcomm’s Snapdragon 855, the fastest mobile processor in the world (45% faster than predecessor Snapdragon 845). Redmi K20 Pro has specifications that are only available in flagship phones above INR 40.000-50,000, including an edge to edge Horizon AMOLED display with hardware DC dimming, 48MP A1 Triple camera, 20MP pop-up camera, 7th generation in-display fingerprint scanner, curved Gorilla Glass 5 on both front & back, High-res audio DAC, Fire & Ice design, no display ads, Game Turbo 2, AI Skyscaping and more. We have been able to bring all of these top of the line specifications starting at INR 27,999.

Redmi K20 Pro is the best flagship phone with Snapdragon 855 phone in the market right now — and it’s not just that. the phone goes well beyond that without compromising on anything.

Redmi K20 retains the same DNA and is based on the Snapdragon 730 (Qualcomm’s third most powerful chipset). 40% faster than the predecessor Snapdragon 710. This makes it the first commercially available phone based on that chipset, providing users with early access to the latest processor in the Snapdragon 700 series.

Qualcomm Snapdragon 855 and 730 are the latest processors, which are much more expensive than its predecessors (845 and 710). Please note, latest technology gets cheaper with time: we could have used older generation processor to save money or we could have waited for 6 months for component costs to go down, and hence further reduce the price of Redmi K20. But that would’ve gone against our philosophy of bringing the latest innovation to you.

There is a bagful of questions that point out the difference between China and India pricing of the Redmi K20 and Redmi K20 Pro. Jain has tried to quell those concerns as well in his open letter. The components required for manufacturing the Redmi K20 and Redmi K20 Pro are 65 per cent locally sourced. But this leaves 35 per cent to be imported from outside India, which invites taxes and duties paid to the government, hence, higher pricing than China’s.

Jain even mentions that Xiaomi could have chosen plastic and other “cheaper materials” on Redmi K20 and Redmi K20 Pro. “Retaining our commitment to honest pricing, Redmi K20 series also has less than 5 per cent net profit as per the company’s policy” – he noted. Needless to say, a company needs profits and good revenue margins to stay in a market – something Jain addresses in his letter. “… it is not correct to assume that we as a company will incur losses in order to make our products more aggressively priced.”

Xiaomi’s close competitor Realme is, on the other hand, is gaining popularity twice as fast. Within a matter of one year, Realme has managed to secure the second spot in the online smartphone market of India, as per Counterpoint report. Samsung has dwindled back to the third spot, after making reasonable efforts to wrest its position back in the country.

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