Slightly higher pricing for smartphones is here to stay for a while, Xiaomi India Chief Operating Officer Muralikrishnan B told Financial Express Online on Wednesday, adding that this would continue till the time the ongoing global supply situation normalizes.
“Over the last 12-18 months, there has been a lot of challenge from a supply chain perspective. Not just chipsets, there’s been shortage of components and increase in international freight rates as well,” Muralikrishnan said.
“All of this has placed an upwards pressure on overall prices of devices,” he added.
Drawing attention to the overall smartphone market in India and how it was witnessing near double digit percentage increase in overall average selling price, Muralikrishnan said that it was “apparent that this price increase will continue until the supply situation stabilizes.”
Factors like pent-up demand, COVID-19-induced slowdowns, and sanctions against some key Chinese technology companies have contributed to a global shortage of chipsets. The cost of battery packs, camera modules and display panels have also shot up by as much as 10 percent depending on the vendor, according to various reports.
Xiaomi president Wang Xiang had warned in March that the company wasn’t immune to the ongoing supply chain shortages and that even though it was “looking okay” it was “feeling pressure.” It may eventually have to “pass part of the cost increase to the consumer in different cases,” Xiang had told investors during an earnings call.
“The reality is, there is pressure on pricing. But as a company, we’ve always believed in honest pricing. We try and retain our net hardware margin at a maximum cap of 5%,” Muralikrishnan added.
Redmi Note 11T 5G—price, features and future of Redmi Note 11 series
Taking the example of the newly launched Redmi Note 11T 5G, the top Xiaomi India executive said despite all challenges, it was able to price the phone quite aggressively considering everything that it put into it, hardware-wise, and that it was a “very effective price proposition” compared to rival offerings.
5G is an added cost to devices like these and some of the affordable 5G phones—including the Redmi Note 11T 5G—launched recently have made it abundantly clear that there is a certain ‘5G tax’ that is involved that companies need to factor in while designing products.
“5G chipsets of course have a price premium that is commanded by the suppliers,” Muralikrishnan said, adding “great phone design is a question not just of what you put in the phone but also what you can remove without significantly compromising on the holistic experience that the device offers.”
Though, he did not comment anything on what the Redmi Note 11T India pricing meant for subsequent launches in the Redmi Note 11 series. With the ‘T’ model reaching the Rs 19,999 price point, the Redmi Note 11 Pro and Redmi Note 11 Pro Plus—should Xiaomi bring them to India in their current form—will expectedly go over and beyond 20k.
As for availability, he said Xiaomi will ensure equal allocation of stock across online and offline channels—the Redmi Note 11T 5g will be available from Mi.com/in, Mi Home, Amazon India, and retail stores.
“We typically plan to do 50-50% business each across both channels pretty much across the entire portfolio that we have and the Redmi Note 11T 5G is no exception.”
Its predecessor, the Redmi Note 10T 5G will meanwhile “continue to run through its lifecycle” even as the “majority of the volume going forward will be Redmi Note 11T 5G,” he said.