Chinese device maker Xiaomi will provide a software upgrade over the air (OTA) from October to all its seven million 5G phone buyers since May 2020, so that their phones can be powered by a standalone (SA) network that Reliance is planning to launch. Currently, these 5G phones work only on a non-standalone (NSA) 5G network.
The company has ruled out a sub-Rs 10,000 phone in its portfolio this year until 5G chipsets prices fall.
The assurance on 5G SA allays concerns raised by telecom operators, such as Airtel, that there is no ecosystem of devices for supporting the SA network in the country. As a result, Airtel will power its network on NSA 5G.
Explaining the work in progress, Muralikrishnan B, newly appointed president of Xiaomi India, said it is working on the OTA software update for SA 5G. “Reliance Jio has reported that it will launch 5G in October, so we are working towards synchronising our OTA around the same time.”
He pointed out that while all 5G devices in the market will get updated, new 5G devices out of the box will come with built-in SA software by the end of the year. “It will definitely have to be by the end of this year as once updates are ready, rolling them out on new devices in the factory is a minor and simple activity,” he said.
Muralikrishnan said sub-Rs 10,000 5G phones would not be available this year because of the high price of 5G chips. The prices of 5G chipsets will take time to ease.
Nearly 25 per cent of smartphone mobile devices across technology that are sold, he added, are above Rs 20,000.
He believes the inflexion point will happen when there are meaningful 5G device options in the sub-Rs 20,000 price point; only then will the market start growing.
Currently, while Xiaomi has 20 devices in 5G, only two of them are below Rs 20,000 and when there is an offer, another phone could be added. Now, with the new launch of its sub Rs 15,000 phone, there will be four devices in the ring.
“It is a function of chipset pricing where 5G chipsets were at a premium over 4G for the same specifications by Rs 3,000 for the past few years. And high-end customers want a phone which is a lot more future-proof as they want it to last for three years,” said Muralikrishnan.
This is why all the phones that the company sold above Rs 20,000 were in the 5G bracket. “Over a period, this trend will start to penetrate the Rs 15,000-20,000 segment and then between the Rs 10,000 and Rs 15,000 segment. Even if one fast forwards for the next six months, there will be a premium for 5G chipsets over 4G on the same specification,” he said.
Xiaomi’s prediction is that a ‘huge’ acceleration in 5G mobile device demand will happen in the second quarter of 2023 because while operators have said they will launch in October, they expect the network to be in larger markets across the country by the end of 2023.
“While we will have 5G phones in all price points, demand will come from rich content and the big use cases will be in ultra HD streaming, AR and VR, and gaming — all of which will catalyse demand for 5G,” said Muralikrishnan.
The company will work with operators for ‘bundling opportunities’ with, say, data packs, which again will make it easier for consumers to upgrade to 5G.
Responding to allegations of poor levels of localisation by foreign device manufacturers, he said Xiaomi manufactures 99 per cent of its phones in India. Talks with vendors are on to bring the manufacture of display, vibrator, and flexible printed circuit boards (which are key to higher value addition) here, too.
The value addition, based on the value of a Xiaomi phone which is sourced locally, is already 70 per cent. The issue, he said, is the lack of an ecosystem for sub-assemblies. However, wherever components are made in India, the company sources them.
Muralikrishnan said talks are on for a possible production-linked incentive for components for smartphones, which could accelerate localisation further. For instance, Xiaomi has already localised camera modules.
On the government asking global mobile device makers to push exports to help India reach its ambitious target for electronic exports by 2026, Muralikrishnan said that while India had certain cost disadvantages, the company was working on a plan to remove them and would share it with the government when ready.
He also said the company derived “a lot of comfort” from the government ending speculation that sub-Rs 10,000 phones will be reserved for only homegrown companies. Business Standard