Xiaomi, which has been focused on expanding its market since establishing its Korean corporation, is exploring the budget mobile market as securing offline sales channels proves challenging. However, analysis suggests that finding a way through the budget mobile sales network in Korea, where carrier-centered device sales dominate, is not easy.
◇ Xiaomi enters the budget mobile market... competing with its own products linked to telecommunications plans
According to the industry on the 8th, Xiaomi has chosen 'budget mobile' as a card to elevate its stagnant market share in the domestic smartphone sector and is seeking a way forward. Spitz, Xiaomi's Korean distributor, launched the budget mobile (MVNO) brand 'Spitz Mobile' by renting KT's network starting last month. Following the sales of Xiaomi's 'Redmi Note 14 Pro 5G' combined with budget mobile plans last January, the domestic distributor has directly initiated a budget mobile business.
In January, Xiaomi partnered with KT M Mobile to offer a promotion where budget mobile subscribers using a 21,000 won monthly plan under a two-year contract could receive a free 400,000 won Redmi Note 14 Pro 5G device. Recently, Spitz Mobile introduced the 'Xiaomi Choice Plan,' where new budget mobile subscribers can win Xiaomi appliances like a 50-inch TV, a robot vacuum, or an air purifier. The industry predicts that Xiaomi will ramp up marketing by linking future domestic smartphone releases with budget telecommunications plans run by its distributor.
Particularly, the synergy with Xiaomi's offline store, which is set to open in the first half of this year, is expected to be significant. Customers visiting the offline store will be able to directly experience products and subscribe to budget mobile plans operated by Xiaomi's Korean distributor. A telecommunications industry source noted, "I believe that a budget telecommunications plan linked to Xiaomi smartphones will be launched following the opening of Xiaomi's first offline store in the first half of this year."
◇ Xiaomi faces limits in the carrier distribution structure... "a backup plan in a difficult situation"
Analysis suggests that Xiaomi's entry into the budget mobile market through its domestic distributor is due to feeling constraints in expanding its market share within a carrier-centric device distribution market. Although Xiaomi began selling the 'Redmi Note 14' through offline distribution points of the three major carriers last January, subsequent products like the 'Poco X7' and 'Xiaomi Ultra 15' have been sold exclusively through online stores. Some industry insiders speculate that Xiaomi's sales performance has not supported the entry of these subsequent products into carrier stores.
A device industry source stated, "In a situation where the three major carriers only distribute devices from Samsung and Apple, Xiaomi's struggle to secure a stable channel was likely significant," adding, "Given that Xiaomi's main customers in Korea are mid-to-low-price independent smartphone users, it seems they considered linking up with budget mobile services."
However, there are criticisms that Xiaomi's strategy may not be effective in the Korean market. In a market where premium phone consumption is significant, launching low-cost phones alone makes it impossible to achieve meaningful results. There are also concerns that the mid-to-low price phone market, led by the Samsung Galaxy A series through carrier distribution networks, does not have a large enough niche. The fact that it falls short in terms of after-service (AS) compared to Samsung is also cited as a weakness.
An Jeong-sang, an adjunct professor at Chung-Ang University’s Graduate School of Communication, remarked, "Xiaomi's strategy of selling mid-to-low price phones linked with budget mobile services is a backup plan in a difficult situation," adding, "To establish itself in the Korean market, stable access to carrier distribution networks is essential, and it needs to increase sales of premium products like the 'Xiaomi Ultra 15.'" He further noted, "No matter how much Xiaomi emphasizes cost-effectiveness, it is unlikely to see marketing effects in Korea, where the independent phone market has not developed."
Meanwhile, according to market research firm Counterpoint Research, unlike in Korea, where the independent phone market has not developed, Xiaomi's smartphone share in Japan, where the independent phone market is advanced, skyrocketed to 6% last year from less than 1% in 2023.