It’s just Yu and Mi, baby: Xiaomi faces stronger, more confident homegrown rival in India

The Indian Yu Yureka phone (left) is priced at US$140, while the Xiaomi Redmi Note 4G (right) is US$160 in India.

Xiaomi plans to grow from 61 million to 100 million smartphone sales by the end of 2015. While that seems likely to happen given its rate of growth, the Chinese phone maker’s rivals are much stronger this year than ever before. In fact, 2015 looks set to be the year that Xiaomi’s rivals catch up.

That’s exemplified by Xiaomi’s most important market outside its home nation – India. In India, homegrown Micromax recently launched a spin-off brand that shows it’s learnt a lot of lessons from Xiaomi. And learnt them well.

Micromax’s first phone for its budget brand, the Yu Yureka, launched yesterday in India. It shows the essential hallmarks that have worked so well for Xiaomi since 2011 – a phone that packs a lot of power into a price tag that’s a lot smaller than you’d expect.

India’s seismic shift to smartphones

The Yu Yureka goes head-to-head with Xiaomi’s 4G-enabled budget phone, the Redmi Note 4G, and matches it on specifications, low price, flair, and even software. One of the things that Xiaomi tends to do right – aside from price – is that its Android skin looks great, which is something that precious few hardware companies manage to do well. But now Micromax is doing software right thanks to signing up CyanogenMod, the famed Android tweakers, to make the Android skin for the Yu series of phones. All the pieces have now come together to form a formidable rival in India – and Xiaomi would be right to worry.

India is an important market not just for its size but for its huge potential in the years ahead. While the tech and mobile market is not as mature as China’s, the relative lack of development makes India’s scope for growth truly awesome. An estimated 23.3 million smartphones shipped to Indian retailers in Q3 2014, which was more than double the figure a year before.

Eventually, at some point, India will reach China’s smartphone sales volume, where consumers snap up about 400 million new smartphones each year.

Basic, non-smart phones still account for the majority of mobile sales in India, but that means a seismic shift is now under way to Android, iOS, and Windows Phone devices. Cheaper Android phones are helping push this forward in the very price-sensitive market. The ratio of feature phones to smartphones shipped in India is now 68:32, which has changed a lot from 78:22 at the end of last year, and 90:10 at the end of 2012.

Xiaomi is helping push that forward. The company sold one million phones in India in its first five months in the country.

See: Xiaomi sold over 61 million smartphones in 2014

$100 phones get classy