Redmi Note 3 to be a game changer in India, says Xiaomi's Hugo Barra

China’s Xiaomi expects Redmi Note3, launched Friday at Rs 9,999 onwards, to be the most powerful device across price categories in India. Speaking to ET’s Gulveen Aulakh, Head of international operations Hugo Barra and India head Manu Jain describe the new device as a game changer, the first phone in the world with Qualcomm’s Snapdragon 650 chip. Assembled in India, the device will be initially launched on Mi.com, and on Amazon. Soon after, it will be launched with Flipkart and Snapdeal. It will also go on offline channels as well, but majority volume will go online. Edited excerpts:

Q: Can you talk about the new device and its impact on the India market?

Hugo Barra: The Redmi Note product category is the most important product category for us. In October 2014, when we launched the first Redmi Note, every device above 5-inch didn't sell at all. We were the first company to bring a 5.5 inch device and sell at around Rs 10,000, so we actually created the Rs 10,000-phablet category. Redmi Note, Note 4G and Prime, have done extraordinarily well. Prime, was the No 1 product across all categories on Amazon for 6 weeks, it’s still no 2. The Redmi Note franchise is killer for us. It was the first 4G device under Rs10,000, which was a huge milestone for us. With the Redmi Note 3, we're going to potentially change the game again.

This is the first phone in the world, with the Qualcomm Snapdragon 650 chip, which is possibly Qualcomm's best work in years. It will be one of the most powerful device across price categories. This is one of the first devices in India to support all LTE bands, this is critical because if you want a proper VoLTE (Voice over LTE) experience, you need a device that supports all bands, particularly for indoor coverage. This product is ready for all operators in India, we thought about India from the very beginning. If you don't have a device that doesn't supports all bands, you will upgrade in three to six months since.

Q: Is Redmi Note 3 being made out of India?

Manu Jain: Yes, we assemble in India. As of today, 75% of the phones we're selling in India are made here. We're not only maintaining but growing the run rate that we clocked the previous quarter, and share of Make in India phones keeps on increasing. We did 3 million by July end, 1 million in Q3 and between 1 and 1.5 million in Q4.

Q: What is the channel that you want to sell Redmi Note 3 through?

Hugo Barra:We're launching initially on Mi.com, which has been doing very well, and on Amazon. Soon after, we will launch with Flipkart and Snapdeal. It will also go on offline channels, but majority volume will go online.

Q: Is growing the offline side a strategy going forward?

Hugo Barra: We'll be primarily be focused on online, because sales today are almost exclusively online. Anything we do will increase our offline presence. So, we'll continue to explore offline partnerships here, but primary focus is online. The online channel is growing extra ordinarily in India. In the summer of 2014, about 10% of smartphones were sold online, it has grown to 33% according to an analyst at MWC last week. We were a big part of the driver behind that.

Q: By end of 2016 where do you see online market going? Will the mix change by end of year?

Hugo Barra: More than 90% of our sales come from online. It’s hard to tell at this point because we need to make sure that we manufacture enough to be able to grow from where we are. It's hard to tell at this point whether the mix will change. It's not true that we're going to sell more offline in terms of percentage than we sell presently.

Q: How much does Mi.com contribute to online sales?

Hugo Barra: Mi.com is doing very well, we're not disclosing the contribution yet. There are products exclusively on Mi.com, so it drives a lot of traffic.

Manu Jain: According to Comscore data, Mi.com has already become one of the top 10 shopping sites in India, which talks about huge amount of traffic being driven to Mi.com. In e-commerce space, traffic is very true reflection of number of consumers and sales. We have shared that on some days, 1 million unique users coming on the site, which is phenomenal, considering we spend close to zero marketing dollars in promoting the site.

Q: Are you launching TVs in India next month? This year?

Hugo Barra: Not next month (on launching TVs in India next month). We're certainly looking at the TV space ourselves.

Q: Next exciting thing that Xiaomi will launch apart from handsets?

Hugo Barra: Our other products in the ecosystem space, smart gadgets in the smart home space, it’s a big area for us in 2016. We have a unique approach to incubating companies, we have over 50 companies that produce smarthome products, which are closely integrated. We're planning to bring that story to India this year, in a much more significant way. We're planning to bring more of these smart ecosystem products to Mi.com.

Q: Are you looking to bring your content to India?

Hugo Barra: We are looking at the content space, it's part of our strategy in China where we have content aggregation with partners, we've managed to build the largest video library. It’s a little early for India primarily because of the broadband and 4G penetration. A broader 4G rollout in 2016 will be the necessary condition of broadband proliferation.