Faisal Kawoosa, founder of techARC, a market analysis firm, suggests that the restructuring could be because Xiaomi wants to position itself as an Internet of Things (IoT) company, while Poco has more of a smartphone-only play.
On the other hand, Counterpoint Research’s Tarun Pathak says this might help Xiaomi with its 5G strategy. According to Pathak, while the Mi brand will make premium smartphones with 5G chipsets, Poco can continue making flagship-class devices, but at lower price points and 4G connectivity.
The price of 5G chipsets is considerably higher than their 4G counterparts, so it’s more difficult to maintain margins. Since Xiaomi said its Mi brand will focus on premium phones, and premium phones require cutting edge features, it will have to make 5G an important element there. Xiaomi CEO Lei Jun, had earlier said that all of the company’s phones priced at over $285 this year will support 5G connectivity.
The move comes a few days after Xiaomi announced that it will be focusing on its premium Mi brand in India in 2020. Given that Poco was also meant to produce flagship-class smartphones at cheaper prices, it’s possible that the brand is being separated in order to avoid cannibalisation within the company’s own products.
Adwait Mardikar, research analyst at Canalys, suggests that breaking off from Oppo did wonders for Realme. Xiaomi may be hoping Poco will do the same. He pointed out that phones like the Redmi K20 and K20 Pro offer the same value proposition as the Poco F1 and sell in the same price segment, hence cannibalizing each other on the market.
When the two brands operate separately, they do not cannibalise product sales in terms of the overall profit and loss. Mardikar said that while it’s unclear whether Poco will still use Xiaomi’s distribution, retail and service channels, the brand should have the option to do so. The Poco F1 doesn’t show up on product listings on Mi.com, Xiaomi’s online e-commerce website, right now.
Kawoosa, Pathak and Mardikar all agreed that the idea is to allow Poco to build its own identity away from Xiaomi, with its own leadership team and ideology.
“The timing of this also makes me think that they (Poco) are ready to launch their next phone," Mardikar added, suggesting a March-April timeline for the same.
“What started as a sub-brand within Xiaomi, has grown into its own identity. POCO F1 was an incredibly popular phone. We feel the time is right to let POCO operate on its own," said Manu Jain, Managing Director for the Indian subcontinent at Xiaomi, in a press statement.
While Jain claims that Poco has its own identity, the brand has actually only launched one phone so far, the Poco F1. It claimed to have sold millions of units for the Poco F1 later, but rather conspicuously did not launch any more phones since then, despite repeated questions from bloggers and consumers. The Poco F1 was launched on 29 August, 2018.
Poco’s head of product, Jai Mani, also left the company last year. His exit wasn’t publicized by Xiaomi and came to light when he changed his bio on Twitter. Mani, who is an ex-Googler, was originally hired by Hugo Barra, who had joined Xiaomi as a global vice president after spending years as a senior executive in Google’s Android team.
However, this will be clearer once Xiaomi clarifies what Poco’s structure will be like. At the moment, C. Manmohan, who was hired as India Head for Poco last year, seems to be the face of the company. Interestingly, of all the Xiaomi executives who have publicly made the announcement about Poco’s independence on Twitter, Manmohan tweeted about it. The last tweet from Manmohan’s account came on 9 January, 2020.
In an interview with Techcrunch last year, Alvin Tse, global head of Poco, and Mani had told the publication that Poco had 300 employees.