Xiaomi becomes China’s largest smartphone vendor, pinches first place from Samsung

August 5, 2014
12
366

Xiaomi might not be a household brand in Western markets, but the company is making a big name for itself in China. Canalys research estimates that the company became the largest smartphone vendor in China last quarter, beating larger manufacturers, including Samsung, to the top spot.

In the second quarter of the year, Xiaomi captured 14 percent of the market, just ahead of Samsung, Lenovo, and Yulong, who are all on 12 percent each. Huawei takes its place as the fifth largest vendor in China, with an 11 percent share, whilst other manufacturers still make up a healthy 39 percent of the market. This research reflects IDC’s recent findings, which showed shrinking global market shares for Samsung, and growth for many of the industries smaller players.

China unit shipments table Q2 2014

This year, quite a bit of effort has been made to try and understand exactly what is causing declining market shares for the more established smartphone brands, and the consensus seems to be that lower-cost Chinese manufacturers are offering a better performance/price proposition for consumers.

Xiaomi is a prime example of a company profiting from undercutting the premium players. Its budget Redmi series has proven hugely popular in the low-end segment, and Xiaomi’s premium hardware offerings, the Mi3 and the new announced Mi4, are sold at much more affordable prices than Samsung’s hardware. A typical Xiaomi handset will set you back just $100, compared with Samsung’s $500+ price point.

In its poor quarterly earnings report, Samsung acknowledged its sales had suffered due in part to intensified competition from Chinese manufacturers, especially in the mid and low-end categories.

China unit shipments Q2 2014

Although Xiaomi has not quite broken into the top five largest manufacturers in the world, currently there are twelve companies poised to break into the top five, of which Xiaomi is one. Strategy Analytics believes that Xiaomi is set to leapfrog LG into fourth place in the near future.

Xiaomi’s business model has allowed it to sell devices at close to cost, the company then makes its profits through mobile applications and additional purchasable services. This has given the company a unique advantage in certain markets, where consumers are happy to pay less upfront in exchange for premium longer term services.

It is likely that we will see smaller manufacturers continue to steal market share from the big players, especially in price sensitive and emerging markets.

Comments