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Which up-and-coming OEM has the best chance for global success?

For this Friday Debate we take a look at several up-and-coming OEMs (mostly from China), and talk about whether we think any of them have a shot a wider, global success.
By
December 19, 2014
xiaomi mi4 review aa (11 of 19)
Xiaomi will soon sell products in the US, but phones and tablets won't be offered.

Xiaomi continues its rise to the top, particularly in the Asian world. OnePlus is finally starting to become easier to buy. Oppo, Meizu, Huawei and several other similar OEMs continue to globally expand.

All these brands are making headway due to a combination of aggressive pricing, aggressive marketing, and the introduction of unique features (like rotating cams, CM out of the box, etc). That said, all these players are still relatively small potatoes in the western world — particularly in the United States.

For this week’s Friday Debate we discuss which up-and-coming Chinese (and/or any Asian-based) OEM has the best chance for success on a truly global scale. Can any of these OEMs join the ranks of big-names like Samsung, LG and Apple? As is our recent custom, we start out the Friday Debate by hearing from members of our community, followed by members of Team AA and finally we’ll give our readers the opportunity to voice their opinion in the comments section. You can read all community responses in the forums, though this week we are showcasing a response from Shawny.

Shawny

Wow, that’s a tough question considering how many minor OEM’s there are and what they’re capable of. They just lack the experience to unleash their full potential like Samsung, HTC, LG, Motorola, Nexus, Sony etc. Nonetheless, there are a few OEM’s that seem to be rising from the ashes and rising to a position where they might eventually be able to compete on a global scale.

Xiaomi:

Up until this year, I had no clue who Xiaomi were and what to even expect from them. I just knew that they were a Chinese manufacturer and that’s basically it. It was when they sold thousands of phones in a couple if seconds (in China or India, I forgett), that the company caught my attention and not surprisingly, a lot of News feeds including AA. They kept breaking records and even managed to somehow top Samsung in China in less than the 2 years they were running, that’s impressive.

It shouldn’t take a rocket scientist or a microbiologist to realize that Xiaomi will be amongst the likes as LG, HTC and others. If Xiaomi keep this up, they will no doubt surpass some of the big OEM’s, I’m confident.

OnePlus:

“Premium for cheap.” That was the message I was getting upon those rumors by OnePlus and quite frankly, it was what they delivered. A company that barely existed last year and now is up there with Xiaomi, Huawei and others. They were the OEM to save people with an average budget from their misery, dubbed the “Flagship Killer”.

They didn’t start off well to be honest, I think we can all remember when people entered that weird smash your phone competition (The funniest was that one person who smashed their HTC One M7 without reading reading the term’s and conditions, haha :D) My point is that it was a poor decision by OP and it didn’t get any better when people received their phone with so many missing tools. I don’t think there was a time when OP had some kind of happy moment during their phone sales, I’ve heard losses and that the company was not in it for the profit but to please consumers.

I have to give OP credit for their work and pleasing consumers, but I don’t believe they will last long with their current problems. Maybe I’m being harsh, but that’s how I see it. Some advice though, purchasing a phone without an invite would be nice, just saying…

Huawei:

I’ve known Huawei for a long time but they’re like… a quiet smart kid in class, passing well but silently and no one bothers to pay attention to them, but recently they seem to be gaining in momentum and they make really nice smartphones. It’s strange how I think that their smartphones are better than Xiaomi, but I’m not the market so it’s obvious what consumers think. There’s really not much to say, I do see growth either way and they aren’t only producing phones so they have something to fall onto. Also, as an Gunner, I know that they have a partnership with Arsenal fc and are even producing the Ascend P7 Arsenal edition phone, so they could be attracting a lot of Gunners in the Asian market. At this rate, I’d say give them 3-4 years more and you’ll see them up there with the best.

Yota:

Never heard of this OEM until the YotoPhone 2 was released. Very impressive and unique phone I must say. I saw the review for the phone and I’d have to get it a :thumbsup: mainly because it’s awesome (Ugh, I’m thinking of that Lego song now from the Lego Movie) there’s a lot of credit that should be given for this company’s latest release and I must say, without further babbling, that this company has a brighter future now with their current status, but we have to give them time and see how that phone does and how it influences the market. I’m in between on this one, a success or failure will depend in the coming year or two.

Oppo:

This is also a company with unique ambitions like Yota. I like Oppo, they may not have the coolest name but they certainly have one of the coolest features on their phones, that rotating Camera is one of them and the phone’s back gesture feature is amazing too. They seem to be another rising OEM and we can’t throw them out of the picture since they create such epic phones that I must get one day. There is obvious potential growth here and I do hope it will join the likes of Samsung, Sony, Motorola etc. They deserve such a status, keep it up Oppo!

Overall, I’m aware that there are other OEM’s like Sharp, Vivo, Meizu, etc. but they aren’t much of a big deal in many countries and that is why I didn’t include them. Bare in mind, this is just my perspective so yeah…

What Team AA has to say

Now that you’ve had a look at what community member Shawny had to say, it’s time for Team AA to weigh in:

Jonathan Feist

2014 really has been a big year for Chinese smartphone manufacturers. Vendors like OnePlus and Xiaomi have made a big splash on the world, but I think it is the quiet ones that have made a real difference. Popularity may be very hard to achieve in the Western markets, but success is another thing.

As far as popularity goes, we have all seen the rise and, depending on perspective, fall of OnePlus with their flagship killer, the One. Fewer have also seen the major rise of Xiaomi this year. However, we usually overlook the major global success of the low-end and feature phone king, ZTE. 

I believe that Xiaomi is in for an awesome ride in 2015 and beyond, launching into more and more markets around the globe. I believe that players like Huawei, OPPO, Vivo, and Lenovo will also see great things ahead, but the Western markets are not their playground, yet.

Lenovo is a special case here, having recently purchased Motorola, they gain instant penetration into many markets around the globe, especially the U.S. We are yet to see what Lenovo will do with the big M brand, which has been pretty much flying solo, and doing a great job of it, since Google announced their pending sale early in the year. I would highly recommend that Lenovo leave Motorola alone, else they find themselves with an insubordinate situation, as Microsoft has with Nokia over building Android devices.

Bottom line, I think if anyone has a chance of becoming a major popular manufacturer in the West, it is Xiaomi, followed closely by ZTE.

They will each have to step things up and offer a flagship ‘killer’ of their own. Budget devices make sales, but premium devices make fans. I would say that ZTE knows this – (I believe) they are the 4th largest phone manufacturer around the globe, but they make more carrier branded phones than self branded, and the high-end of their offerings just do not compare to the Nexus 6, Moto X, Note 4, Xperia Z3, LG G3, HTC One family, Galaxy S5, LG G2, Moto G, David Beckham’s left foot and so many more.

I suppose what I am trying to say is that the first of the Chinese manufacturers to build a phone that is a status symbol of personal success for users, whether warranted or not, and can overcome the legal barrier to entry into the American and Canadian markets, could have a chance at toppling a current top manufacturer. Thus, I don’t see it happening any time soon.

Robert Triggs

This really is the billion dollar question. In terms of raw numbers, Samsung and Apple are still a long way out in front, and there’s little sign of anyone catching up right away. However, Xiaomi and MicroMax have shot up in share in less than a year, and look poised to break out of the pack. At the same time, Apple and Samsung shipments look to be slowing, the gap could be set to close.

It’s the lower upfront cost of these brands that is resulting in their success, and that trend isn’t going anywhere. Over the next couple of years, I can certainly see these brands becoming major players in certain parts of the world, in some countries they already rival the big brands.

Now, if by global success you mean selling huge numbers of handsets in every region, as Samsung currently does, then that’s a different story. As we’ve covered in-depth, saturated Western markets are harder to break, due to marketing, tastes, and mistrust of unknown brands, especially from China. I don’t see Xiaomi becoming a big name in the US, but Xiaomi isn’t interested in that market.

These smaller brands are finding success in faster growing smartphone markets, where the opportunities are. Could Xiaomi, Lenovo or Huawei go on to take significant shares of South East Asia, Latin America, India, China, and Central Africa? I certainly see no reason why not. Does that count as global success? In my book, absolutely.
As to who is the most likely to succeed: Xiaomi is certainly the most ambitious, but I wouldn’t count out Lenovo.

Eric McBride

Can Chinese OEMs dethrone the heavy hitters in the US and globally?

My answer: If they continue to do things as they are now, then it’s a resounding “NO WAY and thank you for playing”. Here’s why.

When it comes to dominating a market, domestic domination, international domination, and global domination are 3 completely different beasts. When I lived in Hickory North Carolina and got a craving for pizza, it was common knowledge that it was all about Tonys Pizza, which was a tiny privately held restaurant in the area. Pizza Hut, Dominos, or Papa Johns weren’t even in the conversation there, as it was ALL about Tonys in Hickory, and believe me when I tell you that place was ALWAYS packed. But does that mean Tonys could dominate on a national level witout severe changes to their business model? Not even close. International maybe? Common. Global? Just stop it.

Samsung and Apple have established something that in my opinion no other smartphone manufacturers have really brought to the table (yet): brand recognition via relentless marketing (even subliminally) at an entirely new level. Everytime I hear that d*mn whistle on a train or a bus, most of the people know in an instant that it is a Samsung phone that made that noise. Everytime I hear that specific IOS ringtone that we have all come to know, or hear just the music from certain TV spots without being able to see the screen, you instantly know that this commercial is coming from Apple. Despite how insignificant that may seem, this ladies and gentlemen is branding power at its highest form. And how did it come to that? 2 words: Relentless marketing.

HTC and LG were dropping some solid devices the entire time that Samsung’s run was at its peak, but as shown in the market share numbers, there were declines and drops all over the place for both companies. When it came to Android, there were a lot of options, but only one of those options was making noise and doing all they could to get their products stuck in your head at a viral/subliminal level, and that was Samsung. I couldn’t turn on a TV, a radio, or a YouTube video without seeing something about Samsung or Apple. Samsung spent huge amounts on over the top campaigns, being the first OEM to really go at Apple’s throat. And guess what? It worked. Apple, who once seemed untouchable (and had established itself in the same way…remember all those commercials with upcoming bands, dances, and songs you just couldn’t get out of your head?), was all of a sudden looking very “mortal”.

In other words, I don’t care how many mega pixels, how powerful of a processor, how big of a display, or even how insanely low a pricetag is coming from a Chinese OEM (or any other American OEM for that matter). If you don’t have the money/resources/creativity for pure unadulterated, over the top, creatively borderline insane driven marketing to go along with your device (along with having the ability/resources to expand your reach globally), you can simply forget about taking the US and a big portion of Europe let alone the world. HTC found out the hard way, Motorola found out the hard way, LG found out the hard way, and these are all tier one companies with solid devices that DID spend “big” amounts of money that still couldn’t come close to even making a dent in Samsung’s success when they were at their “prime”.

Now you might be saying „Pfffft…look at Samsung now Eric. They are falling at a pretty fast pace“, …remember that becoming a global leader and STAYING a global leader is a different debate all together. “Pfffft…look at all the companies coming up now Eric. You suck!” Sure companies are (thankfully) coming up, but are they anywhere near GLOBAL market domination? Nowhere near it.

The winning equation looks like this: Solid device +marketing insanity+acceptable price (notice I didn’t even say “cheap”) = PROFIT at a more international level (remember, global domination also involves timing, luck, and even more factors that I can’t discuss now). Chinese vendors will continue to grow in developing countries, will dominate China, and will start making a big mark in Europe and even in the US. I applaud that, as great devices are coming out of China, and not everyone has the money/sees the reason in spending the insane amounts of money that much of the western world spends on smartphones and contracts. But without taking their brand power and brand recognition to levels they never may have even dreamed imaginable (think Coca Cola, who Apple also surpassed on a branding level), simply scratch global domination off your list of things to do.

Matthew Benson

Truth be told, having not spent enough time with any specific Chinese OEM device enough to make a solid conclusion, I will avoid outright picking one company that I think will be the first to break out in the USA. With that said, however, Huawei’s latest devices have been of great interest to me, especially the tablets.

The MediaPad X1 7.0 looks fantastic (if not a bit unoriginal) and the screen is wonderful. I played around with it for a bit and would actually consider buying it were I not already in possession of a smaller tablet at the moment. Likewise the Ascend Mate 7 is a very nice phone; sort of a modified HTC One M7 but for significantly less money. Huawei has, much like HTC, quickly gone from making totally bland/hideous products (check out some of HTCs pre-Android days) to stylish and symmetrical beauties.

Then again looking at Vivo, the company has recently unveiled the thinnest smartphone in existence. It completely one-upped Oppo in not only making a smaller device, but including all the things that Oppo couldn’t locate, namely a headphone port. How did this miracle happen? Engineering prowess. Innovation. R&D. Vivo spent good money investing in technology to make this device happen, and it has paid off-at least on paper. But even if it turns out to be awful, the fact remains that the tech world is all enamored with it, and eagerly awaits the chance to take it for a test drive.

I think the real task these Chinese OEMs will have to accomplish is that their brands are truly something to covet, and easing public perception when it comes to security (ties to Chinese government, etc). When thinking back about a decade or so, Samsung was anything but the giant it is today, at least in terms of brand acceptance. Back in those days, Sony was the go-to source for any and all product breakthroughs and top-notch products. The Korean offerings from Samsung and LG were largely viewed as inferior and destined for bargain bins.

In this regard, the OnePlus One is probably in the best situation right now. In deliberately making its hardware ridiculously hard to obtain (read: invitation-only), OnePlus has managed to generate a huge amount of conversation, and tech sites around the globe have given the company and its phone considerable coverage. Couple this with the decision to partner with Cyanogen and it has elevated the company to another level entirely, wherein even enthusiasts want the hardware, and where just about anyone can afford it.

Chinese OEMs have a fantastic chance at success in the USA, if only because their perfect pricing and premium products. And even looking at things like money (something Samsung has lost a lot of this past quarter), companies like Xiaomi don’t care if they’re not breaking the bank with profits per sale, so long as there are enough sales to make profits. And the products produced to procure those profits aren’t priced perilously, so customers are happy! How many of those $600+ devices are sold at-cost?

Now it’s your turn

You’ve heard what some of our forum members think, and the thoughts of our team as well. Now it’s your turn to tell us what you think. Due to the nature of this topic, there’s no poll this week, but please feel free to voice your thoughts in the comments below!