With every passing day the smartphone market is getting more and more interesting, diversified and competitive. Every other day a new player makes a debut. The bigwigs like Samsung (SSNLF, Financial), Apple (AAPL, Financial) and Google (GOOG, Financial) keep ruling the roost as new players come sell and then either wean away or keep selling on average lines adding up to the others' section of the smartphone graph.
Some time ago a new Chinese company made its debut in the smartphone market and has taken the world by surprise fueling its number growth to such an extent that while only Samsung and Apple stand beyond it, global names like Google, Lenovo (LNVGF, Financial) and Microsoft (MSFT, Financial) has become laggard in comparison to the company – Xiaomi. In the third quarter this new smartphone player surged ahead in sales numbers to the third position. Let us take a look at the mavericks of Xiaomi.
Xiaomi’s trip to success
Xiaomi hasn’t yet sold a single handset in the U.S. or Europe and yet it is just third in its sales numbers just behind Samsung and Apple. So is this the home ground advantage. Well definitely that is what it looks like plus this is what happens when you start your business in the country with the world’s largest population.
Xiaomi reached the ranking, behind Apple and Samsung, in the third quarter, said research firms IDC and Strategy Analytics on Thursday.
Xiaomi started selling phones just three years ago and in such a short while managed to climb up to the number one position in its home turf by offering feature-packed Android phones at affordable prices.
In the third quarter Xiaomi stood in the third position worldwide holding 5.3% of the smartphone market share under its belt which is still way behind the second position holder, Apple, standing at 12% going by the reports of IDC. But the point worth noticing is the rate at which it is scaling up heights. Xiaomi posted triple-digit year-over-year growth in smartphone shipments, of 211%, making it the fastest-growing among the top vendors.
Xiaomi’s stand
“It is the first time Xiaomi has entered in the top five smartphone rankings,” IDC said.
The phone that changed the fate of the company and catapulted it to its current heights is its flagship model the Mi4. It is a fresh model from the Xiaomi mint loaded with the latest of the features at par with the other international bestselling brands at a sticker price of just $326 which holds the key to its rapid success story. Best of the features with an affordable price tag.
Apart from China it is now also available in its neighboring country, India, through ecommerce channels like Flipkart, Snapdeal, etc., and at regular intervals these sites run out of stock which also speaks aloud of its popularity not just in its own backyard but also elsewhere across the globe. While analyzing the upward movement IDC analysts also said, "What remains to be seen is how quickly the company can move beyond its home territories to drive volumes higher."
As for Xiaomi’s peer group competition, Samsung, number one in smartphone market share, is already reeling under immense pressure and has started its downside roll in the face of stiff competition from companies Xiaomi and Lenovo and off course its arch rival Apple. In the third quarter, Samsung's market share stood at 24.7%, down from 35% a year ago, going by the street analysts. Though analysts are hopeful about the Note 4 and Note Edge from Samsung, their management has already sounded the alarm of the rising smartphone market competition, and going by the Q3 reports of Samsung it is clear that Samsung is under a lot of stress in the smartphone market.
Apple, in second position is doing fairly well with the two new iPhones selling at their best across the world and taking the sales figure of Apple smartphones up by around 16%. Going by the market reports Apple posted its largest third-quarter smartphone shipments ever, the previous models of iPhones like the iPhone 5S and the 5C also form a major part of this incremented Apple sales.
Xiaomi’s fate
If we consider the current sales demography of the smartphones worldwide, one thing that is clear is that the sales numbers reporting in from the emerging markets are much higher than those from the developed markets. Hence this is where all the major smartphone makers must target at and in keeping up with this trend Xiaomi has launched it in India where the phone is doing quite well in spite of controversies about Xiaomi being a Chinese phone can compromise national security of India.
The growth rate of smartphones in emerging markets stands at over 30% while that in developed markets post single digit growth figures. Hence it would be a good move on the part of Xiaomi management to move into the emerging markets before setting sail for the U.S. soils.
It is very important to follow this company closely for future investment opportunities. After the blockbuster launch of Alibaba (BABA, Financial) globally last month, Xiaomi might also follow the Chinese ecommerce giant and launch IPO in the near future, more so because it has already tasted global success by operating in just China and in India to some extent. It has the rest of the world to explore and might even take away the number one position sometime if its growth rate continues at the same rate. For now it would be best to observe the advent of the company and keep a place for Xiaomi in our investment portfolio for any future opportunity.
