Xiaomi Beats Samsung in China | Crashes India’s Largest Online Store

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Sam Wakoba
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T1B3L_B4DT1RXrhCrK.jpgIn little over a year, Xiaomi has risen to become theworld’s largest smartphone vendor beating Samsung in volume terms in Q2 according to a report from Canalys.
According to the report, in Q2 2014, Xiaomi took a 14% share in China, on the back of 240% year-on-year growth. With Lenovo, Yulong, Huawei, BBK, ZTE, OPPO and K-Touch, the eight Chinese vendors in the top 10 together accounted for a total of 70.7 million units and a 65% market share. Samsung and Apple, the only international vendors in the top 10, together accounted for shipments of 20.0 million units, representing 18% of the overall smart phone market in China.

‘This is a phenomenal achievement for Xiaomi,’ said Shanghai-based Canalys Research Analyst Jingwen Wang. ‘Undoubtedly this was helped by an anticipated, temporarily under-strength Samsung performance during the quarter. But that is only half the story – Xiaomi has also executed on its strategy to grow volume shipments.”

China, which is the world’s largest smart phone market accounted for 37% of global shipments or approximately 108.5 million units. Xiaomi took a 14% share in China in what analists says its compelling products at aggressive price points. Xiaomi was also chiefly focused on its locally relevant MIUI software features and services and of couse targeted marketing.

miui_xiaomi_logo_resources_by_7_ryder-d6ylwh0With a renewed focus to deliver LTE products in China to address growing demand for 4G services, the firm’s affordable RedMi range is booming and has been its growth driver. With 97% of its Q2 shipments into mainland China, Xiaomi is now looking to enter into Indonesia, Mexico, Russia, Thailand and Turkey the second half of the year.

‘Its aggressive pricing model will certainly resonate beyond China, but the challenge it faces in scaling its model for success on a global stage should not be underestimated,’ said Singapore-based Analyst Jessica Kwee. ‘Xiaomi needs to build its international brand, and will need to localize its services offering with MIUI for the different markets into which it expands.’

Largely using online sales channels, Xiaomi has the potential to be a disruptive force beyond China and internationally. In India, the Xiaomi Mi3 sold out in few seconds when it was launched on online store Flipkart, further crashing the website.

Locally, Samsung’s decline was due to shifting demand for 4G handsets, pushed by China Mobile behind its 4G services but despite challenges in China, Samsung retained its global lead with a 26% share beating Apple’s 12%, Huawei’s 7% and Lenovo’s 5%. This is Samsung’s lowest global share in two and a half years  down by 6% in Q2 2013 and 7% in Q1 2014. According to the report, Xiaomi’s strong domestic performance brought it in to complete the global top five with a 5% share.

See diagram below.