Xiaomi Market Penetration Threat to Samsung, Other Competitors

Ever since the invention of smartphone, our lives have improved considerably. Now the smartphones have innovative ability that helps individuals to manage their work competently. There are several brands available in the market. China’s Xiaomi brand has made its way into the top five for the first time with a sharp rise over a year ago, while the reputed brand Samsung has declined. Indian market is prepared for a huge growth in the next three years such that vendors from India too will be vying for the top 10 slots. Many Chinese mobile vendors are expecting to tap the Indian growth.

Xiaomi smartphone was launched in 2011. Its sales received an enormous boost in 2013 with the launch of the new sub-brand Redmi. After-sales service and support teams of Xiaomi were growing, overseas expansion was being prepared and also the range of accessories and different Xiaomi products was increasing rapidly. The cheaper Redmi brand was launched in Q3 2013 and quickly its devices were accounting for around two-thirds of the smartphone volume.

Xiaomi left the competitors behind after the unveiling of 4G smartphones in China. This change happened after the arrival of its first LTE devices in Q3 2014. 4G phones depicted around 50 percent of its volumes in Q3. Xiaomi sold out additional 4G phones more than the other seller vendors in China in Q3.

Beyond taking its smart phones into new markets, Canalys expects more consumer devices, accessories and services from Xiaomi brand. Xiaomi’s latest new devices were very low priced. With activity tracker like Mi brand it has already penetrated the wearables marketplace.

Marketing strategy

Xiaomi disordered the Chinese smartphone market with its strategy, however it’ll not be easy for another mobile vendor to disrupt the Chinese smartphone market now that smartphones represent nearly 95 percent phones sold out in China – smartphones depicted roughly 25 percent phones sold out in China once Xiaomi launched its 1st phone.

Many of the other vendors competitive in China have followed its lead, driving up their on-line sales, typically with an online only brand. However, they’re following a method. Some of the vendors that targeted the low-end of the market are stuck there, attempting to manoeuvre upmarket  – however, it’s getting harder and harder to differentiate. Xiaomi’s Chinese competitors are trying overseas.

Xiaomi is challenged, however it’s not as simple as merely swing an inexpensive phone on the website and hoping individuals buy it. And currently Xiaomi is heading in the right direction in its economies of scale, buying power and growth potential.

Xiaomi’s rise is significant not simply because it signals a potential rival to the hegemony of Samsung and Apple, but also because of why it has done so well.

In short, it’s as a result of sales in mature markets (where Samsung traditionally has been strong) getting saturated with smartphones. So sales have bogged down drastically. On the other hand, the emerging markets are seeing terribly sharp sales rises — some of the highest ever in smartphone history.

Xiaomi vs. other brands

Xiaomi has already become the world’s third largest smartphone manufacturer during a short span of time. A recent study claimed that Xiaomi accounted for six percent of all smartphones shipped worldwide, trailing solely Samsung (25 per cent) and Apple (12 per cent). Xiaomi hasn’t even started selling those phones in the West yet. Its share will obviously grow. In China, Xiaomi is the No.1 maker with a 15 per cent share. Apple has scarcely started selling in China in earnest.

Due to Xiaomi’s popularity, Samsung has lost the most market share within the last year in China, from 21 percent share to less than 14 percent. Having lost share and the leadership, Samsung will launch new devices in shortly designed specifically for China to reverse its fortunes. Lenovo and Huawei have done well to keep up their share, whereas the fortunes of the other Chinese vendors are mixed. Apple gets a boost when new iPhones are launched and has a loyal customer base.

Until now, Samsung and Apple are the two major companies dominating the smartphone market. Currently Xiaomi is set to be a serious player on a worldwide scale. Previously, it had been thought that only Apple and Samsung had the market leverage to urge customers to pay prices high enough to make profits in the phone business. There is growing evidence that Android’s manufacturer is seeing itself squeezed in the markets. For this Xiaomi is solely responsible.

Samsung has already determined to bit by bit move aloof from expensive products completely, instead focusing in other markets. Apple is dominant in high-end, and Samsung is aware of it. The launch of the iPhone 6 has engulfed Samsung’s market share, forcing it into make cheaper product.

So Apple must now plan for a world in which an Android manufacturer can sell high-end phones at a lower cost than Apple, it can make a profit. It has been assumed that Apple doesn’t really compete against Android because Android makers compete against each other, and Apple catered the richest section of the market that wants to pay top-dollar for a good phone. But the numbers of Xiaomi implied the consumers in the future could be faced with a more complicated choice: An expensive iPhone or a less luxurious Xiaomi, both with similarly upscale designs or hardware.

While Apple is clearly not threatened by Xiaomi right now, the fact that Xiaomi has already upended one bedrock belief of smartphone economics suggests that you just should not assume it cannot undo others also as well.

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