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Lucky 3: Xiaomi now world's third largest mobile vendor

Posted: 31 Oct 2014     Print Version  Bookmark and Share

Keywords:smartphone  mobile  Xiaomi 

China's Xiaomi leapt to become the world's third largest smartphone vendor, three years after it launched its first mobile device. This should have surprised no one, but the company's milestone is significant enough to ask how—not if—the rules have changed in the global smartphone market.

First, the US and European markets are becoming irrelevant. Growth momentum and volume have withered in those developed regions. Xiaomi ranks number three in the market, after Samsung and Apple, without setting foot in the United States or Europe.

Xiaomi

Top Five Smartphone Vendors, Q3 2014 Preliminary Data (Units in Millions) (Source: IDC)

Second, it turns out that winners in the global smartphone battle are not an army of no-name Chinese whitebox vendors with me-too products or fake iPhones. While there is no denying of the power of whitebox companies in China, leading the domestic market in China are branded phones like those from Xiaomi.

Third, Xiaomi has built enough star power to make every Chinese proud. It's also generating buzz and praise beyond China. Given time and global attention, Xiaomi's impact could reach the whole Chinese electronics market, strengthening the indigenous industry. Similarly, the rise of Sony gave birth to a number of strong electronics manufacturers in Japan, each one striving to become either a Sony rival or a supplier. (In related news: China-based brands emerge as strong smartphone players)

Fourth, the cost of a smartphone is vitally important in the global smartphone battle. More important, though, is how to lower the cost (of products and operations), without sacrificing quality. Apple, although no low-cost smartphone vendor, keeps its costs in check by limiting the number of iPhone models it rolls out. For Samsung, the sheer volume of sales is its edge. Xiaomi, meanwhile, relies on its online sales strategy (they do not sell their phones at retail) to keep its operational cost down. The Chinese company also prefers products with a longer product cycle. (See also: Android, China make strong showing in smartphones)

Xiaomi

There are a growing number of other vendors (shown in green) above. (Image: IDC)

Fifth, the game is far from over. There's a lot of room left for everyone to grow. As Ramon Llamas, research manager with IDC's Mobile Phone team, noted, "a driving force behind the record smartphone volume [in the third quarter] was the combined effort of the vendors trailing market leaders Samsung and Apple." He explained, "The next three vendors—Xiaomi, Lenovo, and LG Electronics—all posted market-beating growth and with markedly different strategies."

Whether in the low end as Lenovo has done, at the high end where Xiaomi competes, or in both as LG Electronics has shown, "There are a number of other vendors achieving similar results," he concluded.

In the following pages, EE Times focuses on Xiaomi and dissects what makes Xiaomi stand out not only from its fellow Chinese smartphone vendors but from its global competitors.


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