Xiaomi’s low cost smartphones reap market share dividends

Xiaomi’s low cost smartphones reap market share dividends

Chinese smartphone maker Xiaomi earned a certification from Guinness World Records for handset sales by selling over 2.11m units on Wednesday 8th April as part of a huge online promotion to celebrate its fifth anniversary. The company’s continued success is a clear indication of the threat it poses to Samsung, Apple, Sony and others selling devices in the Asia Pacific market, where cost often dominates end user purchase decisions.

Xiaomi did not reveal which of its many smartphones sold in volume during the Mi Fest annual flash sale, or the extent of the promotional discounts being applied. It launched a suite of new products in January 2015, including the dual SIM 5.7in Mi Note smartphone or high end ‘phablet’ of similar size and specification to the Apple iPhone 6 and Samsung Galaxy Note, but with a recommended retail price of 2299-3299 yuan ($370-$530) estimated to be roughly half the cost of equivalent Apple iPhone 6 models being sold in China.

In its Asia Pacific Quarterly Mobile Phone tracker report research company IDC estimated that Xiaomi’s market share in China outstripped that of Samsung in 2014, increasing its slice of the pie from 5.3% to 12.5% year on year whilst Samsung’s fell to 12.1% from 18.7%.

“Xiaomi's focus on selling low-cost phones with decent specifications, as well as the hype that it created through its flash sales, helped it to obtain the top position in both 2014Q4 and 2014,” said IDC.

Xiaomi is a little known brand outside of China and currently only operates in six markets worldwide (including India, Singapore, Malaysia and Indonesia ) but it has announced plans to launch a version of its Mi.com online store in the US in 2015, initially selling non-smartphone and tablet devices until appropriate distribution channels and certification processes for those devices can be set up. The company was reported to have a market valuation of over $46bn in December 2014 after receiving a further round of $1.1bn from investors.

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