Xiaomi, The Third Largest in the Third Quarter
Not too long ago Xiaomi was ranked to be fifth when it comes to global market shares in the smartphone industry. In its home ground, China it took the top spot at around the same time when it was up in fifth globally too. It is a big jump considering that this company was only formed less than five years ago. Moreover it was mainly sold in mainland China up until earlier this year when Xiaomi decided to attempt to reach markets outside China like Malaysia, Hong Kong, Singapore and most recently India. To support that of course Hugo Barra, Vice-President to Xiaomi decided to build more data centers around the world to ensure that customers outside China stay satisfied.
The third quarter reports for most company is already out and plenty of companies have already looked into the fourth and final quarter of the year. But of course they report their third quarter achievements to us publicly. Xiaomi has not released full figures of their earnings so far, but get this; they are currently the third largest smartphone market share holder globally in the third quarter. This means that they have sold more devices that the likes of HTC, Motorola, and Lenovo just to name a few. That is indeed an achievement. In percentage Xiaomi actually grew about 26 percent from the second quarter to the third quarter. For any type of business at all that growth number is actually a massive one. In unit numbers it is even more impressive; 19 million smartphones sold this quarter compared to 15.1 million last quarter. Most of it though is numbers sold in China itself. To put in perspective how fast Xiaomi is growing, Huawei was in the same third spot for the same third quarter last year and managed only to sell 16.8 million devices at the time.
The year has not ended and there are still expectations that Xiaomi will continue growing to the end of the year. So far in the successful 2014 year for Xiaomi they have sold about 45.1 million smartphones compared to 18.7 million the whole year last year. That is growth by multiplication if you look at it. But looking at what Xiaomi is doing and the current market movements, it is no wonder that Xiaomi keeps making leaps and bounds to rise in the highly competitive smartphone industry.
Xiaomi firstly keeps prices as low as possible. This either forces other manufacturers who wants to compete cut their prices as well or it boosts your sales even though you are not a known competitor or a strong brand in the minds of consumer. Why? Who does not like to buy cheap things. What is more is that the specs offered by Xiaomi, even with cutthroat pricing are not too shabby. Take for example a Xiaomi Mi3 priced at RM769 currently from Xiaomi Malaysia. It has got specs comparable to a Samsung Galaxy Note III but yet priced marginally lower. Yes, Xiaomi is not a very prominent brand yet as of now globally or in Malaysia but it is getting recognition and awareness just through its cutthroat pricing strategy.
Another growth factor for Xiaomi is also its expansion strategy. Notice that Xiaomi moved from its purely China market to certain Asian markets but not to any of the European market? This move done by Hugo Barra not only ensures simple logistics and that the smartphone manufacturing stays in China but to ensure growth ability based on the markets. Hong Kong, Singapore, Malaysia, and India shows an increasing interest and adoption in smartphones but the numbers are still growing. In certain markets as well disposable income may not be too high and not comparable to European markets. Xiaomi comes in offering highly affordable prices to these foreign markets and made sure that there is demand in these markets by releasing their devices by batches. It shows demand and lowers operating costs as smartphones are produced according to demands and manufacturer achieves just the right number for economies of scale.
Lastly Xiaomi’s success comes in the form of local support. There are other brands in China such as Oppo, Huawei, and not to mention ZTE. But here is the issue; ZTE makes sub par smartphones and with limited capabilities at low prices, Huawei and Oppo makes some impressive devices but are priced at a premium. Xiaomi in China puts itself in a very unique and favourable position with its customers. With prices offered by Xiaomi, they are affordable and cheaper compared to the other competitors. Build quality of their smartphones are also pretty solid which makes them very much more favourable than ZTE. While ZTE’s lineup is limited as well Xiaomi has at least three devices to offer in its line up. Plus with the booming growth of smartphone users in China, affordability becomes an issue with higher-end smartphones able to cope with the needs of the market. Xiaomi steps in to fill that gap and succeeded well, and that is why they become the top market share holder in China and also contributing the most sales in this quarter’s sales as well.
The current booming trend of Xiaomi looks to be encouraging and it does not seem like it is slowing anytime soon. But this booming trend will not last forever bur until then Xiaomi will continue to enjoy it. It is interesting to see how Xiaomi will try to retain its current growth though in the future and which markets Xiaomi will try to penetrate into next. If the growth starts to slow down it would be also interesting to watch how Xiaomi will evolve into a more mature and stable manufacturer or become like one of the giants along side the likes of Apple, and Samsung.
Sources: Android Authority