Samsung’s dominance in the Chinese mobile phone market was shaken by Xiaomi. Reportedly, Samsung, the top smartphone vendor for a significant part of the past two years, was dethroned by Xiaomi, a Chinese handset maker, in the April to June period. Per Canalys, a market research company, Xiaomi sold 15 million smartphones compared with Samsung’s 13.2 million during the period.
A detailed study revealed that Xiaomi had 14% market share with shipments up more than threefold year over year, while Samsung market share shrank to 12% with shipments down from 15.5 million recorded in the year-ago period.
Notably, Xiaomi is also climbing the ranks pretty fast in the global smartphone market. The company, by virtue of its strong sales in China, has become the fifth largest smartphone vendor beating LG, per Strategy Analytics’ second-quarter 2014 reports.
While Samsung and Apple (AAPL) retain the number 1 and 2 positions in the global smartphone market with a respective 25.2% and 11.9% market share, Chinese manufacturers have captured the next three positions. Up front is Huawei with 6.8% market share followed by Lenovo with 5.4% and then Xiaomi, which has jumped from nowhere to take 5.1%. It is worth mentioning that while the top two vendors witnessed year-over-year market share decline, all the Chinese vendors saw increases.
To be globally successful, Xiaomi will have to expand its presence in international markets including India, Brazil and Russia. It is already working toward this goal, with its Mi3, receiving overwhelming response in India. The company sells its products through e-Commerce site Flipkart in India where it is reported to have sold 1 million phones. The company expects to launch Redmi 1S and Redmi Note product lines in the coming months.
The Chinese handset maker’s positive response in India further adds to Samsung’s woes as Micromax Informatics Ltd., an Indian handset maker, replaced it as the largest mobile phone supplier in India in second-quarter 2014, per market research and consulting firm CounterPoint Research.
Samsung is being challenged by local handset makers offering innovative products at competitive prices in the emerging markets of China and India. Moreover, with Amazon’s (AMZN) entry into the smartphone market and Microsoft (MSFT) acquiring Nokia’s (NOK) handset business global competition has intensified for Samsung.
Currently, Apple, Microsoft and Nokia have a Zacks Rank #3 (Hold), while Amazon has a Zacks Rank #4 (Sell).
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