Latest News: Technology |  Celebrity |  Movies |  Apple |  Cars |  Business |  Sports |  TV Shows |  Geek

Trending

Filed under: News | Apple

 

Apple, Be Afraid? Xiaomi is Going Global

Apr 28 2014, 4:50am CDT | by

11 Updates
Apple, Be Afraid? Xiaomi is Going Global
 
 

YouTube Videos Comments

Full Story

Apple, Be Afraid? Xiaomi is Going Global

Xiaomi, the Chinese smartphone maker, announced on Wednesday that it is planning to enter ten countries this year.  By New Year’s Eve, you should be able to buy the Mi3 in India, Brazil, and Russia as well as Indonesia, Malaysia, Mexico, the Philippines, Thailand, Turkey, and Vietnam.  Xiaomi is already selling phones in Mainland China, Hong Kong, Taiwan, and Singapore.

Cupertino should be worried.  Xiaomi’s Mi3 in China is cheaper than the iPhone 5c—1,999 yuan versus 4,488—and better—the Xiaomi phone has a larger and sharper screen and a camera with higher-density pixels.  Unless you insist on having a depiction of a piece of fruit on your device, you will go with the Xiaomi offering every time.  No wonder Xiaomi outsells Apple in China according to research firm Canalys, shipping 7.3 million phones in the fourth quarter of last year.  The American company came in at about 7 million in the period, enough for sixth place behind Xiaomi’s No. 5 ranking.

Xiaomi, which sold its first phone in September 2011, plans to ship 100 million of them next year.  To reach that goal, it will have to go where the growth is.  “The next half billion new smartphone customers will increasingly come mainly from poorer emerging markets, notably India and Africa,” states analytics firm IDC

Xiaomi is particularly well positioned in the newest of the new markets.  It is willing to accept razor-thin margins, pricing its phones in its home market just slightly above cost.  “It’s definitely disrupting everyone,”  says IDC’s Ryan Lai.  “Now consumers expect phones with high-end specs at low prices.”  As a result, Xiaomi has been pressuring competitors ZTE and Huawei, both Chinese brands.

And it looks like Samsung, the global smartphone leader, and iconic Apple are the next to be Xiaomied.  Hugo Barra, who left Google last year to take the Chinese start-up global, publicly said this month that his company will use the same pricing model in foreign markets.  That cannot be good news for market leaders accustomed to earning fat margins. 

Those market leaders will have a respite of a few years because it’s clear that Chief Executive Lei Jun and Barra intend to leave the near-saturated Western Europe and U.S. alone.  But eventually the pair will need to extend their company’s reach everywhere.  

If successful in emerging markets—that’s close to a sure bet—Xiaomi will have achieved economies of scale that will allow it to launch an assault on developed countries, and the company will have the profits from new markets to fund the attack on mature ones.  What Lei and Barra are doing is the business equivalent of Mao Zedong’s capture-the-cities-by-controlling-the-countryside strategy that proved so successful in the Chinese civil war in the 1940s.   

Xiaomi is not invulnerable, however.  One explanation why it is expanding into new markets is not to take over the world but to escape its home country.  Even though it is a fearsome competitor, its ability to grow Chinese smartphone sales looks limited at best.

Why?  After nine straight quarters of growth, China smartphone shipments are now shrinking.

The downturn began in the fourth quarter of last year, when manufacturers shipped 90.8 million smartphones, down 4.3% from the 94.8 million in Q3.  China’s transition from 3G to 4G accounts for some of the falloff, as China Mobile’s 4G phones had not reached store shelves when its 4G network launched in December.   Other reasons, according to IDC, include the popularity of phablets and a reduction in subsidies for phones with small screens.

One calendar quarter does not a trend make.  But how about two of them?  China’s “stumble” or “hiccup” continued into the first quarter of this year when smartphone shipments, according to the Ministry of Industry and Information Technology, fell 9.8% from the same quarter in 2013.  Doug Young of the South China Morning Post believes the drop could have been as much as 15% when China Mobile data is taken into account.  A double-digit fall in shipments of 3G handsets, which make up the bulk of the China market, was only partially offset by a small increase in 4G sales, he believes.

The issue for China will be whether smartphones—more than 80% of total Chinese phone sales—will recover after the 4G rollout is completed.  They might if China’s trendy consumers replace 3G handsets with 4G ones.

In any event, the thinking is that the downturn is merely a blip, “temporary” in the words of Nomura.  Young, the journalist, disagrees, arguing that the days of heady growth in China are over.  Xiaomi, however, is not waiting for another disappointing quarter to find out who is right.

The China smartphone market has exploded three-fold in the last three years, and the country is now the world’s largest market.  According to IDC, the 351 million smartphones shipped in China last year constituted more than a third of the world’s total.  That’s impressive by any standard, but at some point the Chinese market has to come back to earth.  Moreover, if China’s economy continues to underwhelm—another sure bet—consumption will suffer and with it smartphone sales.

Xiaomi is heading to ten new countries this year, and it’s not hard to figure out why. 

Follow me on Twitter @GordonGChang and on Forbes

 

iPad Air Giveaway. Win a free iPad Air.

You Might Also Like

Updates


Sponsored Update

Update: 11

Xiaomi's Hugo Barra emphatically denies company is copying Apple; evidence strongly suggests otherwise

Source: The Unofficial Apple Weblog

Hugo Barra, product management director
Chinese manufacturer Xiaomi swears it's not in the business of copying Apple. In fact, the allegations have apparently become so loud and ever-present that former Google executive and current Xiaomi execut ...
Source: The Unofficial Apple Weblog   Full article at: The Unofficial Apple Weblog 9 hours ago, 11:00am CDT
 


Advertisement


Update: 10

Xiaomi Unveils a Fresh Chapter in Plan to Conquer the World

Source: BusinessWeek

China's Xiaomi Breaks Into Tablet Market
Xiaomi Chief Executive Officer Lei Jun unveils the Mi4, a metal-backed iPhone-esque smartphone with a 5-inch display, the latest Qualcomm Snapdragon chip, an ...
Source: BusinessWeek   Full article at: BusinessWeek 1 day ago, 2:18pm CDT
 

More From the Web

Update: 9

Xiaomi Hoping Mi 4 Smartphone Can Take on Apple's iPhone

Source: NDTV

China's Xiaomi Breaks Into Tablet Market
Xiaomi CEO Lei Jun took aim repeatedly at iPhone maker Apple during the Mi 4 launch presentation o ...
Source: NDTV   Full article at: NDTV 1 day ago, 9:30am CDT
 

Update: 7

Xiaomi VP and former Google exec (unconvincingly) denies the company copies Apple

Source: 9to5Mac

Hugo Barra, product management director
You’d think it would be pretty hard to deny that Chinese Android phone and tablet manufacturer Xiaomi copies Apple – yet that’s exactly what former Google exec and now Xiaomi’s global vice president Hugo Barra tried to do in an interview with The Verge. Allegations of it copying Apple are “sweeping sensationalist statements because they have nothing better to talk about,” he says. Well, let’s see … Let ...
Source: 9to5Mac   Full article at: 9to5Mac 1 day ago, 8:36am CDT
 

Update: 6

China's Hottest Smartphone Company Has Another iPhone Clone

Source: The Business Insider

BRAZIL-APPLE-STEVE JOBS
Chinese startup Xiaomi launched its newest flagship smartphone Monday night, the Mi4. The phone has specs that rival top-tier phones like Samsung's Galaxy S5 and the iPhone 5S. It has a 5-inch screen and runs a special modified version of Android that Xiaomi uses in all of its phones. Xiaomi is the buzziest smartphone maker at the moment. It only sells phones in China and a few other emerging markets, but it's ...
Source: The Business Insider   Full article at: The Business Insider 1 day ago, 8:11am CDT
 

Update: 5

Is the $14 Xiaomi Mi Power Bank too good to be true?

Source: Asia One

China's Xiaomi Breaks Into Tablet Market
In our article '5 tips when buying a portable battery pack for your mobile device', we ask readers to avoid cheap power banks, especially those whose features sound too good to be true for the price.But once in a while, something comes along and attempts to overturn this rule of thumb. Yes, we're referring to the Mi Power Bank from Xiaomi. Just like the company's smartphones (heck, just like everything that Xiaomi is selling), the Mi Power Bank is priced ...
Source: Asia One   Full article at: Asia One 2 days ago, 10:06pm CDT
 

Update: 4

BlackBerry’s firewall is about to come under siege

Source: BGR

Hugo Barra, product management director
Batten down the hatches, BlackBerry — Hurricane Xiaomi is barreling toward you. The Wall Street Journal reports that even though red-hot Chinese vendor Xiaomi has had trouble getting its phones approved for sale in Indonesia, the company does expect to get the green light very soon. Hugo Barra, Xiaomi's vice president for global operations, tells the Journal that if all goes as planned, Xiaomi will start selling its smartphones in Indonesia by the end of August. ...
Source: BGR   Full article at: BGR 5 days ago, 12:04pm CDT
 

Update: 3

Samsung Considers Its Counterattack as Rivals Erode Cellphone Profit

Source: NDTV

China's Xiaomi Breaks Into Tablet Market
Companies like Xiaomi and Huawei have quickly increased market share in China during the last year ...
Source: NDTV   Full article at: NDTV Jul 13 2014, 10:36pm CDT
 

Update: 2

REPORT: It Sounds Like People Are Losing Interest In Samsung's Best Phone (SSNLF)

Source: The Business Insider

China's Xiaomi Breaks Into Tablet Market
Samsung is reportedly cutting its orders for Galaxy S5 components just days after it said that its Q2 operating income has plummeted to the lowest it's been in two years.  Component makers in Taiwan are only ordering 15 million units for Q3 2014, which is down from the 21 million these manufacturers ordered for the second quarter of this year, according to a new report from China's Economic N ...
Source: The Business Insider   Full article at: The Business Insider Jul 11 2014, 7:36am CDT
 

Update: 1

Apple Overtaken by Chinese Upstart Xiaomi in Key Metric

Source: Fool.com

China's Xiaomi Breaks Into Tablet Market
Xiaomi's customers may use their phones more often than Apple ...
Source: Fool.com   Full article at: Fool.com Jul 10 2014, 9:30am CDT
 

Shopping Deals

 
 
 

<a href="/latest_stories/all/all/31" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

 

Comments

blog comments powered by Disqus

Latest stories

Bill Belichick Offers No Comment on Aaron Hernandez Texts
Bill Belichick Offers No Comment on Aaron Hernandez Texts
New England Patriots head coach Bill Belichick did not offer any comment on questions regarding his text messages with former tight end Aaron Hernandez, who is charged with the murder of three individuals.
 
 
Jamaal Charles Agrees to $18M Extension with Kansas City Chiefs
Jamaal Charles Agrees to $18M Extension with Kansas City Chiefs
Running back Jamaal Charles agreed to an $18 million contract extension including an extra $5.1 million over the next two seasons with the Kansas City Chiefs on July 23.
 
 
Batman Day: Brad Meltzer On Why Batman&#039;s &#039;Cultural Shield&#039; Protects Us All
Batman Day: Brad Meltzer On Why Batman's 'Cultural Shield' Protects Us All
July 24, 2014, marks Batman Day for DC Comics. And writer Brad Meltzer tells why Batman's impact is so important.
 
 
Fat Shaming &quot;530 Fatties&quot; Facebook Page Reminds Society Of Bad Behavior
Fat Shaming "530 Fatties" Facebook Page Reminds Society Of Bad Behavior
Facebook Page "530 Fatties" openly mocks overweight people around Sacramento and the 530 area code. But it's certainly not the first time that people have faced body image criticism.
 
 
 

About the Geek Mind


Read more about The Geek Mind.