updated 05:53 pm EDT, Tue August 5, 2014
Firm states that Chinese company overtook Samsung on weak shipment quarter
Research firm Canalys ushered in some less-than-welcome news for Samsung this week, as the firm indicates that the Korean electronics manufacturer has lost the leading smartphone spot in China. Xiaomi, a Chinese manufacturer that has rapidly risen in popularity, has claimed the top spot for market share in the country, dethroning Samsung on the back of weak quarterly results.
Canalys indicates that Xiaomi shipped more than 14.9 million units in the second quarter, while Samsung only shipped around 13.2. Devices shipments to China were responsible for 97 percent of the company's total of units shipped for the quarter. Xiaomi moving to the number one spot marks the first time that Samsung has been removed from the position since the fourth quarter of 2011. Samsung's decline marks a 15 percent change year-on-year. Xiaomi now holds 14 percent of the market share in China, with 240 percent year-on-year growth.
"This is a phenomenal achievement for Xiaomi," said Canalys Research Analyst Jingwen Wang. "Undoubtedly this was helped by an anticipated, temporarily under-strength Samsung performance during the quarter. But that is only half the story -- Xiaomi has also executed on its strategy to grow volume shipments."
The range of devices that Xiaomi is delivering has been key to its success. While it has issued a number of high-end phones, it also offers devices that are more readily affordable, like the RedMi smartphones and tablets. It doesn't hurt that the company allows for direct-channel sales, along with parts sourced from its home country.
For the future, Xiaomi needs to look at 4G LTE devices, much like Samsung does, for the remainder of the year. The demand for 4G devices in rising in China, led by China Mobile's push, according to Canalys. Samsung is said to have realigned its inventory in China during the second the quarter, a shift that caused it see fewer units moved. It gave Xiaomi a chance to capitalize, a growth it might not be able to take advantage of in the third quarter.
Xiaomi still has a long way to go to capture Samsung on the global sale, as the firm states Samsung holds 26 percent of the global market. By comparison, Xiaomi sits just over five percent, allowing it to capture the number five slot in phones shipped. However, the company is looking to expand to other markets, including Mexico, Russia and Thailand (it will likely avoid most of the larger markets such as the US due to patent concerns).
With the lineup it currently has, there will need to be some tweaks to accommodate the new markets, but with the low price points and ability to capture a market as large as China, it's possible that Xiaomi could see rapid expansion in global share.
Unfortunately for Samsung, it doesn't appear that China is the only market it is losing ground in. Reuters reports that for the quarter ending June 30, Indian phone manufacturer Micromax took over the top supplier spot for mobile phones in India. Samsung recorded only a 14.4 percent share, a decrease of 16.3 percent from the previous quarter. Micromax passed it with a 16.6 share of the Indian market, according to Counterpoint Research.