According to Canalys estimates, Huawei became China’s top smart phone vendor in Q3 2015, while Xiaomi fell to second place. This is Huawei’s first time at the top China’s competitive smart phone market. The company powered its way to first place with 81% year-on-year shipment growth, extending its strong performance in the previous quarter. In Contrast, Xiaomi’s shipments shrank year on year as it struggled to sustain its high growth.

Also, the Research Director of HIS Technology China Kevin Wang revealed the shipment figure of both Huawei and Xiaomi in advance: Xiaomi shipped 18,500,000 smart phones in Q3, while Huawei shipped 27,400,000 at the same quarter.

Although falling out from the throne does not mean Xiaomi is going to decline swiftly, it is indeed at a dangerous historical node when some other signs are concerned.

The domestic market is unsustainable for Xiaomi

On the one hand, as the world’s largest smartphone market, the shipments of smartphone in China has reached 100 million in the first quarter of the year, but this is the first time that the shipment growth slowed down in six years; and the shipment again declined 4% in the second quarter of the year, this was the first time in history.

Due to the current growth of Xiaomi is mainly dependent on the domestic market, its weakness in Chinese market may cast a shadow over its future development.

In the past few years, Xiaomi has developed fast through selling low-end smart phones and launching social media campaigns across the internet at the background of China’s smartphone market is rising rapidly. While in consideration of the shipment figures of Q3, Xiaomi may begin to lose the momentum of its development in domestic market.

The other hand, the company is experiencing the similar situation as Nokia did at the low-end smartphones according to Economy & Nation Weekly.

In 2012, Nokia suffered siege of China’s cheap mobile phone manufactures in the market, and its market share was becoming less and less.

Now, Xiaomi is facing the same problem, its rivals include Meizu, Hammer, Yijia, OPPO and Vivo, so the competition that Xiaomi encountered is really fierce.

Xiaomi’s Overseas strategy suffers

Xiaomi is intending to enter into the U.S. market now. Lin bBin, the Co-ounder and the President of the company said Xiaomi will mainly sell the middle and high-end products in the U.S. market, for example, Xiaomi Note and Xiaomi Note Pro.

However, it is not an easy task to enter into the U.S. market, especially Xiaomi may encounter various lawsuits from many mobile phone brands because of its lack of patent. Last year, Xiaomi faced t patent litigation from Ericsson when it entered into Indian market.

“Xiaomi’s design is very similar with that of Iphone which may cause trouble from Apple in the U.S. market,” CNBC forecasted in a recent report.

Besides lack of patent, Xiaomi also faces many Chinese competitors in the U.S. market. ZTE’s market share has accounted for 8% in the U.S., it has jumped to the fourth big brand of mobile phone in the country. Huawei, Oneplus, Coolpad and Hammer are also expanding their market share here.

Except patent lack, from IDC of data displayed, ZTE in 2015 second quarter in United States of market share has accounted for 8%, a jump became has United States fourth big of phone brand; Huawei its independent phone brand glory also has determine into United States market; cool sent into United States market has up four years of long; a added more is with and CM system of cooperation and in overseas market played a days, its total sales of 40% is in United States completed of; even recently even hammer also intends to into United States market.

Domestic competitors went abroad did not shake, this millet, even from Google to dig Hugo Barak and JaiMani, may be useless.

High-end market is weak

The lay out of Xiaomi’s product line is too single. It is difficult to form the stickiness groups after its eye-dazzling promotion campaign.

Xiaomi now has only 4 product lines: Hongmi, Hongmi Note, Xiaomi and Xiaomi Note. Their price is ranging from 599 to 2299. There is no Xiaomi’s product pricing 3000 – 4000 is listed on any popular mobile phone list, while Huawei, Apple and Sumsung are in the lead.

Xiaomi’s situation is very similar with Nokia’s when the latter lost dominance in 2012. Due to Nokia’s adopting Windows Phone platform, its sales volume shrink quickly which made Nokia reduce its price to attract the users, but it faced huge pressure in the high-end market.

Confused strategy

It seems that Xiaomi want to do everything now. For example, it cast a lot of energy to do smart home, Xiaomi aims to strengthen the linkage between its phone and window sensors, human sensors, wireless switches, water purifiers, air purifiers and even electrical sockets, through which users can remote all household appliances and devices. What’s more, Xiaomi launched a electronic balance bike which only cost 1999 yuan on October. However, the electronic balance bike is prohibited in many big cities like Beijing, Shanghai. So, Xiaomi’s move seems unwise.

Till now, Xiaomi’s strategic layout seems a little bit in a mess.

By Li Yundie

Beijing Today Media Center

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