Xiaomi took a long journey from its disastrous 2016 to the number 1 spot in June 2021. So, the question is whether They can defend the top spot for over a month. On the other hand, its competitors are the industry giants like Samsung and Apple respectively.
However, the past 12 months are already remarkable for them. As the veteran manufacturer managed to overtook Huawei in 2020. They became the number three smartphone brand in terms of global shipments.
Moreover, the winning streaks go on as they passed Apple, a major success in their journey. They delivered a 17% market share as compared to Apple’s 14%.
And, they went on until they passed Samsung for the top spot in June 2021 according to Counterpoint Research. The firm delivered a 17.1% share of sales versus Samsung’s 15.7%. That’s how they became industry leaders.
But, the major question is that Is Xiaomi capable of holding its place against Samsung?
How Did Xiaomi Get The Number 1 Spot?
According to the facts, the major reason for this boost to the firm is the US trade ban against Huawei. These sanctions opened the door for Xiaomi to step in, with the firm passing Huawei in Q3 2020. Meanwhile, Huawei dropped out of the top five globally and in China by July 2021.
However, Xiaomi didn’t let this opportunity go off their hands. They used this opportunity to expand to (or grow in) over 100 overseas markets, often targeting Huawei’s strongholds in Europe, South East Asia, and other markets. In fact, Canalys noted that the firm grew by 50% in Western Europe on its way to taking the global runner-up spot. It also saw impressive yearly growth in Africa (150%) and Latin America (300%) in recent months.
Sanctions on Huawei also opened the doors for these manufacturers for carrier partnerships, especially in the 5G era. It actually made progress in this area before the Huawei ban thanks to tie-ups with European carriers for its Mi Mix 3 5G in early 2019. Things have only improved since then.
This isn’t the only benefit from Huawei-US tensions, as the likes of Oppo, Realme, and Vivo have also looked to new markets in a bid to fill the massive void. But market share reports show that Xiaomi is leading the way in this regard. Moreover, we see Mi smartphones as the best smartphones on the list here and there.
Can Xiaomi Hold On To The 1st Spot?
It seems like a tough task for any brand to knock Samsung off its perch for any meaningful period of time, as the Korean company is at the top for almost a decade now. Huawei may have seized the crown for a quarter, but the combination of pandemic-related timing and trade sanctions meant this was a case of convenient timing rather than a meaningful change.
However, the latest June 2021 reports show that Xiaomi is capable to beat Samsung regardless it’s only a month. Furthermore, the Q2 2021 market share report from Canalys reveals that the two brands were separated by just 1% market share. The company managed to record year-on-year growth of 83% versus Samsung’s 8% growth.
In other words, it seems like Xiaomi can keep the number one crown for more than a month if it can keep up its explosive growth. Canalys noted that a new wave of COVID-19 affected its smartphone production in Vietnam, resulting in shortages of Samsung phones across online and offline outlets. We can also consider it as the turning point for the firm to surpass global giants Samsung. Xiaomi was, therefore, able to take advantage of this gap, particularly when it came to the shortfall of A-series phones.
Once Xiaomi has managed to keep its defenses against Apple, it can continue to focus on Samsung. But beating Samsung in the long-term will also require Xiaomi to beat regional top dogs.
It has risen to a distant third place in Latin America, for example. Motorola is a massive player in Latin America, occupying second place with a 21% market share, and Xiaomi could build a foundation for enduring success here by grabbing this share. Here, particularly in Mexico and Colombia, according to Counterpoint Research, suggests that they are on the right path. This would be a dramatic change after its disastrous foray into Brazil back in 2015.
Latin America isn’t the only region with players other than Samsung to beat, as Africa also fits the bill. Xiaomi has shown in-roads here too, as the aforementioned growth rate suggests. But much like Latin America has Motorola as a huge player, Africa’s brands (Infinix, Itel, Tecno).
Xiaomi’s Premium Smartphones
Xiaomi is keeping up the pace as a premium brand. They truly breached the ultra-high-end barrier with the Mi 11 Ultra. Xiaomi’s first water-resistant flagship is packed full of features and takes the fight to Samsung and Apple’s Ultra/Pro phones. There’s a 120Hz QHD+ screen, an impressive rear camera system, a secondary display on the back, and fast wired/wireless charging for the 5,000mAh battery. However, it isn’t cheap either, coming in at €1,200, but it certainly fits under the ultra-premium tag in terms of features.
In any event, premium phones could be a key strategy for Xiaomi’s growth prospects. Sure, these aren’t volume-driven devices, but they do allow the manufacturer to potentially subsidize the volume-driven mid-range and budget phones that are its bread and butter. And the increased profit margin will also open the door for more cash to spend on R&D and promotional activities.
Xiaomi could make more than a 5% profit margin on some hardware products (e.g. flagships) and way less than 5% on other products to get to the overall 5% profit margin cap.
At The End
Another possible hurdle might be Huawei, in the event that the US trade ban is eased in 2022. A revived Huawei might not be able to instantly get back into the top three or four, but it could claw back market share that was otherwise up for grabs. This scenario is looking increasingly unlikely as the Biden administration has arguably expanded sanctions against the company.
Finally, Xiaomi’s home market is another hurdle to overcome in 2022. The company is currently occupying third place in China, behind Vivo and Oppo. It still recorded the most impressive growth out of the top five players in the region, but it hasn’t challenged for the top spot in years. So it has plenty of work to do if it wants to pass the brands in 2022.