Taipei, Wednesday, November 22, 2017 21:17 (GMT+8)
cloudy
Taipei
19°C
Digitimes Research: Xiaomi to see strong competition at home, unlikely to achieve 2014 shipment target
Anthony Chen, DIGITIMES Research, Taipei [Tuesday 21 January 2014]

China-based Xiaomi has announced that the company plans to ship 40 million smartphones in 2014. But Digitimes Research believes the vendor is unlikely to achieve the goal as many of its competitors have started establishing online shopping operations to sell their own-brand products with impressive hardware specifications at low prices - a business model similar to Xiaomi's.

Xiaomi is a brand vendor that has been promoting its smartphones by highlighting their high-end features yet entry-level pricing, and the company is mainly selling smartphones through its online store. The company is known for its hunger marketing, limiting supply at product launch to create an impression of strong demand for the device.

In August 2013, the China-based vendor released its CNY799 Hongmi smartphone, extending its product protfolio to lower-tier market segments. The competitive pricing resulted in impressive sales.

Xiaomi's marketing strategy managed to shoot up its shipments beyond the 18 million mark in 2013 and earn the brand a lot of attention.

By selling products through their online shops, smartphone vendors can avoid sharing their profits with retailers and telecom carriers, and therefore can offer lower prices for their devices.

As a result, many China-based smartphone players are adopting the Xiaomi model and have established sub-brand products and online operations to enhance their competition. These include major players such as: Huawei's Honor; Gionee's Iuni; and CoolPad's Great God. These players are either offering competitive pricing or trying to create new brand images, in hopes to expand their share in China's competitive smartphone market.

Huawei is a major player with abundant R&D and marketing resources, as well as strong support from its supply chain. Huawei released its Honor 3C smartphone in December 2013 priced at CNY798. Its pricing and features were similar to those of Hongmi. In response to Huawei's challenge, Xiaomi reduced its Hongmi price by CNY100 in January 2014. The price reduction is expected to significantly impact Xiaomi's profitability, and the challenges from Huawei, and other players, are likely to hinder Xiaomi's plan of having entry-level products drive up overall shipment volumes.

With more China-based smartphone vendors expected to create sub-brand products and run online stores in 2014, Xiaomi will face fiercer competition from its peers in 2014. Although China's online shopping continues to see surging sales, it only accounts for less than 20% of the country's total retail sales and Xiaomi's share of online smartphone sales is expected to be heavily dented by the competitors in 2014.

Xiaomi is still weak in terms of sales in the conventional market and through telecom channels, and it will lose its pricing advantages if it has to share its profits with retailers. Digitimes Research believes the China-based vendor will not be able to gain much profit through conventional channels.

With China's smartphone market gradually approaching saturation, shipments to overseas markets will become a key driver for growth in 2014. However, Xiaomi has only just started to explore the overseas markets, which are unlikely to make much contribution to the company in the near future.

Realtime news
  • Taiwan October unemployment down

    Bits + chips | 1h 34min ago

  • Everlight makes loss selling Epistar shares

    Before Going to Press | 18min ago

  • Largan to benefit from smooth shipments of iPhone X

    Before Going to Press | 22min ago

  • Digitimes Research: 45 million Level 1, 2 autonomous vehicles worldwide by 2020

    Before Going to Press | 1h 15min ago

  • Global gaming notebook shipments to reach 5.5 million in 2017

    Before Going to Press | 1h 24min ago

  • NPO MLCCs see booming demand

    Before Going to Press | 1h 32min ago

  • Foreign investor reportedly to construct PV module plant in Taiwan

    Before Going to Press | 2h 17min ago

  • Taiwan market: Nearly 580,000 smartphones sold in October

    Before Going to Press | 2h 21min ago

  • Taiwan market: Oppo unveils R11s

    Before Going to Press | 2h 23min ago

Pause
 | 
View more

China AMOLED panel capacity expansion forecast, 2016-2020

RESEARCH EXTRAS | Jun 8, 15:37

This Digitimes Research Special Report examines the China AMOLED industry, focusing on the expansion capacity of the makers, the current implementation plans of major smartphone vendors in the market and the technological hurdles faced by China's makers.

Taiwan server shipment forecast and industry analysis, 2017

TAIWAN MOBILE DEVICE | May 31, 10:20

According to surveys and analyses conducted by Digitimes Research, revenues generated from sales of server motherboards, servers, storage systems and related network system equipment by Taiwan-based vendors rose 4.8% on year to reach NT$555.8 billion (US$18.79...

Global tablet market – 3Q 2017

GLOBAL TABLET | Nov 16, 14:59

According to Digitimes Research statistics, third-quarter 2017 global tablet shipments totaled 42.29 million units, outperforming market expectation. Shipments of both brand and white-box tablets showed obvious on-quarter growth with the shopping season kicking...

Taiwan LCD TVs – 3Q 2017

TAIWAN DISPLAY SYSTEM | Nov 14, 14:08

Shipments to North America saw significant growth in the third quarter of 2017 because of seasonality. Year-end holiday promotions are expected to drive up Taiwan's LCD TV shipments in the fourth quarter.

Taiwan small- to mid-size LCD panels – 3Q 2017

TAIWAN LCD PANEL | Nov 13, 15:36

Taiwan panel makers saw strong orders for 18:9 all-screen smartphone applications in the third quarter, during which their 6G LTPS production capacity also increased.

Innodisk
China AMOLED panel capacity expansion forecast, 2016-2020
Global notebook shipment forecast, 2017 and beyond
  • China AMOLED panel capacity expansion forecast, 2016-2020

    This Digitimes Research Special Report examines the China AMOLED industry, focusing on the expansion capacity of the makers, the current implementation plans of major smartphone vendors in the market and the technological hurdles faced by the China makers.

  • Global AP demand forecast, 2017-2020

    Digitimes Research expects global AP shipments to surpass the 1.9 billion mark in 2017, with smartphones remaining the main application. Qualcomm will be leading the market in 2017, as other players continue playing catch up and scramble for funds to invest in more diverse applications.

  • Global notebook shipment forecast, 2017 and beyond

    This Digitimes Special Report examines key factors in the notebook industry, including products, vendors and ODMs, that will affect total shipments in 2017 and through 2021.