Taipei, Wednesday, September 3, 2014 03:00 (GMT+8)
partly cloudy
Taipei
27°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.

Topics: Page 2

Realtime news
  • Digitimes Research: CSOT expected to ship 25 million LCD TV panels in 2014

    Displays | 4h 6min ago

  • China, Taiwan solar-grade silicon wafer makers plan to hike prices

    Green energy | 4h 8min ago

  • Semicon Taiwan 2014: Focus on new processing, packaging technologies

    Bits + chips | 4h 47min ago

  • Epistar, Genesis may benefit from Cree investment in Lextar, says Epistar

    LED | 5h 8min ago

  • Notebook panel supply expected to see 20% shortage in 3Q14

    Displays | 5h 14min ago

  • Supply chains ramp up production for 9.7-inch iPad

    Displays | 5h 15min ago

  • Foxconn to invest in AirSig

    Before Going to Press | 5h 21min ago

  • Demand of 3D ICs may not take off for 3 years, says Amkor Technology

    Before Going to Press | 5h 57min ago

  • China-based CTIEC acquires France-based CIGS business

    Before Going to Press | 6h 15min ago

  • Taiwan market: HTC to launch new exclusive stores to promote aftersale services

    Before Going to Press | 6h 17min ago

  • Niching looks to ramp up LED leadframe and FC CSP substrate shipments in 2015

    Before Going to Press | 6h 41min ago

  • China to post highest growth in semiconductor manufacturing equipment spending in 2014

    Before Going to Press | 6h 59min ago

  • Clevo chairman to develop innovation park in northern Taiwan

    Before Going to Press | 7h 9min ago

  • Shortage of CNC capacity to remain until 2015, say unibody chassis makers

    Before Going to Press | 7h 10min ago

  • Tencent invests in DXY

    Before Going to Press | 7h 14min ago

  • Digitimes Research: Samsung lowers US 7-inch tablet prices

    Before Going to Press | 7h 15min ago

  • LDK Solar sees continued losses in 1H14

    Before Going to Press | 7h 16min ago

Pause
 | 
View more

Analysis of China's revised domestic semiconductor industry goals

RESEARCH EXTRAS | Jul 16, 18:09

Facing a funding shortage for local IC manufacturers, the China State Council in June 2014 published guidelines to strengthen government support for China's semiconductor industry, while stating the short-, mid-, and long-term goals for the related industry supply...

The transition to 4k TV - UHD TV market forecast, 2014-2017

RESEARCH EXTRAS | Jun 26, 13:59

Ultra HD TV vendors are facing challenges due to an overall slowdown in the TV industry and are concerned whether relative supply chains can provide compatible Ultra HD content and services. However, trends show that content makers as well as panel and chip makers...

Taiwan LCD monitors – 2Q 2014

TAIWAN FPD | Aug 25, 14:48

Taiwan's monitor shipments grew 10% in the second quarter compared to a low first-quarter base. With panel makers reducing their supply of monitor applications and monitor vendors reluctant to increase their shipments, Taiwan's makers will only see a single-digit...

China smartphone market and industry – 2Q 2014

CHINA SMARTPHONE | Aug 12, 17:41

A delay in the launch schedule for low-cost 4G smartphones resulted in a mere 4.8% increase in second quarter shipments in the China market. However, with telecom operators planning on increasing their subsidies in the second half of the year, demand will be...

Taiwan small- to mid-size LCD panels – 2Q 2014

TAIWAN FPD | Aug 6, 21:18

Taiwan makers' small- to medium-size panel shipments reached 351.4 million units in the second quarter of 2014, up 16.8% sequentially but down 2.8% on year.

Analysis of China revised domestic semiconductor industry goals
DIGITIMES Marketing Services
  • 2014 global high brightness LED market, trends and shipment forecast

    For the global LED lighting market, the market size will reach US$25.82 billion in 2014 or a market penetration rate of 23.4%. This is attributable to exponential shipment growth for light bulbs, tubes, and directional lamps.

  • Greater China touch panel shipment forecast through 2015

    This Special Report provides forecasts through 2015 for Greater China touch panel shipments with breakdowns based on technology (glass, film, resistive), application (smartphone, NB and tablet) and by firm.

  • 2014 global tablet demand forecast

    This report analyzes the main players, their strategies and shipments forecasts for 2014, as well as other factors contributing to either growth or decline in various segments within the tablet market, with a particular focus on Apple, Google, Samsung, and Microsoft, along with whitebox vendors.