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Smartphone market outlook and the MediaTek Helio X10 based Xiaomi Redmi Note 2/Prime launched for $125, $140 and $156
Let’s start with an extremely good presentation video by Mrwhosetheboss:
And an actual experience video from Chinese sources (finished by comparing to iPhone 6):
Aug 16, 2015, Xiaomi Today: Xiaomi sold 800,000 Redmi Note 2 phones in 12 hours
Note that Xiaomi has already been the top Chinese company tracked here:
– Dec 12, 2012: UPDATE Aug’13: Xiaomi $130 Hongmi superphone END MediaTek MT6589 quad-core Cortex-A7 SoC with HSPA+ and TD-SCDMA is available for Android smartphones and tablets of Q1 delivery
– Aug 1, 2013: Xiaomi, OPPO and Meizu–top Chinese brands of smartphone innovation
– Aug 30, 2013: Assesment of the Xiaomi phenomenon before the global storm is starting on Sept 5
– Sept 5, 2013: Xiaomi announcements: from Mi3 to Xiaomi TV
– June 12, 2014: Xiaomi’s global offensive with Hugo Barra in charge is threatening Apple—with 10.4 million smartphones sold in China it had already outsold Apple in Q1’14, having “just” 9 million iPhones sold there from which we must at least understand the market situation in China upto Q1 2014 as the reference for the Xiaomi’s progress presented here:
With the Q3 2015 Redmi Note 2/Prime advancement Xiaomi will kill the much hoped (by some stock market analysts) incremental opportunities for the $199 Apple iPhone 6 and $299 iPhone 6 Plus in China and throughout the world. And recall that those were announced 11 months ago as “The Biggest Advancements in iPhone History“
Why? Because being in the smartphone device business for just 4 years Xiaomi has already been on or around the top in China for the last 12 months, as well as has launched an impressive global march.
That global sales campaign has been going on in Asia, Russia and Turkey so far, but it is now expanding to Latin America with new model launching in Brazil [CCTV America YouTube channel, July 14, 2015]: “The world’s third largest smartphone maker is taking a different approach in its plans for global domination. Instead of looking to expand in the obvious markets like the U.S. and Europe, Xiaomi is looking to South America. CCTV’s Paulo Cabral filed this report from Sao Paulo.”
And it is not difficult to foresee a huge global success for the company as in India Xiaomi became “the 5th biggest seller of phones in the country, a feat accomplished in only 8 months“: Smartphone company Xiaomi expanding to India and beyond [CCTV America YouTube channel, March 20, 2015]
And now China’s Xiaomi Begins Making Smartphones in India [Voice of America, Aug 14, 2015]: “Xiaomi’s Redmi2 Prime smartphone [NOT the Note 2 one], priced at about $110, began rolling out from a factory in Sri City in southern Andhra Pradesh state this week. … entered the Indian market just a year ago, but since then price conscious consumers have snapped up 3 million phones.“
Also this all happened after “The Chinese smartphone maker, Xiaomi, held a second flash sale of its new 4.7″ Redmi 1S [at $110/699 RMB almost of the same price level as this year’s $125/799 RMB Redmi Note 2] on Tuesday [Sept 9, 2014], after selling out in just four seconds a week ago.“: Chinese smartphone Xiaomi competes with Apple [CCTV America YouTube channel, Sept 9, 2014]
from which I will include the following Q2 CY2014 market share slide for China here:
as this position of being “on the top or around it” has been kept by Xiaomi ever since.
Then we should not forget what only 8 months ago was introduced as Xiaomi launches MiNote, a new iPhone competitor [CCTV America YouTube channel, Jan 15, 2015]: “The tech world is abuzz about Chinese tech company Xiaomi’s bid to compete with Apple and Samsung. Xiaomi CEO Lei Jun unveiled the MiNote and MiNote Pro [at $313/1999 RMB and $391/2499 RMB a kind of twice as expensive predecessors to the new Redmi Note 2/Prime] on Thursday, both are cheaper than similar iPhone models. CCTV’s Xia Cheng reported this story from Beijing.”
With that Xiaomi will kill Samsung high-end opportunities as well.
Let’s look first at the quite drastic decline of the Samsung smartphone business for the last year and a half (data from Strategy Analytics as it’s been represented in the Apple and Huawei move on Samsung article of July 30, 2015 from Telecom.com, with the vendor rankings in the table according to the latest quarter, i.e. Q2 2015):
Note that Coolpad (Yulong) and ZTE are also globally represented Chinese brands, not mentioned so far in this article.
Then I can again refer to Samsung-related high-end specification comparisons produced by GSMinsider:
And don’t be fooled with the Qualcomm Snadragon 805 and 801 SoCs used by Samsung in these 2014 vintage devices as Samsung itself abandoned Qualcomm as an SoC supplier for its 2015 devices:
Note: Such Samsung move of abandoning the Qualcomm Snadragon 805 and 801 SoCs in its latest high-end products is not an accident but a hard-pressed necessity. The octa-core Qualcomm Snadragon 810 replacing the 805/801 had serious thermal throttling problems, and the Chinese brands were starting to use other octa-cores, among them the quite competitive MediaTek Helio X10. See the following Q1 2015 technology landscape presentation composed of the graphical views from the April 12 and April 24 reports by CINNO Research (in addition to the camera related view on the right):
And software-wise Xaomi is already 5 years in the smartphone business with a lot of quite enthusiastic supporters for its Android based Mi User Interface throughout the world. The MIUI 5th Anniversary: Greetings From MIUI Fans From All Over The World testimonial video from the MIUI ROM YouTube channel dated August 12, 2015 is stating that: “MIUI is one of the most popular Android ROMs in the world. It is based on Android, featuring a rich user experience and user customizable themes. MIUI is updated every Friday based on feedback from its users. Now with over 100 million users and 34 MIUI fan sites worldwide, MIUI is the choice of many Android users globally.“
What kind of “much hoped incremental opportunities (by some stock market analysts) for Apple” I was talking about?
From India Will Overtake US to Become World’s Second Largest Smartphone Market by 2017 [July 1, 2015] by Strategy Analytics the following chart has been produced for Dazeinfo’s Global Smartphone Sales 2015 – 2017: India Will Surpass The US [July 1, 2015] report: That chart has been used by Brian Nichols in his Why Apple’s Growth-Related Fears Are Overblown [Aug 12, 2015] article on Seeking Alpha for its final argument that:
… the market sees China as imperative to Apple’s future growth outlook and while true at the moment, there’s a catalyst forming that should lessen the company’s reliance on China and lead to many millions of new iPhone sales.
China is not that “forming catalyst” that I mentioned earlier. Instead, Apple has a prime opportunity to grow in India over the next year or two, a market that’s growing rapidly with middle class consumers and is the world’s second largest economy by population behind only China.
… with India’s help, which includes the growth in middle class consumers through 2020, India might very well one day become just as important as China to Apple.
Before coming to such final argument Nichols is talking about the current market situation in China via a chart from Above Avalon’s China Mobile Is a Game Changer for Apple [April 29, 2015] research note and with the following comments around that:
I expect Apple to find additional growth in China next year, regardless of what has transpired from a macro perspective over the last few months. The reason is simple: Improved network coverage. Fact of the matter is that most Chinese consumers are still using 2G or 3G networks, which are hardly compatible with the iPhone 6. At the end of the first quarter, China Mobile (NYSE:CHL) had 153 million 4G customers, up from 90 million in December of 2014 and just 1.3 million in February of 2014. However, China Mobile had 815 million total customers. So that means the majority of its subscribers are still on 2G or 3G networks. Given the rate at which China Mobile has added 4G customers during the last 16 months, investors can rest assured that its network and 4G customers will be far larger by this time next year. Notably, most of those 4G customers will need smartphones, and Apple has quickly become the most popular choice in China.
As for China’s second and third largest wireless carriers, China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA), they have nearly 500 million customers collectively. And believe it or not, China Unicom and China Telecom’s 4G network is even more underdeveloped than China Mobile’s network. However, both China Unicom and China Telecom are working just as fast to build their respective 4G networks. Once more, this increases Apple’s market opportunity in China, and is the key reason why I think Apple’s growth in China will continue through next year, probably at a very high double-digit rate.
So these are the speculations which IMHO do not take into account the new product waves from major Apple and Samsung competitors, especially Xiaomi.
Xiaomi’s new 5.5″ Redmi Note 2 launched in China just this week for $125/799 RMB (16GB version supporting TDD-LTE for a China specific 4G version of LTE as well as TD-SCDMA, the China specific 3.5G — targeted at China Mobile subscribers) and $140/899 RMB (16GB version supporting both TDD-LTE and FDD-LTE, i.e. both 4G versions — for the subscribers of any mobile operators, and especially of China Unicom and China Telecom) is the actual case in this regard. Watch the Xiaomi Redmi Note 2 Prime first look miui 7 pre-order video direct from the launch (the QR code at the start and the end has been positioned out of my embedded view):
Announced: August 13 2015
Sound Alert Types:
The 2.2 GHz Redmi Note 2 Prime version with 32GB storage and support of TDD-LTE + FDD-LTE will sell at $156 (999 RMB).
– Aug 13, 2015: All About Redmi Note 2/Prime: Specifications, Price, Hands-on Pictures! review by Xiaomi MIUI Official Forum
– Aug 13, 2015: Xiaomi New Product Launch: MIUI 7(China), Redmi Note 2(Prime), Mi Wi-Fi nano full launch information (not only the Redmi Note 2/Prime) by Xiaomi MIUI Official Forum, from which the major Redmi Note 2 and 2 Pro Android competition (Huawei P8 and P8max with Hisilicon Kirin 930 and 935 SoCs, and Meizu MX5 (with the same MediaTek Helio X10 @2.2 GHz) on the Chinese market is described as:
Note: regarding the benchmarked performance of each SoC I will recommend the results made available in the Exynos 7420 vs Snapdragon 810 vs MediaTek Helio X10 Turbo MT6795T vs Hisilicon Kirin 935: Benchmark Scores [July 3, 2015] GSMinsider article
– For a much broader competitive comparison I will recommend the Redmi Note 2’s comparisons by GSMinsider which currently contains comparisons (spec-wise):
Aug 13, 2015: Additional videos from XiaomiHK YouTube channel:
Xiaomi – MIUI Introduction (with English subtitles)
Xiaomi – MIUI V7 Endurance
i.e. MIU 7 on [Xiaomi’s] Mi 4, Huawei Honor 6, Meizu MX4 and Samsung Galaxy S5
Xiaomi – MIUI V7 Performance
Xiaomi – RedmiNote2″>Xiaomi – RedmiNote2
Xiaomi – RedmiNote2 Camera
Important videos available on the Bloomberg Business website only, with 3 most important videos added to them from the CCTV America YouTube channel:
June 5, 2014: Here’s Why Hugo Barra Left Google to Be Xiaomi VP: Xiaomi Early Investor Robin Chan discusses Xiaomi’s hiring of Google’s Hugo Barra on Bloomberg Television’s “Bloomberg West.” Former Xiaomi Board Member Hans Tung also speaks.
July 17, 2015: Xiaomi’s Hugo Barra: Studio 1.0 (Full Show 7/16): This week on Studio 1.0: Emily Chang sits down with Hugo Barra, vice president of global operations at Xiaomi. (Source: Bloomberg) 21 minutes from which I will include here the only slide displayed
Plus a lot of other unique information is available in that interview: like the 2015 vintage business model of Xiaomi (investments into non-platform startups to build business partnerships, a whole ecosystem around Xiaomi etc.).
I will add to that the product shown in the Bloomberg interview as an example of such ecosystem generation. This has been documented in Xiaomi launches $13 fitness band [CCTV America YouTube channel, Aug 18, 2014] as: “Chinese Smartphone maker Xiao-mi has started selling an interactive wristband called the Mi Band. The device can measure one’s heart rate and monitor sleep patterns. It’s not the first such device to hit the market, but so far, it’s the cheapest.”
I will also add the Xiaomi Buying Spree Gives Apple, Samsung Reason to Worry [Bloomberg Business YouTube channel, Jan 8, 2015] video stating that: “Xiaomi zoomed past Apple Inc. and Samsung in China smartphone sales just three years after releasing its first model. Founder Lei Jun is now on a buying spree to take that momentum beyond handsets. Bloomberg’s Edmond Lococo has more on “On The Move Asia.” (Source: Bloomberg)”
Then remember the already known facts mentioned in the second video on the Bloomberg website like: “Xiaomi is not Apple“, “Xiami is an Internet company” (“an Internet platform and services brand” heard in another interview), “services are inherent part of Xiaomi“, “Xiaomi is one of the biggest e-commerce sites in China“, “the Xiaomi platform products are enhanced in functionality on requests from its users by around 50%” etc.
As the latest proof-point of such an Internet platform and service strategy of the company watch the Chinese mobile co. Xiaomi launches wallet app [CCTV America YouTube channel, March 26, 2015] video:
Other videos from Bloomberg Business YouTube channel:
Jan 15, 2015: Xiaomi’s Rapid Rise to $45B Valuation Topping Uber: Xiaomi is Apple and Samsung’s rapidly growing threat. Now the world’s third-largest smartphone maker, Xiaomi is releasing its next phone on Thursday at an event in Beijing. Bloomberg’s Cory Johnson looks at how just fast this company is growing. (Source: Bloomberg)
June 5, 2014: Meet the Billionaire ‘Steve Jobs of China’ Lei Jun: Xiaomi co-founder and chief executive officer Lei Jun is known as the Steve Jobs of China, complete with a wardrobe of black shirts and a cult following. But what did he do before starting Xiaomi, and how has his personality helped drive Xiaomi’s success? Bloomberg West’s Emily Chang gives us an overview of this rock star CEO.
Jan 5, 2015: Xiaomi Doubles Revenue to $12B as Phone Sales Triple: Xiaomi, whose investors include billionaire Yuri Milner, more than doubled its revenue in 2014, according to a blog posting by CEO Lei Jun.
Feb 13, 2015: Xiaomi’s Barra: U.S. Market Is Important in Many Ways: Xiaomi’s Hugo Barra discusses the company’s global expansion plans with Bloomberg’s Brad Stone on “Bloomberg West.”
June 4, 2015: Xiaomi Grows Wearable Device Market Share: Xiaomi is looking to elbow its way into the wearable device market. New figures suggest it took a quarter slice of global sales the first three months of the year. Bloomberg Intelligence’s Jitendra Waral discusses the sales figures on “Trending Business.”
Other videos from the CCTV America YouTube channel:
July 22, 2014: Hugo Barra on latest Xiaomi products: Chinese tech firm Xiaomi showed off some of its latest products on Tuesday. The Beijing-based company unveiled its new Mi smartphone and billed it as a challenger to Apple’s iPhone. Analysts say the Mi 4 will be a make or break product for Xiaomi after sales of the older model proved disappointing.The company is also aggressively expanding overseas. Hugo Barra, Xiaomi’s Vice President for overseas business spoke with CCTV’s Xia Cheng.
July 14, 2015: Eric Schiffer on Xiaomi’s global strategy: For more on Xiaomi’s global strategy, CCTV’s Michelle Makori spoke to Eric Schiffer, CEO of Patriarch Equity.
Dec 22, 2014: Tech company Xiaomi flourishes in China, India despite patent disputes: China’s Xiaomi tech company is often compared to Apple. Founded in 2010, Xiaomi has quickly surpassed Samsung to become the top smartphone in China and third in the world. Xiaomi phones are currently only sold online and in China and India.
Dec 22, 2014: Ari Zoldan of Quantum Networks discusses Chinese companies, patent troubles: CCTV America’s Sean Callebs interviewed tech industry expert and CEO of Quantum Networks Ari Zoldan about the rise of Xiaomi and it’s legal battles.
A comment from IDC brought ahead: “Competition from 2-in-1 devices and phones remains an issue“. In the notes to the IDC press release it is mentioned as well that “tablets with detachable keyboards [i.e. 2-in-1 devices] running either Windows or Android are not included in the PC category” by IDC. This approach to the PC category is one of the reasons why the decline of the PC market in Q2 2015 is 11.8% according to IDC, while it is 9.5% according to Gartner.
You will find more statistics at Statista
July 14, 2015: After a brief respite throughout last year, the global PC market returned to its pre-2014 slump in the first half of 2015. According to Gartner’s latest estimates, worldwide PC shipments amounted to 68.4 million in the past three months – down 9.5 percent from last year’s June quarter.
The struggling PC industry had received a boost when Microsoft ended official Windows XP support in April 2014, prompting a replacement cycle that has now apparently faded. Despite the sobering results, analysts remain cautiously optimistic about the industry’s mid-term outlook. They argue that the recent decline is no sign of structural weakness but partly a consequence of last year’s unusually positive results and partly an effect of inventory control ahead of the Windows 10 launch scheduled for later this year.
[Gartner’s latest estimates:]
July 9, 2015: Gartner Says Worldwide PC Shipments Declined 9.5 Percent in Second Quarter of 2015
PC Industry Faces Slowdown as Industry Anticipates the Launch of Windows 10
STAMFORD, Conn., July 9, 2015 — Worldwide PC shipments totaled 68.4 million units in the second quarter of 2015, a 9.5 percent decline from the second quarter of 2014, according to preliminary results by Gartner, Inc. This was the steepest PC shipment decline since the third quarter of 2013. PC shipments are projected to decline 4.4 percent in 2015.
There were many contributors to the decline of PC shipments in the second quarter of 2015, and Gartner analysts highlighted three of the major reasons for the drop in shipments. Analysts emphasized that these inhibitors are temporary events, and they are not changing the PC market’s structure. Therefore, while the PC industry is going through a decline, the market is expected to go back to slow and steady growth in 2016.
“The price hike of PCs became more apparent in some regions due to a sharp appreciation of the U.S. dollar against local currencies,” Mikako Kitagawa, principal analyst at Gartner. “The price hike could hinder PC demand in these regions. Secondly, the worldwide PC market experienced unusually positive desk-based growth last year due to the end of Windows XP support. After the XP impact was phased out, there have not been any major growth drivers to stimulate a PC refresh. Lastly, the Windows 10 launch scheduled for 3Q15 has created self-regulated inventory control. PC vendors and the channels tried clearing inventory as much as possible before the Windows 10 launch.”
Lenovo maintained the top position in worldwide PC shipments in the second quarter of 2015 (see Table 1), but the company suffered a year-on-year shipment decline for the first time since the second quarter of 2013. EMEA, Latin America and Japan were tough regions for Lenovo, as the company experienced double-digit shipment declines. HP also experienced a shipment decline after five consecutive quarters of PC shipment growth. HP showed a steep decline in EMEA, which was potentially due to the currency impact. The company was also impacted by tight inventory controls in the consumer market before the Windows 10 launch.
Preliminary Worldwide PC Vendor Unit Shipment Estimates for 2Q15 (Thousands of Units)
Notes: Data includes desk-based PCs, notebook PCs and ultramobile premium (see “Market Definitions and Methodology: Consumer Devices”). All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels.
Numbers may not add up to totals shown because of rounding.
Source: Gartner (July 2015)
For the second consecutive quarter, Dell experienced a decline in PC shipments. Dell’s decline was relatively moderate in EMEA compared with Lenovo and HP. Analysts said this could be partly attributed to Dell’s lower presence in the consumer market, which created less impact to Dell from the Windows 10 prelaunch inventory control.
In the U.S., PC shipments totaled 15.1 million units in the second quarter of 2015, a 5.8 percent decline from the second quarter of 2014 (see Table 2). The decline was led by a double-digit decline of desk-based shipments, which offset single-digit growth of mobile PCs. Based on preliminary results, the desk-based PC shipment decline was the steepest since 2009 when the market was hit by the economic crisis.
“The weakness of desk-based PC shipments in the second quarter of 2015 is partly due to relatively large shipments in the second quarter last year when the market was driven by the end of XP support,” Ms. Kitagawa said. “Despite inventory controls for the Windows 10 launch, mobile PC shipments grew in the quarter, which resulted in five consecutive quarters of mobile PC growth in the U.S. Affordable thin/light notebooks are attracting more business buyers.”
HP maintained the top position for PC shipments in the U.S. in the second quarter of 2015 despite a 10.1 percent decline (see Table 2). Dell narrowed the gap with HP compared with a year ago. Lenovo was the only vendor showing year-over-year PC shipment growth among the top five vendors in the U.S.
Preliminary U.S. PC Vendor Unit Shipment Estimates for 2Q15 (Thousands of Units)
Notes: Data includes desk-based PCs, notebook PCs and ultramobile premium (see “Market Definitions and Methodology: Consumer Devices”). All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels.
Numbers may not add up to totals shown because of rounding.
Source: Gartner (July 2015)
[The Ultramobile (Premium) category includes devices such as Microsoft’s Windows 8 Intel x86 products and Apple’s MacBook Air. Source]
PC shipments in EMEA totaled 18.6 million units in the second quarter of 2015, a 15.7 percent decline from the second quarter of 2014. In Europe, vendors spent most of the quarter trying to manage already high inventory levels. They tried clearing that inventory with promotions, having to absorb this with lower margins. In the third quarter of 2015, vendors should see better “sell-in” into the channel with new Windows 10-based devices.
Asia/Pacific PC shipments reached 24.2 million units in the second quarter of 2015, a 2.9 percent decline from the same period last year. Both desk-based and mobile PC shipments declined from the second quarter of 2014. PC shipments in China are estimated to have declined 4 percent in the quarter as demand for consumer PCs remained weak.
These results are preliminary. Final statistics will be available soon to clients of Gartner’s PC Quarterly Statistics Worldwide by Region program. This program offers a comprehensive and timely picture of the worldwide PC market, allowing product planning, distribution, marketing and sales organizations to keep abreast of key issues and their future implications around the globe.
July 16, 2015, Forbes: Why Are IDC And Gartner’s PC Market Stats Different, And Does It Even Matter? by Scott McCutcheon
FRAMINGHAM, Mass.–(BUSINESS WIRE)–Worldwide PC shipments totaled 66.1 million units in the second quarter of 2015 (2Q15), according to the International Data Corporation (IDC) Worldwide Quarterly PC Tracker. This represented a year-on-year decline of -11.8%, about one percent below projections for the quarter.
The slow PC shipments were largely anticipated as a result of stronger year-ago shipments relating to end of support for windows XP as well as channels reducing inventory ahead of the release of Windows 10. In addition, weaker or changing exchange rates for foreign currencies have effectively increased PC prices in many markets, thereby reducing purchasing power and also complicating investment planning.
“Although the second quarter decline in PC shipments was significant, and slightly more than expected, the overall trend fits with expectations,” said Loren Loverde, Vice President, Worldwide PC Trackers & Forecasting. “We continue to expect low to mid-single digit declines in volume during the second half of the year with volume stabilizing in future years. We’re expecting the Windows 10 launch to go relatively well, though many users will opt for a free OS upgrade rather than buying a new PC. Competition from 2-in-1 devices and phones remains an issue, but the economic environment has had a larger impact lately, and that should stabilize or improve going forward.”
“The U.S. market was in line with forecasts, declining -3.3% from a year ago, after avoiding the global market declines over the past five quarters. Soft retail demand, short term weakness from inventory reductions, some cannibalization from competing devices, and low demand for large commercial refreshes are among the factors that reduced PC shipments,” said Rajani Singh, Senior Research Analyst,Personal Computers. “Nevertheless, moving forward, we expect a healthy second half as inventory and purchase decisions pick up following the launch of Windows 10. Emerging product categories will remain a bright spot as attention shifts to convertibles and Chromebooks in the commercial as well as consumer segments.”
United States – With shipments totaling nearly 16.4 million PCs in 2Q15, the U.S. market shrank -3.3% from the same quarter a year ago. Although most vendors saw volume decline, gains from Apple and Lenovo helped limit the overall decline. A tough year-on-year comparison contributed to a decline in desktop shipments, while portable PCs shipments continued to grow.
Europe, Middle East, and Africa (EMEA) – In EMEA, weakening demand and high inventory levels inhibited sell-in, driving results below expectations. Vendors continued to clean stock ahead of the back-to-school season and Windows 10 launch. Moreover, unfavorable exchange rates led to increasing prices and continued to affect demand both in the business and consumer spaces. The commercial market also faced a difficult year-on-year comparison with 2Q14, when the end of support for Windows XP boosted sales.
Asia/Pacific (excluding Japan) – China was impacted by excess commercial notebook inventory from earlier quarters as the anti-corruption campaign continues to suppress commercial spending. Currency fluctuation also remained a key factor in many countries in the region, contributing to lower demand. Nevertheless, volume was close to expectations, reflecting a slight decline in growth from prior quarters.
Japan – continued to see low growth as the weak Yen contributed to a difficult market. The Japanese PC market faced a particularly difficult comparison to year ago shipments that were boosted by the end of support for Windows XP and also changes to Japan’s tax code. As the market responds to these shifts and managing inventory, Yamada Denki (one of Japan’s major electronics stores) announced the closure of unprofitable stores in both urban and rural markets.
Lenovo held onto the top position with shipments of 13.4 million units. Volume was up 1% from the prior quarter, but down -7.5% from the prior year. The vendor continued to aggressively court expansion outside of Asia/Pacific, leading to share gains in the U.S. and EMEA.
HP remained the number 2 vendor, but saw shipments decline -10.4% from a year ago. Slowing business demand and inventory control of entry notebooks contributed to the dip. While most of the slowdown was from outside of the U.S., the vendor also saw its U.S. volume contract nearly -7%.
Dell came in at number 3, shipping more than 9.5 million units and registering a year-over-year decline of -8.7%. Strong results in 2Q14 contributed to a poor year-over-year comparison. Stronger performance in Asia/Pacific and EMEA were offset by slower growth in the U.S.
Apple continued to outperform other vendors, with growth of 16.1% globally. The vendor has largely avoided the price competition affecting other players and may be benefitting from some of the uncertainty around the launch of Windows 10, along with refreshed products like the 12-inch MacBook and a relative concentration of shipments in the U.S.
Acer continued to see growth in Chromebooks with more models introduced. However, the vendor also struggled with the larger pullback in the market, particularly in EMEA where it had seen a rebound in mid-2014. The vendor ended 2Q14 with a volume of 4.33 million, a significant decline from the prior quarter and year ago volumes.
ASUS was statistically tied* with Acer for the number 5 position. ASUS has also been affected by currency factors and inventory management, but strong growth in the U.S. boosted overall results.
Source: IDC Worldwide Quarterly PC Tracker, July 9, 2015
* Note: IDC declares a statistical tie in the worldwide PC market when there is less than one tenth of one percent difference in the revenue share of two or more vendors.
In addition to the table above, an interactive graphic showing worldwide PC market share for the top 5 vendors over the previous five quarters is available here. The chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic can be found by viewing this press release on IDC.com.
- Some IDC estimates prior to financial earnings reports.
- Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold.
- PCs include Desktops, Portables, Ultraslim Notebooks, Chromebooks, and Workstations and do not include handhelds, x86 Servers and Tablets (i.e. iPad, or Tablets with detachable keyboards running either Windows or Android). Data for all vendors are reported for calendar periods.
IDC’s Worldwide Quarterly PC Tracker gathers PC market data in over 80 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.
September update: Qualcomm’s smartphone AP revenues declined 17% year-over-year in the second quarter of 2015, Strategy Analytics estimated. Qualcomm maintained its smartphone AP market share leadership with 45% revenue share, followed by Apple with 19% revenue share and MediaTek with 18% revenue share. For the rest 18%: After a difficult 2014, Samsung LSI continued to recover and more than doubled its smartphone AP shipments in the second quarter of 2015 compared to the same period last year. Samsung LSI capitalised on its Galaxy S6 design-win in Q2 2015. In addition the company featured in multiple mid-range smartphones from Samsung Mobile. Full report: Smartphone Apps Processor Market Share Q2 2015: Samsung LSI Maintains Momentum
… The global tablet AP market declined 28% year-over-year to reach US$679 million in the second quarter of 2015, according to Strategy Analytics. Apple, Intel, Qualcomm, MediaTek and Samsung LSI captured the top-five revenue share rankings in the market during the quarter. Apple led the tablet AP market with 27% revenue share, followed by Intel with 18% revenue share. Qualcomm ranked number three, narrowly behind Intel. Full report: Tablet Apps Processor Market Share Q2 2015: Apple and Intel Maintain Top Two Spots
Digitimes Research saw global tablet shipments fall to 45.76 million units in second-quarter 2015, showing a 10% decrease on quarter and representing more than a 15% decrease on year. Full report: Global tablet market – 2Q 2015 End of September update
Investors.com comments on tablet and smartphone market trends — Q2’2015:1. Apple, Samsung lose ground in tablet market — LG and Huawei gain
2. Apple, Huawei [and Xiaomi] buck slowing smartphone sales trend
As the commenting articles by Investors.com are based on press releases of 2 market research companies I will give the web reference here for those press releases themselves, as well as 3 other press releases not commented on by Investors.com (if there are trend indications in the press releases themselves I will copy them alongside the web reference):
- July 29, 2015: Worldwide Tablet Market Continues to Decline; Vendor Landscape is Evolving, According to IDC“Longer life cycles, increased competition from other categories such as larger smartphones, combined with the fact that end users can install the latest operating systems on their older tablets has stifled the initial enthusiasm for these devices in the consumer market,” said Jitesh Ubrani, Senior Research Analyst, Worldwide Mobile Device Trackers. “But with newer form factors like 2-in-1s, and added productivity-enabling features like those highlighted in iOS9, vendors should be able to bring new vitality to a market that has lost its momentum.”
- July 30, 2015: Huawei Becomes World’s 3rd Largest Mobile Phone Vendor in Q2 2015 [says Strategy Analytics]
- Woody Oh, Director at Strategy Analytics, said, “… Smartphones accounted for 8 in 10 of total mobile phone shipments during the quarter. The 2 percent growth rate of the overall mobile phone market is the industry’s weakest performance for two years, due to slowing demand for handsets in China, Europe and the US.”
- Neil Mawston, Executive Director at Strategy Analytics, added, “… Samsung has stabilized volumes in the high-end, but its lower-tier mobile phones continue to face intense competition from rivals such as Huawei in Asia. … Apple outperformed as consumers in China and elsewhere upgraded to bigger-screen iPhone 6 and 6 Plus models.”
- Ken Hyers, Director at Strategy Analytics, added, “… Huawei is rising fast in all regions of the world, particularly China where its 4G models, such as the Mate7, are proving wildly popular. Huawei has finally overtaken Microsoft to become the world’s third largest mobile phone vendor for the first time ever.”
- Neil Mawston, Executive Director at Strategy Analytics, added, “Microsoft shipped 27.8 million mobile phones and captured 6 percent marketshare worldwide in the second quarter of 2015. Microsoft’s 6 percent global mobile phone marketshare is sitting near an all-time low. Microsoft continues to lose ground in feature phones, while its Lumia smartphone portfolio is in a holding pattern awaiting the launch of new Windows 10 models later this year. Xiaomi shipped 19.8 million mobile phones and captured 5 percent marketshare worldwide in Q2 2015. Xiaomi remains a major player in the China mobile phone market, but its local and international growth is slowing and Xiaomi is facing intense competition from Huawei, Meizu and others. As a result, Xiaomi may struggle to hold on to its top-five global mobile phone ranking in the coming quarters.”
- June 17, 2015: Business smartphones shipments in Q1 up 26% from last year, now 27% of total smartphone market [says Strategy Analytics]
Android was the most dominant OS in terms of business smartphone shipments in Q1, accounting for nearly 60% of all business smartphones (corporate- and personal-liable). It was also the dominant BYOD device; 68% of personal-liable shipments in Q1 were Android. Apple iOS accounted for only 27% of BYOD shipments in Q1, but was the dominant platform in terms of corporate-liable smartphones, with 48% of Q1 CL shipments. The difference in Android/iOS shipments between the CL and IL categories reflects the continuing corporate perception that iPhones are “safer” than Android-based devices.
- Shipments of personal-liable smartphones (i.e. “bring your own device,” or BYOD, phones) drove market growth in Q1
- Strategy analytics defines personal-liable devices as devices purchased by the end-user and expensed back to the company or organization, or devices purchased outright by individual users but used primarily for business purposes linking to corporate applications and backend systems.
- While personal liable devices dominate worldwide business smartphone shipments, some regions are more resistant to the BYOD trend than others. Such regions include Western Europe and Central Europe, where corporate-liable devices are the dominant types of business smartphones. In Western Europe in Q1, 61% of the 10 million business smart phones were corporate-liable. Central and Eastern Europe had a slightly higher rate of BYOD devices shipped in Q1 — 41% — but the majority of smartphones shipped in this regions was also corporate-liable. This a sharp contrast to North America, where three-quarters of business smartphone shipments are personal-liable. The trend in Western and Eastern Europe reflects the more corporate-centric approach businesses take to mobility in these regions.
- July 29, 2015: Mobile Broadband Tablet Subscriptions to Double to 200 Million by 2021, says Strategy Analytics
- Strategy Analytics forecasts global mobile data subscriptions on tablets will more than double from 2015 to 2021, reaching over 200 million
- Around the globe, over 100 million wireless connections on cellular enabled tablets will be added through 2021. By 2021 tablets will only account for 2 percent of total mobile subscriptions, a 2.7 percent population penetration rate.
- July 29, 2015: Intel Maintains Top Spot in Non-Apple Tablet Apps Processors in Q1 2015 says Strategy Analytics
⇒The global tablet applications processor (AP) market declined -6 percent year-over-year to reach $733 million in Q1 2015
- According to Sravan Kundojjala, Associate Director, “Intel maintained its top spot in the non-Apple tablet AP market in unit terms in Q1 2015. Strategy Analytics estimate Android-based tablets accounted for over 70 percent of Intel’s total tablet AP shipments in Q1 2015. We expect Intel’s Atom X3 cellular tablet chip product line to help Intel maintain its momentum in the tablet AP market.”
- Stuart Robinson, Executive Director of the Strategy Analytics Handset Component Technologies (HCT) service added, “Strategy Analytics estimates that baseband-integrated tablet AP shipments accounted for over one-fourth of total tablet AP shipments in Q1 2015, helped by a strong push from Qualcomm, MediaTek and Spreadtrum. We expect continued momentum for integrated APs as Intel, Rockchip and others join the bandwagon.”
- July 30, 2015: Windows Tablet Shipments Nearly Double in Q2’15, says Strategy Analytics
⇒Global Tablet Shipments and Market Share in Q2 2015 (preliminary)
- Windows-branded Tablets comprised 9 percent of shipments in Q2 2015, up 4 points from Q2 2014
- Android-branded Tablet shipment market share was flat at 70 percent in Q2 2015
- Apple continued its slide in market share down to an all-time low of 21 percent in Q2 2015, 4 points lower than Q2 2014
- Vendors with strong 3G and LTE connected Tablet strategies such as Huawei, LG, and TCL-Alcatel gained market share as leaders like Apple, Samsung, and the White Box community lost ground
Tablet & Touchscreen Strategies Senior Analyst Eric Smith added, “Windows share continues to improve as more models become available from traditional PC vendors, White Label vendors, and Microsoft itself though a healthy Surface lineup and distribution expansion. The key going forward will be if the coming wave of 2-in-1 Detachable Tablets is a hit with consumers or if they go the way of the Netbook—we remain cautiously optimistic on this point.”
Tablet & Touchscreen Strategies Service Director Peter King said, “Apple’s fortunes will turn around soon as it will launch the 12.9-inch iPad Pro as well as an iPad mini 4 in Q4 2015. New features in iOS 9, which are exclusive to iPad such as multi-tasking and a more convenient soft keyboard, will also help compel upgrades by owners of older iPad models. Meanwhile, Huawei and LG have posted fantastic growth primarily due to well-executed 3G and LTE connected Tablet strategies.”
Then I will add 2 additional information pieces from Strategy Analytics:
Having experienced negative growth since 2012, global PC sales are expected to rise 5 percent in 2015 driven by replacement of an ageing installed base according to Strategy Analytics’ Connected Home Devices (CHD) service report, “Computers in the Post-PC Era: Growth Opportunities and Strategies.”
Click here for the report:
- PC sales will fall by 4 percent in 2014 before returning to modest growth in 2015 and beyond to support replacement demand.
- Strategy Analytics’ consumer research of computing device usage in developed markets indicates that PCs remain essential computing devices despite healthy Tablet sales.
- Frequent Tablet usage has grown by 22 percentage points from 2011 to Q4 2013 up to 32 percent of all households while frequent Mobile PC (excluding Tablets) usage has stayed steady through this period, as 63 percent of all households indicated they frequently used Mobile PCs.
- Frequent usage of all PCs (including Mobile and Desktop PCs and excluding Tablets) remained above the 90 percent mark of all households, falling only 3 percentage points during this period.
Eric Smith, Analyst of Connected Home Devices, said: “Multiple PC ownership is falling as Tablet sales supplant replacement demand for secondary PCs mainly used for casual tasks. Still, PCs will remain essential devices as households eventually replace their primary PCs used for productivity tasks such as spreadsheet and video editing or personal banking.”
David Watkins, Service Director, Connected Home Devices, added: “The modern Tablet user experience is quickly arriving on the PC thanks to more affordable 2-in-1 Convertible PCs and new operating systems which blend traditional PC and Tablet user experiences. We see development of these forces aligning perfectly with an older PC installed base ripe for replacement in 2015.”
May 1, 2015: Children Change Disney’s Digital Strategy: “App TV” Now Central To Content Planning by David Mercer
Multiscreen TV behaviour is at the centre of television’s stormy transformation – viewing of broadcast, linear TV on the TV screen is apparently in decline while consumption on smartphones and tablets is increasing. Making sense of the big picture is increasingly challenging, and legacy players like broadcasters and the major content owners are inevitably somewhat resistant to the idea that their traditional businesses are under serious threat.
We have monitored the early stages of this transformation for the past decade and see its results in our own research, and we continue to predict further industry disruption in our forecasts. But sometimes it is only when you hear the evidence given in person by a senior executive at a leading global player that the scale of the challenge and opportunity are finally brought home.
This happened at last week’s AppsWorld event in Berlin, where I chaired the TV and Multiscreen conference. The speaker was Andreas Peters, Head of Digital for the Walt Disney Company Germany, Austria and Switzerland. Andreas presented some of the most compelling evidence I have yet heard that television is truly a multiscreen medium for the next generation of viewers.
Disney’s challenge in Germany was to launch a television show called Violetta aimed at 8-12 year old girls. It had been introduced successfully in Argentina but had failed in the UK. As it often does, Disney had invested considerable amounts in merchandising and retailers were eagerly anticipating sales of the new product lines. The show was first broadcast on German free TV on May 1st 2014 but it achieved only very low ratings.
The question for Disney managers was whether traditional TV had stopped working. A crisis meeting was held with a view to writing off the investment. Disney had previously not made its shows available online in Germany but the Violetta situation was so serious they were persuaded to experiment. Two episodes were made available on Youtube with a link to Disney’s own website. Viewing of the content on Youtube very quickly went viral until Disney had achieved a reach of 50% of 8-12 year old girls and eight million views. Violetta went on to become a success in German-speaking markets.
The evidence was clear: for some shows at least, younger children cannot now be reached using the traditional broadcast TV/big screen model. Peters explained that the Violetta experience was transformative for the Disney organisation and led to the inclusion of online and digital media as a key element in the business case for many products. In fact it also led to the development and launch of Disney’s own Watch App, which includes live streaming and seven-day catch-up programmes from the broadcast Disney Channel.
Even after the Violetta experience Disney was sceptical that an app was needed – there was a feeling that the website would be sufficient. Nevertheless the app was launched and Disney had planned for 20,000 downloads. Instead it has passed one million downloads in its first six months. Peters noted: “This was a real shock for us. We completely underestimated the demand.” Around 500,000 viewers are now using the Disney Watch app for linear television viewing, in addition to millions of shows being downloaded for catch-up viewing. Peak app viewing hours are between 6am and 8am and then between 1pm and 9pm on school days, with a different pattern at weekends. Peters made it clear that children did not want lots of features built in to the app – just like TV, they just want to hit “play” and watch.
“Our TV colleagues of course don’t want to believe this,” said Peters. “But the world has changed and it will continue to change.” Disney has also seen a knock-on effect from its app launch with an increase in free-to-air broadcast TV viewing. But the firm is now clear that mobile is not just an add-on to TV or a promotional tool; it must be an integral part of the entire process.
There are many implications for content strategy. TV and Digital have to “understand each other”, which is a challenge when the KPIs in each world are very different. As we have often heard, the video industry is crying out for a set of common metrics which can apply and support advertisers in both TV and online worlds. Video consumption patterns vary and different content may be relevant to different platforms.
But the overall lesson is clear: “TV” is not just the big screen in the corner of the living room. It must embrace multiscreen distribution strategies in order to reach its maximum potential. TV companies are betraying their audiences and their investors if they don’t target the 6.4bn addressable screens available to them.
Versus as it was presented in The lost U.S. grip on the mobile computing market, including not only the device business, but software development and patterns of use in general [this same blog, April 14, 2014]:
The global tablet market ticked up in the second quarter of 2014, although growth is still near the market’s historical low.
- Shipments hit about 44.3 million during the period, yielding year-over-year growth of 11%.
While an improvement from the previous quarter, consider that the tablet market had year-over-year growth of nearly 80% in the same quarter just a year ago.
- Although it lead all vendors with about 27% market share, Apple’s iPad shipments declined 9% year-over-year during the period. That marks the second consecutive quarter in which iPad shipments have declined.
- Samsung’s tablet shipments grew a paltry 1% for the period to hit 8.5 million units in the second quarter. That is an enormous slowdown compared to the growth rates it was achieving just a year ago. In the second quarter of 2013, Samsung tablet shipments grew 300% year-over-year.
- Both Apple and Samsung lost market share during the quarter. Apple’s leading market share fell from 33% to 27% while Samsung’s dipped two percentage points to 17%.
- “White-box” vendors = 41% of market
Worldwide Tablet Market Grows 11% in Second Quarter on Shipments from a Wide Range of Vendors, According to IDC [IDC press release, July 24, 2014]
The worldwide tablet grew 11.0% year over year in the second quarter of 2014 (2Q14) with shipments reaching 49.3 million units according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker. Although shipments declined sequentially from 1Q14 by -1.5%, IDC believes the market will experience positive but slower growth in 2014 compared to the previous year.
“As we indicated last quarter, the market is still being impacted by the rise of large-screen smartphones and longer than anticipated ownership cycles,” said Jean Philippe Bouchard, IDC Research Director for Tablets. “We can also attribute the market deceleration to slow commercial adoption of tablets. Despite this trend, we believe that stronger commercial demand for tablets in the second half of 2014 will help the market grow and that we will see more enterprise-specific offerings, as illustrated by the Apple and IBM partnership, come to market.”
Despite declining shipments of its iPad product line, Apple managed to maintain its lead in the worldwide tablet market, shipping 13.3 million units in the second quarter. Following a strong first quarter, Samsung struggled to maintain its momentum and saw its market share slip to 17.2% in the second quarter. Lenovo continued to climb the rankings ladder, surpassing ASUS and moving into the third spot in the tablet market, shipping 2.4 million units and grabbing 4.9% markets share. The top 5 was rounded out by ASUS and Acer, with 4.6% and 2.0% share, respectively. Share outside the top 5 grew to an all time high as more and more vendors have made inroads in the tablet space. By now most traditional PC and phone vendors have at least one tablet model in the market, and strategies to move bundled devices and promotional offerings have slowly gained momentum.
“Until recently, Apple, and to a lesser extent Samsung, have been sitting at the top of the market, minimally impacted by the progress from competitors,” said Jitesh Ubrani, Research Analyst, Worldwide Quarterly Tablet Tracker. “Now we are seeing growth amongst the smaller vendors and a levelling of shares across more vendors as the market enters a new phase.”
Worldwide Tablet Shipments Miss Targets as First Quarter Experiences Single-Digit Growth, According to IDC [IDC press release, May 1, 2014]
Worldwide tablet plus 2-in-1 shipments slipped to 50.4 million units in the first calendar quarter of 2014 (1Q14) according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker. The total represents a sequential decline of -35.7% from the high-volume holiday quarter and just 3.9% growth over the same period a year ago. The slowdown was felt across operating systems and screen sizes and likely points to an even more challenging year ahead for the category.
“The rise of large-screen phones and consumers who are holding on to their existing tablets for ever longer periods of time were both contributing factors to a weaker-than-anticipated quarter for tablets and 2-in-1s,” said Tom Mainelli, IDC Program Vice President, Devices and Displays. “In addition, commercial growth has not been robust enough to offset the slowing of consumer shipments.”
Apple maintained its lead in the worldwide tablet plus 2-in-1 market, shipping 16.4 million units. That’s down from 26.0 million units in the previous quarter and well below its total of 19.5 million units in the first quarter of 2013. Despite the contraction, the company saw its share of the market slip only modestly to 32.5%, down from the previous quarter’s share of 33.2%. Samsung once again grew its worldwide share, increasing from 17.2% last quarter to 22.3% this quarter. Samsung continues to work aggressively with carriers to drive tablet shipments through attractively priced smartphone bundles. Rounding out the top five were ASUS (5%), Lenovo (4.1%), and Amazon (1.9%).
“With roughly two-thirds share, Android continues to dominate the market,” said Jitesh Ubrani, Research Analyst, Worldwide Quarterly Tablet Tracker. “Although its share of the market remains small, Windows devices continue to gain traction thanks to sleeper hits like the Asus T100, whose low cost and 2-in-1 form factor appeal to those looking for something that’s ‘good enough’.”
Digitimes Research: Global tablet shipments reach 55.06 million units in 2Q14 [press release, July 23, 2014]
There were 55.06 million tablets shipped globally in the second quarter of 2014, decreasing 4.5% on quarter but increasing 17.9% on year, according to Digitimes Research.
The shipments consisted of 14.1 million iPads, down 10% on quarter, and 18.96 million units launched by vendors other than Apple, down 12.7% on quarter. Additionaly, 22.3 million white-box units were shipped in the second quarter.
Shipments of small-size Wi-Fi-enabled units in particular slowed down in the second quarter and the time period was also a slow season for shipments. Supply chains also faced yield issues and Samsung saw less-than-expected shipments for its 8-inch tablets. Tablets sized 10-inch and above have seen shipment increases since fourth-quarter 2014.
Taiwan tablet makers meanwhile surpassed 20 million in shipments for brand tablets during the second quarter, which made up 60% of overall brand tablet shipments during the time period, added Digitimes Research.
Digitimes Research: Global tablet shipments drop 30% sequentially in 1Q14 [press release, April 23, 2014]
Global tablet shipments reached only 58.56 million units in the first quarter of 2014, down almost 30% sequentially, but up 4.6% on year despite Samsung Electronics trying to boost both its high-end and entry-level tablet shipments and Lenovo pushing shipments to meet its fiscal 2013 targets. Seasonality, Apple seeing weaker sales, and the tablet market growing mature were also factors that affected shipment performance, according to Digitimes Research.
Shipments of iPads suffered both on-year and sequential drops to reach 15.85 million units in the first quarter. Non-iPad tablet shipments were 22.31 million units, down 20% sequentially, but up over 30% on year thanks to strong demand for Samsung, Lenovo and Asustek’s Windows-based models. White-box tablet shipments reached only 20.4 million units due to seasonality and labor shortages during the Lunar New Year holidays.
Apple and Samsung remained the top-two vendors in the first quarter, but the two players’ market share gap was less than 6pp. Lenovo was the third-largest vendor, followed closely by Asustek Computer in fourth. Amazon and Google dropped to number seven and ten.
Taiwan ODMs shipped 22.15 million tablets together in the first quarter, accounting for less than 60% of global shipments. The largest maker, Foxconn Electronics (Hon Hai Precision Industry), and second-largest Pegatron Technology both suffered significant shipment drops due to lower-than-expected demand for iPad. Quanta saw increased shipments in the quarter because of Asustek’s T100 tablet, and returned to being the third-largest maker in Taiwan. Compal Electronics’ shipments suffered a sharp decline because Amazon’s Kindle Fire range is approaching the end of its lifecycle, while Acer is turning to cooperate with China-based makers, Digitimes Research‘s figures showed.
Digitimes Research: Global white-box tablet shipments down in 1Q14 [press release, May 12, 2014]
There were 20.4 million white-box tablets shipped globally in the first quarter of 2014, decreasing by 27.4% on quarter and by 2.4% on year, according to Digitimes Research.
The decrease in shipments was mainly because most white-box vendors are based in China and there were fewer working days in the first quarter due to the Lunar New Year holidays, Digitimes Research pointed out.
Of the shipments, 7-inch models accounted for 70.5%, 7.85/7.9-inch ones 21.3%, 8- to 9-inch ones 4.2%, above 9- to 10-inch 2.9%, above 10-inch 1.1%.
Due to strong demand in emerging markets including India, Indonesia, Thailand, Russia and Eastern Europe, global white-box tablet shipments in the second quarter of 2014 will increase 14.2% on quarter and 45.6% on year to 23.3 million units.
Xiaomi’s global offensive with Hugo Barra in charge is threatening Apple—with 10.4 million smartphones sold in China it had already outsold Apple in Q1’14, having “just” 9 million iPhones sold there
And this is just a global start as their plan for the whole year is “only” 60 million units, i.e. given the 4×10.4 units just for China (at least) their direct sales abroad will not be more than 20 million this year.
Note that according to internal to China market research (EnfoDesk) Xiaomi’s true internal sales were 8.98 million in Q1’14, the rest quite probably went to Chinese resellers stocking themselves (but even Apple had only 6.44 million true iPhone sales in China for the same period):
How Apple’s New Rival Plans to Take Over the World [Bloomberg News YouTube channel, June 4, 2014]
Here is everything you need to know about the 4-year-old Chinese mobile company that has become the 6th largest handset company on Earth and the 3rd largest in China. Bloomberg Businessweek’s Brad Stone reports.
Xiaomi Redmi launches in Singapore Feb 21 [TODAYonline (Singapore), Feb 19, 2014]
Chinese smartphone maker Xiaomi has made its first steps for a global presence with the launch announcement of their budget Redmi phone today (Feb 19). The phone will be available on the Xiaomi store at http://www.xiaomi.com/sg.
Xiaomi also announced the upcoming launch of their flagship Mi3 phone in Singapore on March 7 for S$419 without contract.
The smartphone will be available online at http://www.xiaomi.com/sg from Feb 21, and from local telco StarHub from Feb 27. …
China’s Xiaomi is working on phone launches in India, Indonesia, and other Asian markets [Tech in Asia, Feb 19, 2014]
Chinese phone-maker Xiaomi held an event in Singapore this morning. Aside from launching the Redmi and Mi3 phones in Singapore, Xiaomi’s Hugo Barra and Lin Bin talked a lot about Xiaomi’s ambitions around the world.
Xiaomi’s Hugo Barra explained to the event’s Singapore audience that the company will use the same customer-focused tactics in Singapore as it does in China – such as listening to users and making small changes to the product throughout its lifecycle based on what they say. Xiaomi will have a service store in Singapore that’s only for repairs, just as it does in China. Sales will be conducted online or via partner telcos, but telcos may set their own prices.
No plans yet for US and Europe
Barra also explained why the startup chose Singapore as its first stop in Southeast Asia – indeed, as its international HQ – by saying that it was tempted by the small but very sophisticated market, which would allow them to iterate fast. Xiaomi can then use those lessons in neighboring markets like Malaysia, Indonesia, and Thailand.
Xiaomi is also looking closely at India, Barra says, where it’s actively looking for partners. Those four, mentioned specifically by the company at today’s event, look to be the next markets for launch.
However, Barra described the US and European markets as far too difficult at the moment. And so the disruptive Chinese phone-maker looks set to focus on Asia for growth of its brand.
Xiaomi isn’t actually the first Chinese smartphone brand to look to Asia for expansion, as Oppo, Meizu, and Coolpad have been doing the same thing with their Android-based phones in the past year.
Xiaomi Fan Meet Singapore – Hugo Barra Interview [Foliath R YouTube channel, June 5, 2014]
Xiaomi set to expand into 10 more countries this year, including India, Indonesia, and Brazil [Tech in Asia, April 23, 2014]
This afternoon Xiaomi, China’s fast-growing smartphone maker, held a meetup in Beijing to announce it would enter some new markets and also reveal a new product it had been teasing for the past several weeks.
At the event, Xiaomi founder Lei Jun confirmed that the company would expand internationally in full force. Specifically, he claimed that the company will enter no less than 10 countries this year:
- Asia: Malaysia, Indonesia, India, the Philippines, Thailand, Vietnam
- Europe: Russia, Turkey
- Latin America: Mexico, Brazil
Earlier this month Xiaomi’s Hugo Barra listed a few of these territories as upcoming destinations for the company.
Earlier this month Xiaomi’s Hugo Barra listed a few of these territories as upcoming destinations for the company. Earlier this week Xiaomi launched a new website at Mi.com, marking a symbol of its commitment to going global. “When it comes to ecommerce, a short domain name helps obtain higher user traffic because it is easy to remember,” said Xiaomi VP Li Wanqiang in a statement.
Interview with Xiaomi’s Bin Lin & Hugo Barra [LowyatTV (Malaysia) YouTube channel, June 6, 2014]
After the Malaysian launch of the Xiaomi Mi 3, we sat down with both Hugo Barra (VP, Xiaomi Global) and Xiaomi co-founder Bin Lin for a broad-ranging chat on Xiaomi, its unique approach and of course, accusations of being an “Apple clone”.
Here are some of the key highlights during the press event of #XiaomiMYLaunch in Kuala Lumpur, Malaysia.
-Malaysians Mi Fans can finally purchase Mi 3 starting from tomorrow (Onwww.mi.com/my)
–Redmi 1S will be arriving in Malaysia next month.
-We’re trying super hard to bring other products into Malaysia.
-We will be working with Celcom, Digi and Maxis. Stay tuned for announcements from them.
-We currently have 4 authorised service centres in Malaysia. (For more info http://bit.ly/XiaomiMYShippingFAQ)
Last but not least, we love all you Malaysian Mi Fans! If you have any comments, please share it with us. We’ll try our very best to assist you.
Make sure you log on to www.mi.com/my at 12PM tomorrow to buy your Mi 3/Mi Power Bank!
Xiaomi Mi3 launched in Malaysia, out of stock in 17min [MalaysianWireless, May 20, 2014]
Xiaomi Malaysia launched the Mi 3 in Malaysia. The Android device, price at RM889 [$280] went on sale at 12pm earlier today and sold out approximately 17 minutes later. Xiaomi Malaysia said some 4000 units of the Mi 3 and 5000 units of the Mi Power Bank (RM36) were sold.
Hi MIUIers, during Hugo’s visits to Indonesia, he said so many things about Xiaomi, and here’s one of it “Why You Must Have Xiaomi Devices?”
‘Meet & Greet with Hugo Barra’, Indonesia Cellular Show, Jakarta 5 Juni 2014
[Xiaomi] Hugo Barra – Marketing Strategy of Xiaomi in Indonesia [MIUI, June 8, 2014]
Hi MIUIers, this is another video of how will Xiaomi marketing their devices in Indonesia.
Yes…They will use ONLINE system like in the other country, but the different is, Xiaomi will cooperate with local ecommerce to sell the devices. And this happen because of the regulation in Indonesia.
Hugo Barra talks about Mi 3, Redmi 1s, Redmi Note, Mi Pad and Xiaomi Philippines Launch [Joey Abiog YouTube channel, June 9, 2014]
[From Joey Abiog’s related blogpost] Xiaomi will soon be launching Mi smartphones in the Philippines as well as opening its store, service centers and drop off locations in the country. We were lucky enough to meet Hugo Barra, Xiaomi Global VP and get first dibs on the Mi devices that will be launched in the country including the Mi 3 flagship smartphone, Redmi 1s midrange smartphone, Redmi Note octa core smartphone and the Tegra K1 powered Mi Pad. Check out the video
belowabove as Hugo Barra talks about Mi 3, Redmi 1s, Redmi Note, Mi Pad and Xiaomi Philippines Launch.
- Xiaomi is Coming – VP Hugo Barra Introduces Mi Devices in PH [TechnoStorm, June 12, 2013]
- Hugo Barra Greets TechPinas Community, Xiaomi Global VP Answers Questions About The Company’s Operations in the Philippines [TechPinas, June 11, 2014]
“First of all, we are focused on the South East Asia region to start because these are large markets with [very tech-oriented population], people that love specs and are very interested in phones with aggressive prices. Collectively speaking, when you look at Philippines along with Indonesia, Thailand [and other countries in the region], it’s a very significant market and it’s one that’s relatively close to us. The Philippines is following right after Malaysia, honestly, because it’s the one that’s gonna be ready first; It was the fastest process among the remaining countries [in terms of dealing with] customs, certifications, and imports […] It was actually very smooth that’s why we are here first,” Hugo told me [i.e. Mark Milan Macanas].
- Hugo Barra Xiaomi Global VP Visits the Philippines, Exclusive Interview [techpinas YouTube channel, June 10, 2014]
Xiaomi Global VP Hugo Barra explains why the company has decided to launch headquarters in the Philippines and how it intends to operate here.
How Big a Threat Is Xiaomi to Apple? [Bloomberg News YouTube channel, June 5, 2014]
Xiaomi’s Rise to Selling 100K Phones in 90 Seconds [Bloomberg News YouTube channel, June 5, 2014]
Meet the Billionaire ‘Steve Jobs of China’ Lei Jun [Bloomberg News YouTube channel, June 5, 2014]
Xiaomi answer to Apple [XIAOMI GLOBAL YouTube channel, May 31, 2014]
[Xiaomi] Xiaomi’s Phones Have Conquered China. Now It’s Aiming for the Rest of the World! [MIUI, June 5, 2014]
On May 15, behind the curving, imperial facade of the China National Convention Center in Beijing, a veteran technology executive named Lei Jun walks onstage before a thousand raucous fans and members of the media. It’s a familiar scene everywhere now, and like many technology chiefs, Lei peppers his talk by ticking off some of the recent successes enjoyed by his company, the mobile device maker Xiaomi. Sales have been higher than expected; more than 50 million people use the company’s MIUI operating system. Then he gets to the new products, which today are a smart TV that can be controlled with an app and an Android-powered tablet computer, called MiPad, that comes in five colors and is priced to undercut the iPad mini. “I hope through our endeavor we can make Apple (AAPL) feel some pressure,” Lei says.
The crowd reacts to each product revelation as if it’s a World Cup goal. The hardware is indeed slick—the TV has the latest high-def specs, and the tablets are the first devices to use the newest processor from chipmaker Nvidia (NVDA). But Lei is delivering another, more potent message. He’s effectively giving an hourlong demonstration of an historic moment: China, for the first time, has its own technology brand that consumers truly lust after.
Following the event, the fans mill around in the Beijing smog, taking selfies with their MiPhones, waving Xiaomi signs, trading impressions of the new gadgets. Some made 15-hour trips to be here. Zhi Yuan, 28, who took a seven-hour train ride from Shandong province, proudly shows off his Xiaomi phone, the economical RedMi model. He likes it because it’s easy to use. Lei, he says, “can understand our wishes. He knows what Xiaomi fans want.”
Xiaomi (pronounced she-yow-mee) is one of the fastest-growing tech companies in the world. It’s the sixth-largest handset maker on earth and No. 3 in China, behind Samsung Electronics and Lenovo Group, according to research firm Canalys. Xiaomi’s recent growth is impressive, and its potential is even greater. In 2013, the company says, it sold 18.7 million smartphones almost entirely from its own website, bringing in $5 billion in revenue. Earlier this year, Lei set an internal goal of selling 40 million smartphones in 2014, then raised it to 60 million. In a financing round last August, venture capitalists gave Xiaomi a $10 billion valuation, about on par with 30-year-old PC maker Lenovo and Silicon Valley darlings Dropbox and Airbnb. At the same time, Xiaomi has branched out from smartphones to tablets, the large-screen HDTVs, a set-top box and home router, phone cases, and portable chargers, as well as a $16 white plush toy bunny—Mitoo, the company mascot, who wears a red-starred Chinese army hat.
While the phones and tablets have obvious echoes of better-known products from Apple and Samsung, they’re not clones. Xiaomi’s Mi3 smartphone, its flagship, is appropriately light and thin (8.1 mm), with nicely beveled curves. A color-popping display from LG and a high-performance Qualcomm (QCOM) processor give buyers the same components they’d find in other top-of-the-line phones. The device runs MIUI, Xiaomi’s own version of the Android operating system. Regular software updates, which come at the end of each week, often incorporate ideas from users. One popular feature, originally suggested on a Xiaomi online forum, activates the flashlight and shuts down the battery-hogging display when a Mi3 owner holds down the power button for five seconds. “Typically, Chinese companies have been relegated to copycat status,” says Chetan Sharma, a strategic consultant who advises businesses on mobile. “Lei Jun aspires to build a Chinese brand that stands up to the legends of the industry.”
Xiaomi’s real invention is its business model. It sells online, never in stores, and avoids conventional advertising, devoting only about 1 percent of its revenue to marketing. (By comparison, Samsung earmarks 5.4 percent.) Instead, the company relies on China’s social networks, Weibo and WeChat, and the free press Lei gets as a national tech hero. The money Xiaomi saves on marketing lets it buy top-notch components while keeping retail prices down. The Mi3 costs 1,699 yuan, or $270; the iPhone in China starts at more than twice that. A Mi3, or any Xiaomi phone, is a great deal if you’re lucky enough to snag one—the latest models routinely sell out. Xiaomi sells handsets in batches, usually of around 100,000. The first Mi3 release, the company trumpeted, was bought up in only 86 seconds. It’s the technology equivalent of Air Jordans.
Lei’s newest goal is to take Xiaomi beyond China and into Brazil, Mexico, Russia, Turkey, India, and five countries in Southeast Asia. “The creative economy here continues to rise, entrepreneurship is surging, and our innovation abilities are growing,” Lei said in an e-mail translated from Chinese, since he does not speak or write in English. “We’re the world’s largest consumer market. After several decades of effort, this is the trend. Chinese technology companies are coming to the rest of the world.”
Lei was born in 1969 to what he calls an ordinary family in Xiantao, a midsize city in Hubei province. Always good at math, he entered the computer science department of nearby Wuhan University on a scholarship in 1987. In the library his freshman year, he discovered a Chinese translation of Fire in the Valley: The Making of the Personal Computer, the seminal history of the U.S. tech industry and the early careers of Bill Gates and Steve Jobs. The book inspired Lei, who got his degree in two years and joined Kingsoft, then a small, Beijing-based purveyor of office-productivity software that was clearly imitating Microsoft (MSFT).
Chinese migrants to Beijing, it’s commonly said, work harder than city natives to prove themselves, and Lei was no exception, putting in round-the-clock hours. After five years he was named Kingsoft’s chief executive officer and ran the company alongside its founder. Newspapers in the late 1990s dubbed him the láomó, or “model worker,” of Zhongguancun, Beijing’s emerging technology district.
It wasn’t an easy ride. For much of its early life, the embattled Kingsoft was staving off bankruptcy. Piracy of its products was rampant, and its word processing software, WPS Office, went head-to-head with Microsoft Word. Over the course of a decade, Lei tried to find safer ground, steering Kingsoft into video games and security software and spinning off an e-commerce company, Joyo.com, which was acquired by Amazon.com (AMZN) in 2004, though for a relatively paltry $70 million.
Lei finally took Kingsoft public in 2007, raising $99 million on the Hong Kong Stock Exchange largely on the strength of its online gaming revenue. Its market capitalization was a meager $400 million. He resigned from the company two months later.
Local news accounts cited health issues as the reason for Lei’s departure. Friends say he was merely fed up. Younger entrepreneurs, such as Jack Ma at e-commerce conglomerate Alibaba Group, Pony Ma at the entertainment company Tencent Holdings, and Robin Li at local search leader Baidu (BIDU), had built vastly larger Internet empires. They were the true stars of the Chinese technology scene. “[Lei] was financially secure, but he didn’t feel reputationally secure,” says Robin Chan, an angel investor who backed Xiaomi. “He wasn’t being considered in the same breath as Jack Ma and Pony Ma, which is where he is now. It drove him.”
After Kingsoft, Lei started a personal venture capital fund, structuring his investments around mobile, social networking, and e-commerce companies. In 2007 he backed Vancl, an online apparel and household goods retailer. The company almost folded in 2011 after loading its warehouses with products such as handbags and brooms that didn’t sell. “It was a very important lesson for Lei Jun to not get trapped by inventory,” says Hans Tung, a venture capitalist who invested in both Vancl and Xiaomi.
In the fall of 2009, Lei started meeting with Lin Bin, a local Google (GOOG)executive with notions of founding a startup. Lin was in charge of Google’s mobile efforts in China, overseeing about 50 engineers. That fall, the pair met in the lobbies of hotels across Beijing, first to discuss Google’s relationship with a mobile browser company called UCWeb, which Lei had invested in, and then to discuss Lin’s entrepreneurial ambitions.
Lei was about to turn 40 and was infatuated with the dawning smartphone craze. He carried two dozen phones in his backpack, which he meticulously studied, as well as an Amazon Kindle that he had dismantled to understand how it worked. He talked obsessively about the software that ran on smartphones and how it could be improved for China’s massive population of mobile phone users, which was about to surpass 1 billion.
The pair would meet at night and, though both had families with young children, talk well into the morning. They were natural friends, both driven and deeply technical.
Lin eventually figured out there was something else going on during these midnight meetups. “I suddenly realized he wanted to do the startup with me,” he says. “It didn’t make any sense. I checked the guy’s fortune. He was wealthy enough to retire 10 times for 10 lives, he was so successful at investing. And many [of his investments] were on the path to an IPO, which would make him a hundred times richer.”
“Chinese technology companies are coming to the rest of the world”
In early 2010, Google declared it was reorganizing its operations in China in the face of mounting censorship demands by the Chinese government. It was the nudge Lin needed. He told Lei he was ready to leave Google and start a company together. Lei wanted to create not just mobile software tailored to the Chinese market, but actual smartphones, too. He also wanted to sell the phones exclusively online, so they could save on the 20 percent to 25 percent cut paid to retailers, and deliver high-quality phones at prices affordable to the Chinese masses, who on average earned a little more than $2,000 a year.
The partners set up shop in a small office near the Third Ring Road in the north part of Beijing. Lei would be CEO and product chief; Lin, president in charge of daily operations. One of their first tasks was finding a name for the venture. Their first choice was Redstar, after the communist symbol, which was sure to inspire patriotic fervor in Chinese customers. But the trademark was taken. Someone then suggested the word Mi, or rice. The romanized spelling was fortuitously short for “mobile Internet” and, less auspiciously, for “mission impossible.” They considered using the Chinese words for black rice and big rice, before settling on a more humble alternative: small rice, or Xiaomi.
Investors were skeptical that a new Chinese brand could make a dent in the crowded smartphone market. “People thought they were crazy,” says Richard Liu, managing director in Shanghai for Morningside Ventures. “Everyone knew it would take a huge amount of money to enter the phone business, because the competition is so strong.” One prospect said, “The only way this could work is if Nokia (NOK)and Motorola went out of business and there was a hole in the market,” recalls Chan, the angel investor. That proclamation, absurd at the time, wasn’t too far off the mark.
Lei (fourth from left) and Lin (far right) with Xiaomi’s other founders in 2013
Liu, who’d backed UCWeb, first heard Lei’s pitch over the phone, in a call that lasted from 9 at night to 9 in the morning. Liu recalls that Lei described a smartphone company that moved with the speed of an Internet startup, listening and responding to users, selling hardware at or near cost, and earning a profit on accessories and Internet services. Liu ended up supplying half of the initial $10 million in capital. The VC arm of Qualcomm kicked in a minority investment.
Lei and Lin then set about assembling an uncommonly large founding team, with accomplished high-tech veterans who could independently manage the interlocking parts of the company, including hardware, software, design, and manufacturing. To lure senior Chinese executives away from other technology companies, they awarded them the status of co-founder and the stock that comes with it. (There are now eight Xiaomi founders; both Lei and Lin forgo a salary.) Hong Feng, a member of Lin’s team at Google, joined to run the MIUI group. In his first interview with him, Hong recalls, Lei spent an hour talking about how he might redesign the alarm clock on the smartphone because users don’t really need to see every minute (few set their alarm for 7:37 a.m.). That feature hasn’t actually launched. “There are many things we talked about that we haven’t gotten around to actually doing yet,” Hong says.
Xiaomi produced MIUI first, making it available free online in mid-2010 as a software package that technically proficient owners of Android phones could install over their phone’s default operating system. The software, downloaded half a million times in the first few months, was lauded by Android enthusiasts for its user-friendly, common-sense features, such as an easy way to record phone calls and send text messages simultaneously to groups of friends.
The company forged a hard-driving office culture. The founders agreed to work from 10 in the morning to 10 at night—10 to 10, they called it—six days a week. They also set a goal of pushing out a new version of their software at the end of each week. Xiaomi still does this, making MIUI updates available to a core group of beta testers who work for free to try the preliminary software and hunt for bugs.
Lei and Lin planned to wait a year before starting work on their first phone. But the founders were unhappy with MIUI’s performance on other companies’ hardware. Xiaomi also unexpectedly snagged a new co-founder, Zhou Guangping, or “Dr. Zhou,” who in 2005 had been responsible for producing Motorola’s popular Ming phones in China.
Lei, Lin, and Zhou canvassed suppliers, offering to pay cash upfront for components such as batteries and camera modules. They visited screenmaker Sharp in Tokyo in spring 2011 and contracted with Taiwanese manufacturer Inventec to assemble the phones.
The Mi1 was announced in August 2011 to a packed crowd of 2,000 MIUI fans and press. Lei wore a black shirt and jeans, intentionally provoking comparisons to you-know-who. Part of the Mi1’s buzzy appeal was that it was packed with the newest components, such as the latest dual-core chip from Qualcomm. It was a huge gamble—“confidence from nowhere,” as Lin puts it. The phone also had a tantalizingly low price—1,999 yuan, or about $300 at the time, a third of the price of an imported iPhone 4.
Over the next six months, Xiaomi sold out three separate batches of the Mi1, each a few hours after they went on sale. The company says it wasn’t deliberately constraining supply to stimulate demand. “There’s a saying here: Don’t be greedy. Greed can kill a hardware company,” says another vice president and co-founder, Huang Jiangji.
There were plenty of glitches after the Mi1 went on sale. Buyers complained it took several weeks to receive phones. Others grumbled about shoddy customer service, forcing Xiaomi to hire more phone reps and open a network of small repair shops around the country. But the device kept selling, and since the cost of components fell while the price stayed the same, the phone eventually netted the company a 15 percent profit margin.
Xiaomi originally estimated it might move 300,000 Mi1s. It sold more than 7 million. A year later it introduced the Mi2, which was the first phone on the market to feature Qualcomm’s newest Snapdragon processor. Xiaomi would sell more than 15 million units.
Xiaomi’s 5,200 employees are jammed into two crowded office buildings near the Fifth Ring Road, in a former wool-manufacturing district in the north part of Beijing. A stray mutt, adopted by employees and named Prosperous Wealth, is tied up in one lobby. Behind Prosperous Wealth, rows of twentysomethings sit in cubicles, handling customer service calls. Many wear orange T-shirts featuring Mitoo, the communist bunny.
“There’s a saying here: Don’t be greedy. Greed can kill a hardware company”
In March, Lei announced the purchase of land for a Xiaomi office building in Zhongguancun, where he was once hailed as the model worker. The office park will provide a home not only for Xiaomi but also Kingsoft; Lei returned to the software company as chairman in 2011 after its fortunes declined even further. The office park will take several years to be completed. Another thing that won’t happen soon is a Xiaomi IPO. “It’s only a four-year-old company,” Lei said via e-mail. “We have to focus on how to provide better products and services. Xiaomi has no plans to go public within the next five years.”
The pace at Xiaomi has slowed somewhat since the early days, though employees continue to pull 10-to-10 schedules before major product launches. “But we are still happy every day,” says Joy Han, a Xiaomi spokeswoman.
The hardest worker, employees are fond of pointing out, remains Lei. Lin estimates that his partner easily works 100 hours a week. Huang Jiangji, who oversees the company’s new $110 home media server, has a four-hour morning meeting every Saturday with the boss to go over product plans. The server, if all goes according to strategy, will allow users to easily control the coming wave of new devices, such as smart thermostats and appliances—many of which Xiaomi no doubt wants to make itself.
In an end-of-the-year e-mail, Lei implored employees to work harder to meet the challenge laid down by Chinese rivals Huawei Technology and Lenovo, which have larger market shares and are now targeting Xiaomi’s prices and customers. “This means that we will face a more severe test,” Lei wrote. “We are a pioneer in driving change, but whether or not a pioneer can become a true leader in the industry depends on our future efforts.”
On the 11th floor in the main building, in a corner office, is the realm of Hugo Barra, the Brazilian-born Google executive who made news by joining Xiaomi in 2013 to lead its overseas expansion. As he talks, Barra paces his spare office, which overlooks the old tenements that once housed the workers of the demolished wool factories. Barra’s shelves are stocked with Mitoo dolls and other knickknacks. Evidence of his five-year tenure at Google hangs on the walls, including a framed Pac-Man doodle that once appeared on the search engine’s home page.
Barra is naturally bullish about the company’s prospects abroad, and one new weapon is the $130 RedMi smartphone, which Xiaomi introduced last year alongside the pricier Mi3. The phones look alike, but the RedMi sports an inexpensive processor from Taiwan’s MediaTek. Barra even mulls the prospect of a $50 smartphone that might one day upend the economics of mobile. “I don’t think it’s possible today, with the quality of software and hardware that we would expect,” he says, “but I expect that could change over time.”
Xiaomi has to show it can use Western social media tools such as Twitter (TWTR)as well as it has exploited Weibo and WeChat. It must extend its supply chain across oceans and adjust its business model to countries where carriers sell handsets and customers aren’t accustomed to buying phones online. It must also overcome the association that Chinese brands have with piracy and counterfeiting. And Xiaomi will have to learn to do with less free, worshipful publicity. “Lei Jun is a relative nobody outside China, so leveraging his fame may be a little bit more difficult to do,” says Michael Clendenin, managing director of China’s RedTech Advisors. “Guerrilla marketing won’t be as easy.”
Perhaps Lei can use scarcity to his advantage yet again—making Xiaomi phones as rare and coveted in foreign markets as they are back in Beijing. Outside the convention center, the crowd of Xiaomi fans finally begins to thin out. Ma Yun Yan, 24, has dyed red hair, a pink baseball cap, and a T-shirt that reads “Don’t trust anyone.” She took a three-hour flight from Nanning to attend the event and is considering a MiPad with a yellow plastic back, because “yellow is bright and young.” Nearby, Zhao Zhe, 29, says he’s a big fan of MIUI but complains the MiPad is “not cheap enough” and says the experience of trying to buy a Xiaomi gadget online is mafan—a lot of trouble.
The crowd may be hoping for a final appearance from Lei, but they leave disappointed. He is somewhere else, though he continues to post all afternoon and evening to his 8.6 million followers on Weibo. “We’ll definitely fully push forward on Android tablets,” he writes to one fan concerned about the MiPad’s competitiveness. “We have great determination.”