In China's vast smartphone market, the tortoise has caught up to the hare.
Hot Chinese startup Xiaomi Corp. lost the top spot in the world's No. 1 smartphone market to technology stalwart Huawei Technologies Co. in the third quarter and posted its first year-over-year decline in phone shipments, according to a new survey.
The shift comes as smartphone sales stall in China and as established tech companies and new upstarts alike pressure Xiaomi with many feature-filled phones at low prices.
The rival phones are drawing Chinese phone buyers like Wang Weixin, who went on a search recently for a new smartphone after he accidentally dropped his old Samsung SSNHZ 0.00 % into a boiling pot of soup. He said that although he considered Xiaomi, he went with a Huawei Honor 7 because it was a good bargain and because of the company's reputation.
"To be honest, regular folk don't know that much about specs," he said. "But Huawei phones have a good name among my friends, and I know it's an international brand."
Closely held Xiaomi's phone shipments fell 8% in the third quarter while Huawei's jumped 81%, according to research firm Canalys on Thursday. The firm didn't disclose specifics of its market-share data. In the second quarter, Xiaomi had a 15.9% share of the market, while Huawei had a 15.7% share, Canalys said.
The figures call into question Xiaomi's goal of selling 80 million to 100 million smartphones world-wide this year. Xiaomi says it sold 34.7 million smartphones in the first half of the year and has said the traditional fourth-quarter sales boom should help it reach its goal.
Xiaomi said its sales decline was due to product transition and that it would rebound. It cited the mid-August release of a new version of its budget Redmi phone, the Redmi Note 2, and the late September release of its new Mi 4 C.
"The China market is still big enough," Xiaomi public relations director Tony Wei wrote Thursday on Chinese social-media website Weibo. "Xiaomi's focus is user experience and product innovation, and not just specifically seeking flashy numbers and the top market seat."
It has also cited international expansion. Xiaomi has sold three million phones in India since it entered the market in July 2014, Xiaomi President Bin Lin said at the WSJD Live global technology conference in the U.S. this week.
Over the past few years, Xiaomi has thrown the country's traditional electronics makers into disarray. The company's buzzy online sales and rock concert-like product launches netted the company a $46 billion valuation, making it China's most valuable startup.
Weaker sales in China could make it harder for Xiaomi to justify its high price tag to investors. Until Uber Technologies Inc.'s fundraising in July, which valued the U.S. ride-hailing company at more than $50 billion, Xiaomi was the world's most valuable tech startup.
China's established tech giants have borrowed some tricks from Xiaomi and fought back. New handset models and a barrage of advertising helped Huawei surge past Xiaomi, analysts said. Xiaomi also lacks the massive engineering budget and established sales channels of more mature rivals like Huawei. Huawei said its total research-and-development spending stood at $6.6 billion last year. Xiaomi hasn't disclosed its R&D spending.
Huawei, one of the world's largest suppliers of networking gear used by telecommunications carriers, has been expanding its smartphone business over the past several years. In the second quarter, Huawei was the world's third-largest smartphone vendor behind Samsung Electronics Co. and Apple Inc., AAPL 1.01 % according to research firms. Roughly half of Huawei's smartphone sales are in overseas markets such as Europe, the Middle East and Africa.
Changes in China's smartphone market are working in favor of Huawei, which has been moving into higher price points, said Canalys analyst Nicole Peng.
Canalys said China's second-quarter smartphone shipments fell 2.7% from a year earlier to 105.6 million gadgets. Most Chinese consumers who can comfortably afford smartphones have already bought them, so existing users are looking to upgrade. Shipments of smartphones priced below $200 have been on the decline in China, falling 28% in the second quarter, while shipments of midrange phones costing between $200 and $500 rose 22% in the second quarter, according to Canalys.
The research firm said Huawei's average smartphone sales price in the second quarter was $282 in China, versus $149 for Xiaomi.
Xiaomi has sought this year to sell to more overseas markets and expand to other product categories as the smartphone fight turned bloodier in its home market. Kitty Fok, head of global research firm IDC's China group, said despite Xiaomi's growth slowdown, she doesn't expect the startup to flame out.
"Xiaomi has been expanding quite well in overseas markets," she said. "They also still have an advantage in volume, which will help them negotiate prices with component suppliers. That is a key advantage."
Write to Juro Osawa at juro.osawa@wsj.com and Eva Dou at eva.dou@wsj.com
Source: Xiaomi Loses Its Top Spot in China to Huawei
No comments:
Post a Comment