Competition At The Low End
While Samsung remains the largest smartphone vendor, holding a global market share of about 30.2% during Q1 2014, its market share actually slipped by around 1% year-over-year, marking its first decline in nearly 4 years. [1] While the smartphone market is posed to grow further as it eats into the sales of feature phones (which accounted for roughly 40% of global shipments last year), competition is intensifying, particularly in emerging markets, where much of the growth is expected to come from. Manufacturers such as China’s Huawei and Lenovo, as well as upstarts such as Xiaomi that have introduced products with high-end specifications and low prices, have been finding favor among budget-conscious yet aspirational customers. For instance, Xiaomi’s MI-3 handset offers a full HD screen, Snapdragon processor and aluminum-magnesium alloy frame at a price of about RMB 1699 ($271). Xiaomi sells its phones at close to their cost price, supplementing its earnings through its application and media stores, which is in contrast with Samsung’s hardware-driven model.