Xiaomi from China's Apple to Nokia ? Xiaomi sees sharp fall in Q3, 2015: Counterpoint

Few companies have seen growth like Xiaomi. The Chinese company, only five-years old, became the world's third-largest smartphone vendor within just three years of entering the market. The company managed to dethrone Samsung and become China's top-selling smartphone brand last year. It's single product focus - coupled with a style of presentation that can only be called 'inspired' - led many people to refer to Xiaomi as China's Apple. Although the presentation style hasn't changed much, the company's CEO has been keen to downplay the Apple comparisons. Today, the company seems to be evolving from one that launched a single smartphone at a time, to a clearinghouse for all kinds of products. But is this the right direction for the company?

To understand this, we need to look at Xiaomi's smartphone business. At the end of 2014, Xiaomi registered a massive 336 percent year-on-year increase in its smartphone sales, according to Gartner. This further continued through the first half of 2015 as Xiaomi reported that it sold 34.7 million smartphones in the first six months of 2015.

The Chinese company, which was in its initial days pegged as maker of affordable Android alternatives to Apple's iPhones, also received valuation estimated to have reached $45 billion (roughly Rs. 2,84,454 crores) and raised $1.1 billion (roughly Rs. 6,999 crores) by end of 2014.

Micromax-backed YU sold more smartphones online than Xiaomi in Q3, 2015: Counterpoint

But to take on the likes of Xiaomi, Micromax launched the YU smartphone brand, back in December last year. In less than a year, Counterpoint analysts say that YU overtook Xiaomi in smartphones sold online in the third quarter of this year. 

This news comes days after Xiaomi was similarly leapfrogged by Huawei in its home market. In Q2, Xiaomi piped Apple to become the top smartphone vendor in China. But a quarter later Huawei has gone ahead for the first time.

In India, over 10 million smartphones were shipped in India in Q3, 2015 which marks a 20 percent rise year-on-year, and a 12 percent rise quarter-on-quarter. Xiaomi was not only overtaken by YU, but is also said to have seen a 46 percent decline in smartphone shipments during the quarter.

YU made its debut with the Yureka, and has since launched the Yuphoria, Yureka Plus and the affordable 4G-capable Yunique more recently. It is now gearing up to launch a flagship smartphone called Yutopia.

YU started out with an exclusive partnership with Amazon India, but has since also roped in Snapdeal to sell the Yunique.  Xiaomi too started out with an exclusive partnership with Flipkart, but has since branched out to other e-commerce sites like Snapdeal and Amazon India, and also has a small presence offline. Counterpoint’s observation not only highlights YU’s strong growth since its inception, but is also a worrying sign for Xiaomi.

Samsung continues to lead the Indian smartphone market with a 23.2 percent smartphone market share, followed by Micromax with a 17.7 percent share. Intex came in third with a 12 percent share, while Lenovo/Motorola came in fourth on the back of strong sales of the Lenovo K3 Note.
If we compare Apple and Xiaomi, we can see obvious differences in their approach. Apple has never been a budget player, which is one of the biggest differences between the two. The Cupertino-based company has its own army of Apple fans built over years across different markets and various launches including iPhones, iPads, iPod touch, Macbooks, iMacs, Apple TV, and, most recently, the Apple Watch.

But there are some similarities too - Xiaomi had built its reputation by launching one phone at a time, offering great value for the price. While it might have been offering a budget product, the design and build quality Xiaomi's phones offered was higher than what the existing brands were willing to offer. And, like Apple, Xiaomi offered a complete solution of hardware and software, since Google Play isn't a factor in China. Xiaomi's MIUI and Mi Store were as important as the hardware in its success story.

But while Xiaomi has been hugely successful in China the response in other countries has been less heartening for the firm. Some countries like India see the phone sell out in minutes, but if the total stocks are low, then this doesn't really help the company much.

In turn, the company seems to be taking a No-like approach now, and making something for everyone. The question is whether it can pull off being a jack-of-all-trades. It's a difficult tightrope, and one that few brands have managed as well as Samsung.

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