Xiaomi’s market share has been on the rise for a good long while now, but it could topple Apple inside the next 12 months?
Apple and Samsung have retained control of the phone space for the best part of the last five years. And in 2021, things are no different. Both Apple and Samsung are the top two phone companies
Apple’s growth, while no longer as explosive as it once was, is consistent and reliable, requiring less effort both in terms of hardware and ad spend when compared to Samsung who’s bottomline is derived from a plethora of phones.
What makes the top of the phone market so interesting, however, is the disparity between how the three top companies operate: Apple focuses on a singular line of phones, albeit broken up into four distinct models; Samsung makes an enormous range of phones, from the super expensive to the super affordable.
And Xiaomi, while more closely related to Samsung’s business model, is, again, also rather different – it competes aggressively on price. And it does this by running razer-thin profit margins on its phones – just 5%, whereas Apple’s profit margin on iPhone is around 35% to 40%.
According to Strategy Analytics, Samsung is the current #1 phone brand with the highest volume of shipments during Q1 2021 – it controls 23% of the market.
Apple has 17%, but its shipments have grown 44% year-on-year, and this is largely down to its recent successes in cracking China with its iPhone.
And next, we have Xiaomi with 15% of the market. Apple’s year-on-year growth is impressive but it is dwarfed by Xiaomi’s – it posted an 80% year on year growth.
This is a huge number, matched only by VIVO which posted 85% year on year growth and secured itself 11% of the market, as of Q1 2021.
The Phone Market Has Changed
LG is no longer making Android phones. Sony is no where to be seen in Strategy Analytics’ research. Neither is OnePlus, HTC, or Google. Or Huawei.
The entire market is dominated by Apple, Samsung, and this new breed of phone companies from China – Xiaomi, OPPO, and VIVO.
Xiaomi has been around the block a few times, whereas brands like VIVO and OPPO are both relatively new phone companies. But could these brands, most notably, Xiaomi overtake Apple inside the next 12-24 months?
It is entirely possible. And what is most impressive about the growth of Xiaomi, OPPO, and VIVO is that none of them have phones in the US.
You can buy Xiaomi phones in the USA, of course, via specialist retailers, but you will not get them via carriers like Verizon and AT&T.
So where’s the growth coming from? Emerging markets like India and Brazil, to name a couple of hotspots. Xiaomi is also very big in its native China. The company is also growing rapidly in the UK and Europe as well.
Xiaomi’s low-end phones – those under $200 – were responsible for over half of its total sales, according to IDC, and are therefore largely responsible for its continued and impressive growth.
Xiaomi is now getting into “flagships” too with the release of its Xiaomi Mi 11 and Xiaomi Mi 11 Ultra, although these phones, while popular, will continue to be a drop in the ocean (with respect to sales) when compared to its cheaper phones.
Add in the fact that we exist in very uncertain times, and it is easy to see why Xiaomi’s business model – cheap phones with great specs – is paying dividends for the company.
For this reason, it is no longer a question of when Xiaomi will overtake Apple with respect to overall shipments, it is a question of when.
