Price Dictates Growth of Smartphone Market
By Vittorio Hernandez | August 12, 2014 9:25 AM EST
The smartphone market is being shaken up as the tech giants' dominant positions are challenged by Chinese phonemakers that offer lower-cost handsets. With cheaper units that offer similar features to the pricier iPhone of Apple and Galaxy Android units of Samsung, companies like Lenovo and Xiaomi are grabbing a bigger share of the smartphone market.
Three models of China's Xiaomi Mi phones are pictured during their launch in New Delhi July 15, 2014. China's Xiaomi said it intends to invest heavily in India as the budget smartphone maker launched on Tuesday its flagship Mi phone and other products in the world's third largest smartphone market, currently dominated by Samsung Electronics Co Ltd.
Price tags now determine to a large extent the growth of the market. The latest report from market research firm International Data Corp said that smartphone shipment in Q2 rose by almost 25 per cent to 300 million units and Samsung remains the market leader. But its shipments had gone down to 74.3 million units from 77.3 million in Q2 2013, causing the contraction of its market share to 25.2 per cent from 32.3 per cent.
For the same period, the market share of Chinese tech giant Lenovo jumped to 5.4 per cent from 4.7 per cent as its shipment went up to 15.8 million from 11.4 million or a growth rate of 38.87 per cent.
IDC Research Manager Ramon Llamas said that most of the growth in the smartphone market is driven by emerging markets in Asia, South America and Middle East. In the first two markets, cheaper handsets are more popular than expensive units from name brands.
Another Chinese phonemaker with impressive growth rate is Xiaomi which grabbed 21 per cent of the Chinese smartphone market, next to Samsung's 23 per cent share and higher than Apple's 16 per cent share. For the first 6 months of 2014, Xiaomi sales reached $5.4 billion.
Experts believe that with Xiaomi's latest release, the Mi4, it could outsell Apple's forthcoming iPhone 6 in China. At the press launch of the Mi4, Xiaomi Chief Executive Lei Jun admitted the company is challenging the soon-to-be released iPhone 6.
The Mi4 retails for $320 or about 50 per cent the price tag of the iPhone 5S at $650.
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