Xiaomi's smartphone shipments take a big hit in China
Once believed to be one of the strongest players in the smartphone market, Chinese maker Xiaomi now finds itself in a vulnerable position in its home market after its shipments dropped by nearly 40 percent in Q2 2016, according to a new report by IDC.
In the second quarter of the year, Xiaomi shipped just 10.5 million smartphones, 38.4 percent fewer units than in Q2 2015 when it moved 17.1 million devices. A year ago, it held the top spot in China, but now the company has to settle for fourth place, behind Huawei, Oppo and Vivo.
In the top five, Apple is the only other manufacturer to have shipped fewer smartphones year-over-year, with the Cupertino, Calif.-based company moving 8.6 million units in Q2 2016, down from 12.6 million smartphones a year prior. Its shipments decreased by 31.7 percent year-over-year.
The top looks quite interesting. Huawei posted a 15.2 percent growth, with its shipments rising to 19.1 million units from 16.6 million devices a year prior. The modest boost has allowed it to remain at the top, despite the fact that both Oppo and Vivo saw strong growth.
Oppo's shipments increased by 124.1 percent in Q2 2016 to 18 million units, up from eight million units in Q2 2015. Meanwhile, Vivo's shipments rose by 74.7 percent to 14.7 million devices, up from 8.4 million units.
IDC believes that Oppo and Vivo's rise comes down to a combination of a strong presence in retail shops in "Tier 3 to Tier 5" cities and sponsorships of major entertainment shows in Tier 1 and Tier 2 cities. Celebrity endorsements have also played a role in their growth.
"In the past, Xiaomi started the trend of selling its phones online and other vendors soon followed suit and created their own online brand. After vendors witnessed OPPO’s success with its R9, they also started riding on the trend of hiring celebrity endorsers to represent their brand and appeal more to the young crowd", explains IDC senior market analyst Xiaohan Tay. "Hiring celebrity endorsers may help increase numbers in the short-term, but this alone may not be sufficient to drive numbers in the long run. As there is very little differentiation across products to warrant significant brand loyalty, vendors must constantly think out of the box to get people hyped up about their products".
IDC says that China's smartphone market has reached the point of saturation, being driven primarily by buyers replacing existing devices. In total, 111.2 million smartphones were shipped in Q2 2016, just 4.6 percent more units than a year ago -- in Q2 2015, vendors shipped 106.3 million units.
Single-digit growth seems to be the norm these days in major smartphone markets, and the market as a whole is also going through a similar phase. IDC expects 1.5 billion handsets to be shipped in 2016, just 5.7 percent more devices than in 2015.