The next wave of smartphone growth will be driven almost wholly by emerging markets. In particular, China and India will see half a billion smartphones sold this year, with a majority of these sales going to new users.
But the big smartphone makers — namely Apple and Samsung — won’t be in nearly the same position to quickly dominate these markets, as they have elsewhere.
Instead, low-cost local smartphone manufacturers like Xiaomi and Micromax stand to take an increasing share of these markets, as they offer first-time smartphone users affordable handsets with features comparable to those produced by the leading brands.
Apple already knows just how competitive Xiaomi’s products really are.
Apple co-founder Steve Wozniak recently visited Xiaomi’s headquarters and declared, “They’re good enough to break the American market.”
In a new report from BI Intelligence, we create a category we’re calling the “Local 7,” made up of the top five Chinese smartphone manufacturers, and the top two in India. Combined, these seven manufacturers are now shipping about 65 million smartphones every quarter, more than Apple and coming close to drawing even with Samsung.
We explain why global consumer Internet and mobile companies will increasingly need to work with companies like Xiaomi and Micromax — not to mention China’s Lenovo, Huawei, ZTE, and Coolpad — if they don’t want to miss out on mobile’s next growth phase in emerging markets.
- The Indian and Chinese manufacturers run their own successful app stores, mobile operating systems, and mobile services. They also hold the keys to which apps are preloaded on their phones. When BlackBerry wanted to take its BBM messaging service for Android into India, it signed a deal with Micromax.
- Xiaomi sells four of the most popular Android phones in China.
- Xiaomi has used a four-point strategy in its three-year rise to produce four of the most popular phone models in China. We discuss all four aspects, including tight inventory management and crowdsourcing product development feedback.
- Xiaomi and Micromax are both expanding globally. Micromax is in Nepal, Bangladesh, and Sri Lanka. Xiaomi is in Singapore and has its eyes on Malaysia and Brazil. Huawei is already in the U.S. For example, it sells a 4G LTE handset on MetroPCS.
- Major local manufacturers now account for two-fifths of China’s smartphone market, and one-fourth of India’s. Xiaomi already sells four of the top 10 best-selling Android devices in China, and operates one of the top five app stores.
- Combined, the top five manufacturers in China and the top two in India are now shipping about 65 million smartphones globally every quarter, more than Apple, and coming close to drawing even with Samsung.
- The local manufacturers are not provincial outfits producing knock-offs. But their main competitive tool, for now, remains price. Local manufacturers in China and India match the features of more expensive devices and manage to produce comparable hardware at a fraction of the price. A Micromax handset comparable to Apple’s iPhone 5C costs less than one-fourth as much.
In full, the report:
- Discusses the innovative strategies and international ambitions of the seven key Chinese and Indian manufacturers
- Dives into local contexts in China and India and how these unique tech and Internet markets have shaped the new giants’ rise
- Analyses the key role played by these local manufacturers in supplying smartphones that meet the unique needs of local carriers and consumers
- Explains why Xiaomi is called the “Apple of China,” but why the “Amazon of China” might be a better explanation of how it runs its hardware business
- Describes India’s great potential as a smartphone and mobile software market and why it has lagged until now
- Includes all the data on the top local manufacturers in India and China and how they compare to Apple and Samsung in market share and other measures
- Discusses the rise of Lenovo to its current status as the world’s third-largest smartphone manufacturer
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