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Xiaomi's growth bites into Apple's carrier expansion

Publication Date : 04-01-2014


Chinese smartphone maker Xiaomi Corp said it sold 18.7 million smartphones in 2013, up 160 per cent year-on-year, and that it officially expanded to Singapore on January 1, in a bid to enter the global market.

Lei Jun, founder and chief executive officer of Xiaomi, said in an internal e-mail that the company had sales of 31.6 billion yuan (US$5.18 billion) last year, an increase of 150 percent over the previous year. Lei said previously that he expects the company's revenue to hit 100 billion yuan by 2015.

"Xiaomi will see shipments of more than 40 million handsets in 2014," Lei wrote in the e-mail.

The Beijing-based company, which started as a smartphone manufacturer, now also makes televisions, set-top boxes and mobile phone peripherals.

Last year, Xiaomi, which has more than 4,000 employees, hired Google Inc's former vice-president Hugo Barra.

Lei also said in the e-mail that the company set up an office in Singapore on January 1, in an attempt to sell smartphones outside mainland China.

Liu Wei, Xiaomi's spokesman, told China Daily that Xiaomi selected Singapore as a regional hub to expand to Southeast Asian markets.

"We don't have any specific targets for those markets yet," Liu added.

Xiaomi's growth bites into Apple's carrier expansion

The rapid rise of Chinese smartphone vendors such as Xiaomi and Huawei Technologies Co Ltd has hampered Apple Inc's progress in China, though the US company signed a deal with China Mobile Ltd last month and is preparing to offer iPhone devices running on China Mobile's network starting on Jan 17.

Lydia Bi, an analyst with research firm Canalys, said that Apple's alliance with China Mobile will boost Apple's market share in China in the first half of 2014. However, in the long term, she does not expect the China Mobile version of the iPhone to substantially change the market landscape and Apple's share in China due to its high-end positioning.

"At the beginning, technology enthusiasts will pick up the new flagship device on China Mobile's newly launched 4G network," Bi said. "But this advantage may not last into the second half of 2014, as Samsung and other local competitors will bring out a large number of TD 4G devices priced at as low as 1,000 yuan per unit."

Initial market feedback has shown that demand for the iPhone 5S at China Mobile stores appears to be lower than for other carrier phone launches, according to Zhang Jun, an analyst with Wedge Partners, an independent equity analysis firm.

Pre-orders for China Mobile's iPhone 5S, with a contract, in the first two days were about 100,000 units, compared with China Unicom's 120,000 pre-orders and China Telecom's 150,000 pre-orders earlier in the year, Zhang wrote in a recent report, which was based on surveys of various sales platforms, Apple's regional distributors and telecom operators.

Pre-orders for China Mobile's unlocked iPhone 5S in the first two days from other channels, including home appliance chains, Apple's authorized stores and e-commerce websites, reached about 150,000 units, compared with 400,000 to 500,000 units for pre-orders for China Unicom and China Telecom when their iPhone 5S was launched in China in September, Zhang said.

"China Mobile may regard the iPhone 5S as an interim 4G product and is not likely to promote the model aggressively in the Chinese market," said Sun Kai, a senior analyst with German-based research firm GfK Group.

According to Apple's China website, the unsubsidized retail price of a 16-gigabyte iPhone 5S is 5,288 yuan, while an iPhone 5C with the same storage capacity costs 4,488 yuan. Those prices are some of the highest around the world and exceed the average monthly salary in China.

"As most of the iPhone enthusiasts, the majority of whom live in big cities, have already picked up their iPhones before China Mobile's official launch, the high prices will limit new additions to the iPhone's user base in China," Bi at Canalys said.


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