The erosion of Samsung Electronics Co.'s and Apple Inc.'s
dominance of the global smartphone market accelerated during the
third quarter, as Chinese makers of low-cost phones continued to
undercut the industry leaders, according to data from three
market-share trackers released Thursday.
Samsung, the world's largest smartphone maker by shipments, saw
its market share fall to 24.7% from 35% during the three months
ended Sept. 30, its steepest decline since it became the industry
leader in the third quarter of 2011, according to data provider
Strategy Analytics. Upstart Chinese phone maker Xiaomi Inc. rose to
third place with a 5.6% share, up from 2.1%, as its global handset
shipments more than tripled.
Apple remained No. 2, with a 12.3% share, but its market share
fell from 13.4% as supply problems held back the shipment of its
latest-model iPhones, which went on sale in mid-September.
Market-share data released by IDC and Counterpoint Research
Thursday showed similar results.
The latest data came after Samsung posted Thursday a sharply
lower third-quarter net profit as intensified competition from
Chinese smartphone makers hurt the South Korean technology giant's
mobile business.
Linda Sui of Strategy Analytics estimated that Xiaomi was the
fourth-most profitable handset maker in the third quarter, trailing
Apple, Samsung and LG Electronics Inc. Xiaomi's preference for
low-cost online distribution channels instead of bricks-and-mortar
shops helped its profitability, she said.
Xiaomi, which means "Little Rice" in Chinese, is known for its
marketing savvy. The Beijing-based smartphone maker, founded in
2010, has been growing quickly across Asia by selling low-cost
handsets that don't skimp on features, and has created a cultlike
fan base among early adopters of new gadgets.
The company has also used social media in growing its
popularity. Chairman Lei Jun, who has often been compared with
Apple's late founder Steve Jobs for his presentation style at
product launches, has more than 11 million followers on China's
Twitter-like platform, Sina Weibo.
Looking to expand its business overseas, Xiaomi last year hired
Hugo Barra, who was an executive at Google's Android business . The
company has expanded into Taiwan, Hong Kong, Singapore, Malaysia
and India.
During the second quarter, Xiaomi overtook Samsung as the top
smartphone maker in China, the world's largest smartphone market by
shipments, according to market research firm Canalys.
Xiaomi has been expanding into other markets outside China,
including Singapore, Malaysia, India and Indonesia and has been
borrowing money to fund the expansion.
But industry observers say that despite Xiaomi's popularity on
its home turf, it will face challenges getting consumers familiar
with its brand overseas, where it remains relatively unknown.
Lenovo Group Ltd. and Huawei Technologies Co., meanwhile, have
been expanding aggressively outside China. Lenovo's smartphone
sales have been growing fast in Southeast Asia and Eastern Europe,
while Huawei has been increasing its presence in the Middle East
and Africa as well as Latin America. In emerging markets, both
Huawei and Lenovo are challenging Samsung's dominance by selling
inexpensive models with competitive technological features.
IDC said Samsung's third-quarter market share dropped 8.7
percentage points to 23.8% as its shipments fell 8.2% from a year
earlier. Apple's market share fell to 12% from 12.9%, while Xiaomi
came in third with a market share of 5.3%, up from 2.1% a year
earlier. Lenovo ranked fourth with a market share of 5.2%, up from
4.7%, followed by LG's 5.1%.
Lenovo's market share is expected to rise after it completes the
acquisition of U.S. handset maker Motorola Mobility later this
year.
Counterpoint analyst Neil Shah said Samsung has been losing
market share at every price point: in the premium segment to Apple;
in the middle tier to Xiaomi, and Huawei; and in the bottom tier to
Lenovo and a number of local brands such as Micromax in India and
Mito in Indonesia.
Juro Osawa contributed to this article.
Write to Lorraine Luk at lorraine.luk@wsj.com
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