Xiaomi becomes world's No. 3 smartphone vendor by market share

Xiaomi became the world's third-largest smartphone maker by market share for the first time during the third quarter, although it stands to immediately lose that status after Chinese rival Lenovo completed its acquisition of Motorola Mobility.

Strategy Analytics estimates that Xiaomi shipped 18 million smartphones during the third quarter, equivalent to a market share of 5.6 per cent based on total smartphone shipments of 320 million.

Neil Mawston, executive director at Strategy Analytics, said Xiaomi's success is due to the popularity of its Android smartphones in its domestic Chinese market. "Xiaomi's next step is to target the international market in Asia and Europe, where it may face stronger headwinds of low brand awareness and technology-patent challenges," he cautioned.

However, in a separate blog post, Mawston noted that the newly merged Lenovo and Motorola would have displaced Xiaomi during the third quarter, with a combined market share of 8 per cent during the quarter (5 per cent for Lenovo and 3 per cent Motorola).

The Chinese vendor completed its acquisition of Motorola Mobility from Google on Thursday. Motorola will continue to be headquartered in the U.S. and its nearly 3,500 staff will be retained, Lenovo stated.

Yang Yuanqing, chairman and CEO of Lenovo, pledged to challenge Samsung and Apple's dominance of the smartphone market. The combined device maker "will give the market something it has needed: choice, competition and a new spark of innovation," he said.

Mawston isn't so sure. While he noted that the acquisition brings advantages including increased scale, deeper distribution channels and larger marketing and R&D budgets, he also pointed out that Lenovo's "rapid smartphone growth of recent years is now coming to an end, due to fierce competition from Xiaomi and others."

In addition, "Motorola continues to make hefty financial losses, due to a relatively large cost-base," Mawston said. Another potential downside to the deal is that "smartphone vendors usually take several years to integrate," Mawston added, citing the merger of Chinese vendor TCL with Alcatel's device unit, which "took around 5 years to stabilise".

Strategy Analytics' figures for third-quarter smartphone shipments show Samsung remained top of the tree despite shipments dropping from 88.4 million units in the third quarter of 2013 to 79.2 million in the recent quarter, which resulted in a drop in market share from 35 per cent in the third quarter of 2013 to 24.7 per cent in 2014.

Apple also lost market share--down from 13.4 per cent to 12.3 per cent--despite increasing shipments from 33.8 million units to 39.3 million in the recent quarter.

Strategy Analytics' top five is rounded out by LG Electronics (16.8 million units shipped for a 5.2 per cent market share), and Huawei (16.5 million units; 5.1 per cent share).

Meanwhile analyst company Counterpoint Research noted in its preliminary assessment of third-quarter smartphone shipmentsthat Chinese vendors are in the ascendancy. "Chinese brands have rose [sic] significantly on smartphone experience curve in terms of hardware design as well as software and UI integration," the company noted.

Counterpoint Research estimates that Samsung shipped 101.5 million smartphones in the third quarter, giving it a market share of 22.2 per cent. Microsoft Mobile ranks in second place on shipments of 49.8 million units (10.9 per cent share), and Apple third on 39.2 million units (8.6 per cent). Xiaomi is ranked in fifth place with shipments of 18 million units (3.9 per cent).

For more:
- see Strategy Analytics' Q3 smartphones figures
- view Strategy Analytics' merger blog
- see Lenovo's merger statement
- read this Counterpoint Research release

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