Xiaomi usurps Samsung in fast growing India

Xiaomi has overtaken Samsung as the top-selling smartphone brand in the lucrative Indian market, as total sales fell just short of 30 million devices for the last quarter.

According to data from Canalys, Xiaomi has been chasing down the Samsung lead for the last couple of quarters, though this year it tops the sales charts with 8.2 million shipments over the three months. Samsung should be a little disappointed, and surprised, with the results as it managed to increase sales 17% year-on-year to 7.3 million but slipped down the rankings.

“Xiaomi’s persistence has paid off,” said Ishan Dutt of Canalys. “Its results are commendable, given it entered the market just three years ago. Multiple factors have contributed to Xiaomi’s growth, but the key reason for its current success lies in the autonomy that it granted its Indian unit, letting it run the business locally. Localization in channel strategy, marketing and products has been evident in Xiaomi’s Indian operations.”

This is certainly a positive result for the business, not only beating one of the global superpowers of the smartphone world, but beating it in one of the world’s most lucrative market. According to the CIA’s World Factbook, India has the 12th fastest growing economy in the world, 6.8% per annum, it has one of the lowest median ages at 27.5 and a fast growing digital economy. Smartphone growth over the year might have been a bit slow at 6%, but the general economic factors of the country make it a very attractive proposition.

When you combine the CIA statistics with the low penetration of smartphones, estimated to be around 33%, a growing middle class, competing telcos who can’t give away data fast enough and a government which is shifting the economy more towards digital, this is a market which will be very attractive to smartphone manufacturers. Get a foot in early to secure a dominant position with the 1.324 billion population and it could be a game changer.

“Samsung’s loss comes from its inability to transform its low-cost product portfolio,” said Rushabh Doshi of Canalys. “It has been unable to win over cost-conscious consumers, losing market share in the sub-INR15,000 (US$240) segment to Xiaomi quarter after quarter. Despite its ability to offer better margins and funding to the offline channel, consumer demand for Samsung’s devices has been weak.

“But it has far superior R&D, and a better hold on the supply chain due to its strong components business. The power struggle between Xiaomi and Samsung will continue well into 2018, as Samsung revamps its low-cost portfolio and fights to take back the aspirational status it once held in minds of Indian consumers.”

This battle is far from over in India, but the news will also have wider implications for Xiaomi’s worldwide ambitions. The last three years has demonstrated to the Xiaomi management team the benefits of loosening the reigns and building a more localised market strategy, but will also prove Xiaomi can be a useful partner in other more lucrative markets.

Having a substantial presence in two of the world’s largest smartphone markets will offer confidence to the ecosystem that Xiaomi is a partner with a solid foundation, and the ability to adapt to new markets. Xiaomi has shown it can shake off the tag of only being a Chinese smartphone, now it will be interesting to see whether it is able to shake off the budget label as well.

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