May 11, 2015 by ...
Xiaomi just suffered a massive ‘kick in the zipper’ from Apple. The Cupertino firm set its grill in Lei Jun’s backyard and yelled,‘Whose your daddy, son! Now bring me some steak to cook!’
Well, perhaps I let my emotions get away from me with that, but Apple just bopped Xiaomi in the chops. Selling phones at $800 to $1300 a pop, Apple’s profit on each handset was probably higher than Xiaomi phones selling price -$100 to $350. Yes, even with such a huge price gap, Apple still managed to outsell Xiaomi in China by one-percent. That’s gotta leave a mark…
China’s fickle cell phone market
Chinese are fickle. They like a product then dump it, with the exception of Apple. The only problem Apple has had, has been attacks by the communist party. Beijing prefers that people trust Huawei, who with strong government support was 3rd in marketshare. Beijing urged Chinese loyalists to scrap Apple and embrace the firm that a former Red Army Officer started. Beijing said Apple kit was insecure.
The people voted with their money and opted for Apple, thinking that their gear may be insecure, but it’s better to be spied on by Washington than ‘Xi Daddy’ ( the grown man wearing the ‘idiot’ scarf).
Chinese are fickle
Recall that Chinese are fickle and that different companies have garnered top spot in four of the past five quarters. That means Apple will have to fight to hold on to its ranking. The past quarter leaderboard was: Apple, then Xiaomi, followed by Huawei, Samsung and Lenovo.
Chinese market Shrinking
The Chinese market was good for 98 million handsets, which was a y-o-y loss of 4%. With a 90% smartphone penetration rate, China is in replacement mode. The fact that this was the first time such a drop was seen in the Chinese space proves my contention.
Bad news for Xiaomi
None of this is good news for Xiaomi. They mostly sell entry level phones with ‘good enough quality’ and sub-par service. As customers mature, their needs do as well. They can tolerate a lot of pain from their first phone, but not second.
Xiaomi knows this and is trying their best. They are going upscale in pricing and selling for one-half of what Apple does. They hope this move keeps customers from defecting. If Xiaomi could increase quality and customer service it just may work. My fear is that they have lost focus, however.
They now treat China like a faithful wife while that Indian concubine. Not long thereafter it will be a Brasilian beauty and in its wake a lot of pissed off ‘Why Mi? Fans’