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Xiaomi Gains and Samsung Loses in China

December 17, 2014 - Written By Cory McNutt

Something that Mark Twain once said, “The reports of my death have been greatly exaggerated,” can certainly apply to all of the doom and gloom talk about Samsung.  This kind of chatter is usually started by jealousy – companies cannot stand it when another company is doing well… everybody loves the underdog, and everybody goes after the top dog. Another important quote goes something like this, “With great power comes great responsibility,” and this ball falls into Samsung’s court… when you are on top, act like a leader and focus your power and finances responsibly.

In China, Samsung forgot about that somewhere along the line – they were producing phones right and left and China was eating them up. However, Samsung was so high on their throne that they never saw the Chinese upstarts, or they saw them and were too arrogant to believe that they posed any threat. Now this attitude is coming back to bite them in their wallet and everybody that has ever hated Samsung is coming out of the woodwork to predict their demise, especially in China.  Of course, the launch of their Galaxy S5 did not help matters as sales were off by about 40-percent.

Xiaomi is one of those homegrown Chinese manufacturers that build a superb, high-end smartphone and sells it at a mid-range price. Xiaomi has tripled their sales in the last year, out doing not only Samsung, but Apple as well – analysts at Gartner said that Xiaomi is now the number one selling smartphone in China. China had been Samsung’s biggest market, but declined 28.6-percent. The potential for sales in China and India are enormous and Xiaomi has their eyes set directly on those countries as they start to spread out around the globe.

Nobody comes close right now to Samsung as a smartphone maker – It sold 73 million last quarter compared to the less than 16 million that Xiaomi sold. If Xiaomi continues to see growth continue, they could eventually become the number one smartphone manufacturer in the world… but I think Samsung might have something to say about that.  If Samsung can continue to turn the corner with more metal, a sleeker design, keep innovating like the Note Edge and spend those marketing dollars, we might actually start to see some real growth next year, if not in China, then the rest of the world.