China’s Xiaomi has fired another round in its battle with Apple in the smartphone market, sparking a fresh debate over the prospects of the four-year-old upstart in the fast-saturating business.
At a glitzy event in Beijing Tuesday, Xiaomi — which has been described by some observers as the “Apple of China” — unveiled its latest flagship handset that will take on the iPhone.
The Mi4 phone, Xiaomi’s first 4G device, is touted as a smarter alternative to Apple’s more expensive offerings, specifically targeting the iPhone 6 that is expected to debut this fall.
Taking the stage, Xiaomi’s founder Lei Jun extolled the craftsmanship and design of his firm’s new 5-inch-screen handset and said the product “is really better than the iPhone”.
Now, it is mere marketing hype or does he actually think that Xiaomi can pose a serious challenge to the global titan?
Apple and Xiaomi have been competing fiercely in the China smartphone market in the last couple of years. While Apple still enjoyed mild growth in China sales in the past few quarters, market watchers say Xiaomi is running ahead of Apple in terms of unit sales in China.
So, is the sales volume the end-all for Xiaomi to claim new success?
Analysts say the answer is ‘no’. Higher sales do not mean that Xiaomi is posing a threat to Apple’s industry-leading position, they say, pointing out that Xiaomi is still living under the shadow of the US giant.
Almost all of Xiaomi’s products are inspired by Apple’s offerings, whether it is smartphones or tablets, they note.
Xiaomi is, indeed, riding on the success of being a copycat of Apple. Mi Pad, the Xiaomi tablet, comes in colorful cases, just like the iPhone 5c. Its hardware and software features and online sale business model are also very similar to that used by Apple.
In a market that is always stressing the importance of home-grown brands and national loyalty, Xiaomi has successfully won massive support from Chinese phone users.
In the first half of this year, the company’s revenue jumped 150 percent to 33 billion yuan, with total smartphone shipments surging 270 percent to 26 million units. The Beijing-based firm aims to sell 60 million phones in the full year, which is not a tough target.
A combination of low prices and high-end functions is always a winning formula in the China market, especially in the inner cities where people have limited budgets.
But Xiaomi could lose some of its die-hard fans to Apple as the Mi4 will compete directly in the market with the iPhone 6, which is rumored to come in 4.7-inch and 5.5-inch screen sizes.
Some mobile users who used iPhones in the past but switched to Android-based devices for bigger screens, could return to the Apple camp after the US giant launches its larger-screen phones.
Apple’s iOS system and its vast ecosystem of apps will serve as a big draw, posing a challenge for Xiaomi to retain its Mi phone fans.
Another reason for Mi fans to shift to Apple is the 4G compatibility. Xiaomi has just stepped into the 4G smartphone battlefield with its Mi4 device. It is lagging behind all major brands such as Apple, Samsung, HTC and LG, and even local rivals like ZTE, Huawei and Coolpad which have had their 4G smartphones on the market for almost a year.
Apple said its Greater China sales in its fiscal third quarter ended June 28 were up 28 percent from a year earlier at US$5.9 billion. That translates to around 37 billion yuan of sales in just three months, much bigger than what Xiaomi reaps.
Analysts believe the outperforming Greater China business was mainly due to iPhone sales, as Apple and China Mobile began a partnership in January this year. The US firm already had alliances with China’s other two telecom biggies — China Telecom and China Unicom — earlier. The tie-ups with the telecom operators help Apple secure the high end market segment.
There has been talk that the Chinese operators may reduce handset subsidies for foreign brand smartphones in a bid to support local manufacturers. Even if that happens, the impact on Apple could be minimal, given that many iPhone users in China purchase stand-alone handsets rather than join subscription plans.
With 4G being rolled by the mobile operators, Apple will be in a position to be the first to support all three operators’ 4G services, rather than Xiaomi.
So, what’s road ahead for the Chinese firm?
The company, despite its success so far in the mainland market, should focus on its own research and development in 4G and other advanced technologies, rather than just be a copycat and live in the shadow of Apple, analysts say.
– Contact us at [email protected]