Date
19 November 2019
Xiaomi CEO Lei Jun said demand for its 5G-enabled Mi 9 Pro has exceeded the company's expectations. Photo: Reuters
Xiaomi CEO Lei Jun said demand for its 5G-enabled Mi 9 Pro has exceeded the company's expectations. Photo: Reuters

Will Xiaomi regain its old glory in the 5G era?

Xiaomi Corp. has had a meteoric rise in the technology world.  After it released its first smartphone in 2011, the company rapidly gained market share and became China’s largest smartphone maker in 2014.

But competition has since intensified, and Xiaomi (01810.HK), though still very popular, found itself lagging behind more aggressive rivals such as Huawei Technologies, Vivo and Oppo in market share.

Banking on its high brand awareness in the domestic market, Xiaomi remains optimistic that it will be leading the field again, especially with the smartphone business entering the 5G era.

Speaking at the recent World Internet Conference in Wuzhen, Zhejiang province, Xiaomi co-founder, chairman and chief executive Lei Jun revealed that the company plans to launch more than 10 5G phones in 2020 to meet the strong market demand.

Xiaomi introduced the Mi 9 Pro, the company’s first 5G-enabled phone for the domestic market, in September. It became an instant hit among Chinese users.

Lei said demand for the phone, which is equipped with the latest Qualcomm Snapdragon processor and 5G chip, exceeded the company’s expectations and even led to supply chain issues.

Amid the strong market response, Xiaomi now plans to launch 5G models for the high, middle, and low-end price tiers next year.

“People in the industry fear that next year 4G models will not be sold,” Lei said. “Therefore, we expect operators to be able to accelerate their expansion of 5G-based stations.”

Xiaomi is among the first in the market to roll out 5G smartphones. Early this year, it launched a 5G version of the Mi Mix 3 in several European markets such as Switzerland and Germany. Its Mi 9 Pro is the first 5G smartphone to hit the home market.

Losing market share

It is too early to say whether the strong demand for its 5G phones would help Xiaomi win back market share from rivals. As of the second quarter this year, the company held 11.8 percent of the domestic smartphone market, down from 13.9 percent a year ago.

Xiaomi, which relies heavily on online sales, is having difficulties fending off aggressive forays by Oppo and Vivo in the offline market, particularly in China’s third to sixth-tier cities across China.

As part of its efforts to strengthen its product offerings, Xiaomi relaunched the Redmi into an independent brand. The idea is that Xiaomi will target high-end tech savvies with handsets that feature advanced technologies while Redmi will focus on the mass market.

With this two-brand strategy, Xiaomi hopes to protect its market share while enhancing its brand image and challenging Samsung, Huawei and Apple in the high-end arena.

The 5G race is the key battle for Xiaomi, which plans to return to the top three in the global market. The company hopes that its close ties with the US chipmaker Qualcomm will be a great help in its bid.

Xiaomi has been using Qualcomm’s latest chips in different product tiers over the years. With the new Snapdragon 885+ chip, the company will be in a strong position to fight rivals in the 5G arena.

With Qualcomm’s support, Xiaomi is not making an empty boast when it says it will introduce 10 or more 5G smartphones next year.

Affordable 5G phones

Market watchers are speculating that Redmi would launch its own 5G smartphone in the fourth quarter. That would be the first 5G smartphone targeting the mass market.

If Redmi prices it below 3,000 yuan (US$423.5), the device could be a real winner. Mobile operators would want such a product to attract existing users to upgrade to 5G services.

For Xiaomi, such a plan could help it move to the lead in the 5G race.

Chinese smartphone makers are also competing in overseas markets. Huawei has been the frontrunner with its P and Mate series. However, the virtual trade ban imposed by the United States under President Donald Trump is a major setback for the company.

Huawei can no longer use Google software for its devices, and many overseas users rely on Google Mobile Services on their Android smartphones.

Huawei’s lack of Google support would be a huge advantage for Xiaomi and other Chinese phone makers.

Right now, Xiaomi is witnessing remarkable progress in Europe, although it is a relatively new player in that market.  The company’s market share in the region hit 9.6 percent in the second quarter, up from 6.5 percent the year prior, making it one of the fastest-growing phone brands there.

And with its forthcoming lineup of 5G handsets, which will all have access to Google Mobile Services, Xiaomi is in a good position to challenge Huawei – as well as the other brands – and boost its share in the overseas market.

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CG

EJ Insight writer