News that Chinese smartphone maker Xiaomi continues to gain market share in the ever competitive space at the back of healthy profit margins continues to be a point of concern for the likes of Apple Inc. (NASDAQ:AAPL) and Samsung. During an interview on CNBC, IDC Research manager, Ramon Llamas, reiterated that Xiaomi was gaining traction having resorted to focusing on emerging markets and should not pose any threat to Apple on high end markets.
Apple Inc. (NASDAQ:AAPL) and Samsung have positioned their products to target high-end markets with high price tags that continue to be lucrative in terms of profit margins.
“For Xiaomi to grow and push against companies like Apple Inc. (NASDAQ:AAPL) and Samsung. They will have to create their own niche, and Samsung and Apple are playing that high end of the market very-very well,” said Mr. Llamas.
Xiaomi’s price competitive cheap handsets have remained successful in emerging markets where the company continues to gain market share at the expense of Apple Inc. (NASDAQ:AAPL). Low-end smartphones continue to grow at an impressive rate having accounted for a third of total volumes sold this year with a greater chunk of the sales being attributed to Xiaomi.
Llamas believes Xiaomi looks unlikely to pose any threat to Apple Inc. (NASDAQ:AAPL) as the company continues to focus on emerging markets where Nokia Corporation (ADR) (NYSE:NOK) and BlackBerry Ltd (NASDAQ:BBRY) have in the recent years shifted their attentions to, for growth. The fact that margins on low-end smartphones continues to be low means Apple may not consider changing its business model to target emerging markets, for growth.
“Any other vendor not named Samsung or Apple Inc. (NASDAQ:AAPL) should be very worried, and that includes all the other Chinese vendors like Huawei, Lenovo, ZTE, Alcatel Lucent SA (ADR) (NYSE:ALU) because they are all playing the same kind of games. These are companies that by themselves are in different stages of transition. So if they can’t play in that low-cost game to without a significant differentiator then they are going to be looking more from the sidelines than being in the field,” said Mr. Llamas.
A point of concern about Xiaomi has always been its ability to produce original products without having to copy the likes of Apple Inc. (NASDAQ:AAPL) and Samsung. Llamas argues that the company has evolved over the years and is now able to produce unique products justified by increased volumes sales.
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