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August 05, 2014

Xiaomi's Systematic Takeover of the Android Smartphone Market

The business world is full of companies whose myopia didn't allow them to see their competitors while they were perched on the very high pedestal they built once they became market leaders. Two companies that come to mind are BlackBerry and Sony, who were on top and seemingly untouchable. At their pinnacle, BlackBerry was trading at $230 in 2007 and Sony was at $149.72 in 2000; fast-forward to 2014 and their shares are at $9.15 and $18.30 respectively. Unlike the past where a company can sneak up on you and threaten your market share, today you can follow the progress of your potential competitor from its nascent stage until it gets a chainsaw and cuts you down from that pedestal. Xiaomi is walking around with a chainsaw and the market leaders seem to have missed their appointment with their optometrist.

The first company to have woken up to the fact that it is no longer at the top of the largest market in the world, China, was Samsung. Xiaomi has now passed Samsung as the top phone maker in China, a move that has also made it the fifth largest smartphone maker in the world.

At the rate it is going Xiaomi is going to completely dominate the Chinese market, which has encouraged it to go after other markets in Asia including Singapore, Malaysia, Philippines and, India, a market everyone seems to have a hard time cracking, but Xiaomi looks to do what everyone has failed to achieve.

By now you are probably asking yourself so what if another Chinese company is making third rate smartphones no one really wants. The problem with that assumption is Xiaomi is making phones virtually every reviewer seems to like. The final iteration of its M line phone, the M4, is a well-made device with many features available on more expensive phones. Listing all of the hardware specs has Indian customers very excited about getting a phone with all of these features at less than half the price of the iPhone 5S.

The iPhone 5S has a 4.0 inch display, 1.3GHz processor , 1.2-megapixel front camera, 640x1136 pixels resolution, 1GB RAM, 16GB storage, 8-megapixel rear camera, and 1570mAh battery capacity.

The Xiaomi M4 has a5.00-inch display, 2.5GHz processor, 8-megapixel front camera, 1080x1920 pixels resolution, 3GB RAM, 16GB storage, 13-megapixel rear camera, and 3080mAh battery capacity.

The only complaints from the many of the reviews I read so far are, it looks like an iPhone and it doesn't have a micro-SD. While the comparisons to the iPhone will continue to rage on, Xiaomi is after a bigger fish, the Android market. There is no arguing Apple is popular, but globally it only has 12 percent of the market compared to Android's 85 percent. To put that in perspective, Android phones shipped 249.6 million units in Q2 2014, to Apples 35.2 million.

So worrying what Apple is thinking is the last thing on the mind of Lei Jun, Xiomi's CEO. Gradually taking over the Android market in the countries it is starting to sell its phones is going to catapult Xiaomi into the clear leader in this platform, which is much more valuable than the iOS.

Edited by Adam Brandt

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