Xiaomi Takes Up Samsung In Its Home Base, Changes The Rules Of The Game

Xiaomi Takes Up Samsung In Its Home Base, Changes The Rules Of The Game

After taking up Samsung (KSE:005930.KS) in the Chinese market and winning the game, Xiaomi is getting ready to enter the Korean market, according to a story in BusinessKorea.

That certainly changes the rule of the game in the smartphone market.

Once upon a time, the smartphone market was divided into two segments: the high-end segment where consumers look for more advanced devices that come at a high price tag; and the low-performance segment where consumers look for basic devices that come at a low price tag.

Apple AAPL +0.88% and Samsung dominated the upper market segment, while other Asian smartphone makers dominated the low end.

Now comes Xiaomi to break away from other Asian smartphone makers and offer high-performance smartphones at low prices. And that changes the rule of the game in the smartphone market in four ways.

First, it closes the gap between the upper and the lower segments of the smartphone market. Second, it helps Xiaomi gain market share, as already evidenced in China, where the company holds 18% market share. Third, it helps Xiaomi up the game, move from emerging markets to mature markets, and eventually attack Apple and Samsung in their home base.

And fourth, it is expected to fuel a price war, limiting the pricing power of both Samsung and Apple.

That certainly puts pressure on Apple and Samsung to innovate their way out of the price war and maintain their hefty operating margins.

In the meantime, it could be bad news for their complacent stockholders.

Xiaomi’s upcoming independent chipset will be available in two variants: Report
30 Aug 2015 , 12:34

Last month, it was reported that Xiaomi might be gearing up to start using its own mobile chipsets in its handets. Currently, the company’s smartphones are powered by either Qualcomm or MediaTek chipsets, except the Xiaomi Redmi 2A which sports the Leadcore chipset.

According to a report by MyDrivers, Xiaomi will release two different versions of its own chipset. The first one will be used for low-end devices such as the Redmi series while the second one, will be a high-end octa-core processor sporting chip which will be seen in their mid-range devices. However, it is being said that the company will still rely on Qualcomm processors for their high-end devices such as the upcoming Xiaomi Mi 5.

In the past, Korean giant Samsung had also moved away from Qualcomm and started using its Exynos chipset. We have seen the flagship Samsung phones such as the Galaxy S6 and Galaxy S6 edge and S6 edge+ sporting Exynos chipsets. Other manufacturers such as Apple and Huawei also power their own smartphones and do not depend on third party chipset manufacturers.

Xiaomi has also reportedly acquired the full range of ARM core licenses. According to a report, the company recently hired Qualcomm China Head Wang Xiang which should speed up the process too. As of now, Xiaomi has not announced anything officially regarding its mobile chipset venture.

@cirr

I'm glad to see more OEMs shifting away from that dreadful MediaTek SoC for their top-tier devices.

But Samsung and Apple offer flagship devices that are unparalleled in design, performance and user experience. Xiaomi will have to work hard on those segments imo.

TaiShang said:

Xiaomi Takes Up Samsung In Its Home Base, Changes The Rules Of The Game

After taking up Samsung (KSE:005930.KS) in the Chinese market and winning the game, Xiaomi is getting ready to enter the Korean market, according to a story in BusinessKorea.

That certainly changes the rule of the game in the smartphone market.

Once upon a time, the smartphone market was divided into two segments: the high-end segment where consumers look for more advanced devices that come at a high price tag; and the low-performance segment where consumers look for basic devices that come at a low price tag.

Apple AAPL +0.88% and Samsung dominated the upper market segment, while other Asian smartphone makers dominated the low end.

Now comes Xiaomi to break away from other Asian smartphone makers and offer high-performance smartphones at low prices. And that changes the rule of the game in the smartphone market in four ways.

First, it closes the gap between the upper and the lower segments of the smartphone market. Second, it helps Xiaomi gain market share, as already evidenced in China, where the company holds 18% market share. Third, it helps Xiaomi up the game, move from emerging markets to mature markets, and eventually attack Apple and Samsung in their home base.

And fourth, it is expected to fuel a price war, limiting the pricing power of both Samsung and Apple.

That certainly puts pressure on Apple and Samsung to innovate their way out of the price war and maintain their hefty operating margins.

In the meantime, it could be bad news for their complacent stockholders.

Click to expand...

i have only one concern
why xiaomi is not coming in Pakistan?

RazorMC said:

I'm glad to see more OEMs shifting away from that dreadful MediaTek SoC for their top-tier devices.

But Samsung and Apple offer flagship devices that are unparalleled in design, performance and user experience. Xiaomi will have to work hard on those segments imo.

Click to expand...

From my experience, Samsung hp offer not any better compare to Xiaomi hp if same spec. The only one difference is Apple but the reason is becos of OS. There's reason why XIaomi is able to capture China market by overtaking Samsung. And dont forget , CHina consumer has the money since China market is the 2nd largest for expensive apple phone after US. They go for XIaomi not just for better price but they see Samsung offer nothing better than Xiaomi with Xiaomi at 2/3 price of Samsung.

Beast said:

From my experience, Samsung hp offer not any better compare to Xiaomi hp if same spec. The only one difference is Apple but the reason is becos of OS. There's reason why XIaomi is able to capture China market by overtaking Samsung. And dont forget , CHina consumer has the money since China market is the 2nd largest for expensive apple phone after US. They go for XIaomi not just for better price but they see Samsung offer nothing better than Xiaomi with Xiaomi at 2/3 price of Samsung.

Click to expand...

Budget conscious buyers will usually go for the cheaper option, but those looking for premium flagship devices will not consider price as an obstacle.

What you are pointing at is Sammy's budget devices like Grand Prime and A7 which seem overpriced for what they offer. But which SoC (in Xiaomi phones) can truly match the Exynos 7420 in the S6?

RazorMC said:

Budget conscious buyers will usually go for the cheaper option, but those looking for premium flagship devices will not consider price as an obstacle.

What you are pointing at is Sammy's budget devices like Grand Prime and A7 which seem overpriced for what they offer. But which SoC (in Xiaomi phones) can truly match the Exynos 7420 in the S6?

Click to expand...

The Mi5 will be released soon.

TaiShang said:

Xiaomi’s upcoming independent chipset will be available in two variants: Report
30 Aug 2015 , 12:34

Last month, it was reported that Xiaomi might be gearing up to start using its own mobile chipsets in its handets. Currently, the company’s smartphones are powered by either Qualcomm or MediaTek chipsets, except the Xiaomi Redmi 2A which sports the Leadcore chipset.

According to a report by MyDrivers, Xiaomi will release two different versions of its own chipset. The first one will be used for low-end devices such as the Redmi series while the second one, will be a high-end octa-core processor sporting chip which will be seen in their mid-range devices. However, it is being said that the company will still rely on Qualcomm processors for their high-end devices such as the upcoming Xiaomi Mi 5.

In the past, Korean giant Samsung had also moved away from Qualcomm and started using its Exynos chipset. We have seen the flagship Samsung phones such as the Galaxy S6 and Galaxy S6 edge and S6 edge+ sporting Exynos chipsets. Other manufacturers such as Apple and Huawei also power their own smartphones and do not depend on third party chipset manufacturers.

Xiaomi has also reportedly acquired the full range of ARM core licenses. According to a report, the company recently hired Qualcomm China Head Wang Xiang which should speed up the process too. As of now, Xiaomi has not announced anything officially regarding its mobile chipset venture.

@cirr

Click to expand...

It is about time，about time。

If you ask me，Qualcomm‘s Snapdragon 810 is a piece of sh1t that's a notch or two below MediaTek’s Helio X10T。

Qualcomm in ruins in a couple of years。

Another Major Qualcomm Chip Customer May Be Going In-House

By Motley Fool, August 28, 2015, 04:00:03 PM EDT

Mobile chip giant Qualcomm has been running into some notable headwinds lately on multiple fronts. One of the more notable challenges to its chip business is that its top two customers, Apple and Samsung , continue to slowly but surely transition toward in-house designs. Qualcomm relies on the pair for nearly half of total revenues (including licensing and royalty revenue).

Samsung made a high-profile switch from Snapdragons to its own Exynos processors in the Galaxy S6 , which put a dent in sales this fiscal year. Earlier this year, Samsung mobile chief J.K. Shin said it could potentially use Qualcomm chips in upcoming Galaxy phones, but, alas, the trio of devices that Samsung just launched earlier this month are all powered by Exynos processors. There had been rumors that the Snapdragon 808 would win a slot or two, but the Galaxy Note 5, Galaxy S6 Edge, and Galaxy S6 Edge+ all have an Exynos 7420 inside. There's always next year's Galaxy S7 .

As far as Apple goes, Qualcomm has long supplied the cellular baseband inside to complement Apple's A-chip processors. Not only is Apple likely building its own cellular baseband, a move that's arguably long overdue, but Intel has been actively vying for that spot for years, and each year Intel's chances seem to improve as its modem performance improves. There's been a lot of debate over whether Intel has won some of this year's iPhone modem business or if it might win a slot next year. Even if Apple's own designs are years away from implementation and Qualcomm is able to defend the slot, Apple will naturally use Intel's competition as leverage and likely negotiate volume pricing concessions from Qualcomm, putting pressure on sales and margins.

As if these headwinds weren't challenging enough, another important chip customer might be looking to do likewise.

Xiaomi wants more control over its chip road map China's Xiaomi has been successfully winning share in recent years thanks to its aggressive pricing of high-end hardware. That includes using Snapdragons in flagship devices like the Mi Note Pro (Snapdragon 810) or mid-range phones like the Mi 4i (Snapdragon 615). Meanwhile, Xiaomi puts more affordable MediaTek processors in its lower-end phones. But recent reports suggest that Xiaomi may try to shift to in-house chips, too, in the foreseeable future.

Xiaomi planted the seeds of this possibility earlier this year when it partnered with Leadcore to develop the processor that ended up in the low-end Redmi 2A. That was a faster solution than building an in-house team from scratch, while at the same time being able to direct the development of the chipset. While the Leadcore LC1860 processor powering the Redmi 2A is fairly modest in performance and wasn't necessarily anything to brag about, it's easy to see the appeal in developing and implementing a semi-custom chip to power future flagships.

Not only would Xiaomi have more say in its chip road map, but it could brand or co-brand the processors as a point of differentiation. Android phones, especially those made by low-cost Chinese OEMs, are incredibly vulnerable to commoditization, and differentiating based on a core component like the processor could go a long way.

These types of vertical integration strategies often take many years to play out, and Xiaomi is supposedly going to start with its low end and mid-range in 2016, but eventually it's conceivable that it will continue moving up as its ambitions grow. I wouldn't ever expect Xiaomi to be able to rival Qualcomm in terms of sheer technical prowess and performance, since Qualcomm's custom chips are incredibly sophisticated, but it's possible that Xiaomi can eventually develop a processor that's sufficient for its purposes while realizing the benefits of vertical integration.

Qualcomm's chip business has been having a hard time recently, with sales falling 22% last quarter. Chip sales can certainly rebound, but it might not be easy.


Read more: Another Major Qualcomm Chip Customer May Be Going In-House -- The Motley Fool