China's mini Apple takes slice of smartphone pie

Technology

Mo Xiaohua, a 24-year-old accountant, is a proud Xiaomi fan who only recently bought her first Xiaomi phone. For many who use Xiaomi phones, the customisable themes and the weekly updates are a big draw.

"I like Xiaomi because among China's brand smartphones, its value is the best," Mo said. "Now that we have such a good China branded phone, we need to support it."

'Black Back Flats'

Xiaomi has its fair share of detractors who doubt it will have a happy ending. They say the smartphone game in China can only be won with wide distribution and high volume or a big brand with distinctive designs.

Xiaomi, whose attraction is its price and high technical specifications, does not win points for cutting-edge design.

"This is a world where people are now cranking out 'black back flats', that's what all these phones are when you put 10 on the table... Xiaomi is not going to stick out," said Michael Clendenin, managing director at RedTech Advisors. "In this world, the market is driven by two things: one is massive volume and two huge brands."

ZTE and Huawei have set smartphone sales targets for this year at about 30 million and 60 million respectively.

The firms have traditionally dominated the cheap low-end smartphone segment but have been pushing into the mid-price range.

ZTE said it launched 11 types of smartphones in the mid-price range of 1,500-2,500 yuan this year, up from six last year. Apple released its mid-range tablet, the iPad Mini, in China on Friday.

"Xiaomi had great headline appeal a year ago... but the problem is now you have got guys like ZTE and Huawei and Meizu with phones that are priced in a similar range," Clendenin said.

China is expected to surpass the United States as the world's largest smartphone market this year with 165-170 million unit sales, up from 78 million last year, Gartner said. Analysts said Xiaomi had to ramp up volume and address technical problems and a shortage of customer service centres if it wanted a shot at the big league.

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