Chinese smartphone makers upset Samsung's apple cart

Raise share in global sales at Samsung's expense; Xiaomi is world's 5th-biggest

Xiaomi Inc, the three-year-old Chinese company now often referred to as that country's Apple, has become the world's fifth-largest smartphone maker by market share, even as Samsung Electronics' lead in global sales continues to shrink, shows a report by Strategy Analytics.

Three of the world's top five smartphone sellers were Chinese manufacturers in the April-June quarter, Strategic Analytics said, as China's low-cost offerings on the Android operating system whittled away Samsung's market share.

The South Korean giant, which reported its worst quarterly profit in two years on Thursday, saw its share slide to 25.2 per cent from 32.6 per cent in the year-ago period, while Chinese rivals Huawei, Lenovo and Xiaomi gained, Strategy Analytics said.

The latest figures illustrate how Samsung - though still dominant - has lost its footing two years after it overtook Apple Inc as the world leader in the smartphone market.

Though total smartphone sales rose to 295.2 million units during the second quarter from 233 million a year ago, Samsung was the only major manufacturer to report a drop in the absolute number of shipments.

Samsung on Thursday warned investors the second half of 2014 would remain "a challenge", citing competition from its rivals. Xiaomi claimed 5.1 per cent of global smartphone sales in the second quarter, up sharply from just 1.8 per cent a year earlier.

The firm, which entered the Indian market on July 15 and so far sells only through e-commerce website Flipkart, had already sold about 20,000 units of its Mi3 here as of Wednesday. It said it sold its entire weekly India stock in just five seconds.

"Xiaomi's next step is to target the international market in Asia and Europe, where it will have to invest big money to familiarise Western consumers with its unfamiliar brand name," said Strategy Analytics Director Woody Oh, who termed Xiaomi the star performer in the quarter.

Apple saw its market share shrink to 11.9 per cent from 13.4 per cent a year ago and remained a distant second in the pecking order.

The Strategy Analytics study aligns closely with estimates released this week by IDC, which reported a similar drop in Samsung sales.

LG held sixth place in the Strategy Analytics report and fifth according to IDC estimates.