Samsung just took a beating by Micromax in India and Xiaomi in China

Here's some good news for startups and some bad news for Samsung. Micromax, the Indian smartphone vendor, that started its mobile phone manufacturing business in 2010 and Xiaomi, the chinese handset manufacturer, that started its operations in the same year have both beaten Samsung to become the biggest mobile handset vendors in India and China respectively.

Homegrown handset maker Micromax overtakes Samsung in India

According to a report by independent market research and consulting firm, CounterPoint Research, Micromax has overtaken Samsung to become the largest mobile phone supplier in India in Q2 2014.

Micromax's share of handset shipments was 16.6% in the period of April-June while Samsung's share was 14.4%. Samsung finds itself at the second position after a long time at the helm.

Even in smartphone shipments Micromax is closing in on the South Korean giant. While Samsung is still is at the top with 25.3% share of smartphones shipped in Q2, 2014, Micromax is not far behind with 19.1% share. Micromax might just take another quarter to kill that gap like it did with the overall share. Just last quarter Jan-March 2014, Samsung had led the overall market with 16.3% and Micromax was at 13%.

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At the third, fourth and fifth position with overall handset shipment shares of 10.9%, 9.5% and 5.6% respectively, are Nokia, Karbonn and Lava.

From an obscure handset maker to Chinese smartphone market leader in an year - Xiaomi

How many of us knew about Xiaomi this time around last year? Not many. And now it is the largest smartphone maker in the largest handset market of the world - China.

Not only that but due to its dominance in China it has also become the fifth largest smartphone maker in the world, according to this report by Canalys.

According to the report, Xiaomi shipped 15 million smartphones in China in the second quarter of 2014, compared to 4.4 million in the same period in 2013. Samsung had sold 13.2 million smartphones in China in Q2, 2014, a significant decrease from the 15.5 million it sold in the same period a year ago.

Xiaomi registered an overall growth of 240% from Q2, 2013 to Q2, 2014.

You might like to read: Mumbai Locals and Mobile Phones: What is being consumed?

Samsung is hurting not just from Micromax and Xiaomi but its share is also being dented by Motorola and several Chinese brands that are offering the same features in the sub-$200 range.

Buddying up with Indian e-commerce giant Flipkart that raised a mammoth $1B recently, Motorola sold over one million handsets, while China’s Xiaomi similarly sold out the first batch and second batch of its phone in India on the same platform, reportedly within 38 minutes and 5 seconds respectively.

[Insights] What Micromax and Xiaomi are doing right?

In the Chinese market, Xiaomi has taken a very different path when it comes to branding and marketing. With Xiaomi customers get special software - a customized version of Android, called MiUi that they cannot get with other Android devices.

In its pricing strategy, it follows the footsteps of Amazon. It sells the phone for a price that is almost equivalent to the price of the individual components. Where it makes money from is by selling apps, games and special Android themes and Internet services. In addition to that, unlike other leaders, Xiaomi sells the same model for upto an year and a half for the same price, while the price of the individual components fall significantly.

The induction of Hugo Barra, Google's VP for the Android division has helped a lot, as many partnerships have been forged due to Barra's knowhow and the relationships that he brought along with him.

Back home in India, Micromax has worked on getting three key things right, according to Counterpoint research director Neil Shah: investing on building its brand, forming deeper distribution networks into both urban and rural markets, and offering a broad portfolio of handsets with localization (such as regional languages).

In addition to this, it is working on building a sub-$100 phone in partnership with Google, for emerging markets which might help it penetrate deeper into the market.

"We will see intensified competition in the Indian smartphone space as Asian OEMs such as Xiaomi, Gionee, Huawei and Asus enter with premium-like hardware at an aggressive price-point attracting young tech-savvy but price-conscious urban buyers," Shah added.

As encouraging as this trend this, now Xiaomi and Micromax and the similar brands who want to win the smartphone race will have to extensively keep working on their brand awareness and marketing strategies.

What according to you is working for Xiaomi and Micromax?