SMARTPHONES: Oppo Surges, Xiaomi Tries New Look, ZTE Resets

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Bottom line: Huawei may have lost its top position in China’s smartphone market in the third quarter, while Xiaomi’s new model with a screen that takes up the entire front surface could bring some buzz back to the company.

Huawei loses ground in China smartphone race

A trio of smartphone headlines nicely summarize the rapid changes constantly gripping the space, where today’s superstar can become little more than a footnote in just a year. The latest rising superstar Oppo is leading the headlines, with a new report saying it overtook Huawei to become China’s smartphone leader in the third quarter. Meantime, former market leader Xiaomi is also in headlines as it rolls out a new intriguing model in a bid to regain its former glory. Last but not least is the faded ZTE (HKEx: 763; Shenzhen: 000063), one of the industry’s oldest players, which is changing smartphone chiefs in its own bid to find new relevance in the tough market.

Let’s begin with the latest smartphone rankings, which show that Oppo and the similarly surging Vivo both passed former leader Huawei to take the number one and two spots in China’s smartphone market in the third quarter. (Chinese article) Oppo led the pack with 16.6 percent share for the latest quarter, followed by Vivo’s 16.2 percent and Huawei’s 15 percent. Those figures compare with second quarter data that showed Huawei in the lead with 16.9 percent, followed by Oppo at 16 percent and Vivo at 13.2 percent.

This latest data, which comes from market research firm Counterpoint, contrasts with data released last week from TrendForce showing Huawei still had the top spot with 19.1 percent share, followed by Oppo with 12.7 percent and Vivo with 10.9 percent. (previous post) The rather large difference between the 2 data sets probably owes to differing methodologies, which I can’t really comment on since I’m not familiar with the subject.

But both data sets show that Huawei’s market share declined in the quarter, as it faces relentless competition. Data tracking firm IDC, one of the most reputable sources, previously said Huawei led Oppo by just a percentage point in the second quarter. Other more recent reports have also said Huawei struggled for unspecified reasons in the third quarter, meaning its quite possible it has been overtaken by Oppo and even Vivo.

Buzz for New Xiaomi Phone

While Huawei shows signs of struggling at the top of the smartphone pack, Xiaomi lost that battle more than a year ago due to technical problems and lack of buzz for its problem-plagued smartphones. Now the company has just rolled out a couple of new models, including one making headlines due a somewhat unique design that lacks a speaker for listening on the front of the phone. (English article; Chinese article)

Instead, nearly the entire front side of the 6.4-inch new phone, called the Mi MIX, is taken up by the display screen. Xiaomi has pointed out that such a design gives the screen 23 percent more viewing area from a similar 6.4-inch model, and that 91.3 percent of the phone’s surface is now taken up by the screen. Notably, Xiaomi has looked overseas and hired a French designer, Phillipe Starck, for the Mix.

Starck doesn’t appear to have much experience in the smartphone business, but one report points out he previously designed a yacht for former Apple (Nasdaq: AAPL) chief Steve Jobs. The new Mix does seem to be generating some early buzz for its unusual screen and overall design, so perhaps there’s some hope for the model, which is only available in limited quantities and will cost around $516.

Finally we’ll end with ZTE, one of the few early Chinese cellphone makers that made the transition into smartphones. ZTE’s smartphone business hasn’t done too well these days, and it’s rarely mentioned anymore in media reports. I haven’t really followed the company too closely lately, but expect its slide is probably related to the usual stiff competition and lack of unique product designs and savvy marketing.

Now ZTE is changing its smartphone head, in one of the first big moves since it named a new CEO in April. (Chinese article) Such a move is probably long overdue and it’s quite possible that new chief Yin Yimin could turn things around. But the job certainly won’t be easy due to the market’s constant rapid change and unrelenting competition.

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