Samsung sales "does not look good" millet rapid growth erode customers

According to foreign media reports, last week, Samsung chief financial officer Lee Shang-hoon (LeeSangHoon) warned that Samsung's second-quarter earnings will not be "very good." Samsung did not explain the reason, but the sluggish handset sales could be the "culprit" given Samsung's reliance on the profits of the handset business.

If the Samsung mobile phone business is really in trouble, it may be related to the rapid growth of a major rival. Earlier this week, millet said mobile phone sales in the first half of this year increased by 271% over last year. The rapid growth of millet even poses challenges for apples seeking growth in overseas markets.

Millet: China's rapidly growing star

Millet was founded four years ago, but has attracted a lot of big-name executives - Google's Hugo Barra, the biggest of them, causing an uproar in China's mobile phone market. Market research firm KantarWorldpanel said in a report that in April the sales volume of Xiaomi smartphones exceeded Samsung, which is a noteworthy phenomenon given that Samsung has been the No. 1 smartphone manufacturer in China in recent quarters.

The success of millet is largely a by-product of its low-cost handsets. Mi 3 flagship model product is a high-end smart phone, the price in the Chinese market is only about 300 US dollars (about 1849 yuan). Given the annual household income of only a few thousand dollars, for ordinary Chinese consumers, millet phone is quite attractive.

Nested Samsung customers

Technology blog site TechCrunch published an article saying that many of Xiaomi's customers are the first to buy smart phones, but about one-quarter Samsung mobile phone users. Like Samsung, millet smartphone uses Android operating system.

Millet version of Android is a highly customized version of Android, but this basically has no effect on product sales. Few consumers in China really use Google's official Google Play, which downloads Android apps primarily through third-party app stores.

Apple seeks growth in the Chinese market

Given the exclusive use of iOS operating system, compared with Samsung, Apple in China or other markets is less likely to erode users of millet.

However, millet continues to pose a threat to Apple's emerging market ambitions. Although Apple has firmly controlled the market in developed countries like the United States, Japan and other countries, analysts turned to China and other markets to boost the growth of iPhone demand.

To a large extent, emerging markets have boosted demand for iPhone. Last quarter, Apple iPhone sales more than analysts expected, mainly due to emerging market demand hit a record. For example, Apple China business revenue growth of 5%, Apple executives pointed out that the company's total revenue in BRIC hit a new high.

Investors may consider millet phones as low-end products, transition products for Chinese consumers, who will eventually buy the Apple iPhone. The actual situation is that millet phone quite high-end, for example, m 3 configuration comparable with the Apple iPhone5s.

If Xiaomi can continue to attract the first Chinese consumers to buy smartphones, Apple is very difficult to attract them to defection. If millet into other emerging markets, it will Apple, Samsung pose a strong competitive threat.

Regrettably, millet is not a public company and public investors can not share the fruits of its rapid growth. Smartphone makers - and especially Apple and Samsung shareholders - should pay attention to the rapid growth of millet. In emerging markets such as China, millet is a major competitive threat to Samsung and Apple.