The Smartphone-Market and the (Un-)Occupied Huawei-Position

The Smartphone-Market and the (Un-)Occupied Huawei-Position

30/03/2022

By Michael Brandtner and Jens Hansen, Ries Positioning Think Tank

In 2021, the global smartphone market was dominated by three brands. According to Statista, Samsung claimed the leadership position with a 20 percent market share, ahead of Apple’s iPhone in second place reaching a market share of 16 percent and Xiaomi ending up third with a 13 percent share. The top three were followed by Vivo and Oppo holding an 11 and a 10 percent market share respectively.

Although the top three smartphone market positions appear “occupied” from a business perspective, we have performed two “rollbacks” revealing there could be untapped opportunities.

The “Business Performance-Rollback”

From a business performance perspective, it is exciting to note that the first two places or positions in the smartphone market were very stable over the last 10 years. Looking back at the fourth quarter in 2011, Samsung was the market leader with 29 percent followed by Apple’s iPhone with a 21.8 percent share. Back then, lagging behind at a great distance were Huawei (4.9%) and Sony (4.5%) and ZTE (4.3%).

In 2013, the “knocked off” laggers had become Huawei, Lenovo und LG.

In 2014: Lenovo, Huawei und Xiaomi

2015: Huawei, Lenovo und Oppo

2016: Huawei, Oppo und Vivo

2017: Huawei, Oppo und Xiaomi and in

2018, 2019: Huawei, Xiaomi und Oppo.

In 2020, came the year of the brutal downfall of Huawei. This re-shuffled global market shares in 2020 to Samsung claiming 20 percent of the market, Apple 16 percent, Xiaomi 11 percent, Oppo and Vivo with 9 percent market share respectively. (Interesting note: By far the strongest “number 3” in the last ten years was Huawei with 14.4 percent in 2018. This year, they were even on par with Apple with the iPhone).

The “Positioning Performance-Rollback”

If we however rollback and study the smartphone market from a positioning performance point-of-view and strictly look at customer perceptions, there have been three leading brands in the mind over the same period of years: iPhone, Samsung Galaxy and Huawei. The iPhone has been and is perceived as the “original” and also as the market leader. Samsung with its Galaxy is perceived as the leading alternative to the iPhone and as the key “competitive challenger”. Huawei managed to create a strong and differentiating mental position by claiming a “Camera Focus” in the minds of the prospects. (In this case it was very helpful for Huawei to use Leica as an ingredient brand.)

In 2020 however, Huawei rapidly lost this focused mental position when the brand was bereaved of the use of its Google services. At that point, the number four in the category, Xiaomi, could have taken the opportunity to ladder up to claim the open “number three slot” in the prospects’ minds.

This leads up to an important positioning conclusion: Huawei did not just own a strong business position being number three in terms of market share. With its “camera” focus it owned a strong and focused “camera”-position in the minds of the customers. Not so Xiaomi. Xiaomi today appears to own a strong number 3 business position on paper. But which perception does Xiaomi actually own in the minds of the prospects?

The Big Challenge and the “Untapped” Opportunity

The two simultaneous “rollbacks” studying the smartphone market from a “real” business and “perceived” positioning perspective reveal the undermined market position Xiaomi has built its business on. Our warning or maybe better advice to Xiaomi’s top management:  Urgently secure and if possible expand your business position as the number three in the market with a strong perceived differentiating idea in the minds of the customers.

While spelling out the challenge for Xiaomi, we cannot withhold to simultaneously describe the situation as the next big opportunity for any smartphone supplier in the market. If Xiaomi doesn’t get a grip of their mental positioning, there is a great opening for any challenging smartphone player to develop a strong competitive positioning idea: To claim and fill the empty hole in the minds of the prospects that Huawei’s disappearance has left behind. An action that not only would offer a chance to seriously threaten Xiaomi’s business, but ultimately could challenge Apple and Samsung. Conclusion: When fighting for “real” business market shares never forget the “perception” shares! So simple in theory, but often so difficult to execute in practice.