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According to International Data Corporation’s (IDC's) Quarterly Mobile Phone Tracker, smartphone shipments in Indonesia reached 9.4 million units in 2Q18, a growth of 22% quarter over quarter (QoQ) and 18% over the same period last year, marking the highest shipments ever recorded in Indonesia. While the top 5 companies continue to dominate the local smartphone market with more than 85% share, the new historical high was largely attributed to a surge in Xiaomi’s shipments.
“Xiaomi, which faced various growth challenges in the past, has emerged to be the dark horse in the Indonesian smartphone market, becoming the second largest player after Samsung. As opposed to OPPO and vivo's strategy, Xiaomi, despite its minimal marketing campaigns and thin margins for channel partners, was able to supply handsets with competitive price-to-spec ratios to the market, giving end users more value for their money. With this strategy, Xiaomi gradually caught up and gained significant mindshare and market share,” says Risky Febrian, Market Analyst, IDC Indonesia.
In the past, OPPO and vivo made strides in the local scene with their aggressive marketing campaigns and lucrative profit margins to their channel partners. This caused a disruption in the market, directly driving up the market share of midrange ($200<$400) smartphones as consumers who were seeking to upgrade their smartphones were enticed by these "loud" brands.
In 2Q18, the average selling price (ASP) for OPPO and vivo phones were around US$220 while Xiaomi was at US$130. Aside from its value-for-money price points, Xiaomi’s minimal marketing zeroes in on internet-centric campaigns such as regular flash sales through ecommerce partners, mobile gaming, and continuous support to its fanbase community, which in turn spreads the brand name through word of mouth and social media mentions.
“IDC expects Xiaomi will continue in this direction to attempt to win the top spot in Indonesia. In the coming quarters, other players will be forced to revisit their pricing strategies to compete effectively, and local brands are expected to be hit the hardest by Xiaomi’s disruptive gameplay. That said, several challenges remain for Xiaomi to wrestle with, such as supply constraints and gray shipments of its popular models, both of which will negatively impact its local pricing strategies and market demand,” ends Febrian.
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International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of IDG, the world's leading technology media, data, and marketing services company. To learn more about IDC, please click here.