The Hottest Smartphone in China

Published Thu, Aug 16th, 2012   Wall Street Daily Research

 
Another day, another smartphone launch in China.

This new electronic treat is from a company called Xaomi, literally “Little Rice” in Mandarin.

You probably haven’t heard of the brand, but it certainly has consumers in China revved up.

Buyers are lining up for the company’s new phone, enticed by hardware that matches the iPhone 4S, at just half the cost.

And while mobile users in the West often hold out for Apple (Nasdaq: AAPL) or Samsung’s pricey flagship devices, in China – the world’s biggest smartphone buyer – the demand is clearly moving down market.

Investment bank, Jefferies, says two years ago just 18% of smartphones sold in China cost less than $250. Flash-forward to 2012, the low-end has blown up, expanding to 60%.

“Next year is going to be about who’s going to provide the best value for my money from a consumer point of view and from a telco point of view, because we think hardware specifications for the handsets have already peaked,” said Cynthia Meng, head of technology media and telecommunications equity research for Jefferies.

If the China trend spreads globally, a shift to cheaper handsets will mean tighter margins and slower growth for these industry powerhouses.

And new opportunities for little-known upstarts like Xiaomi.