Lenovo and Xiaomi have lost their spots as the fourth and fifth largest largest smartphone manufacturers, according to a study by IDC. The research firm found that the two companies had been pushed out of fourth and fifth place by two lesser-known Chinese companies, Oppo and Vivo, when looking at shipments over the first quarter of 2016.
China's market is messing with everyone
It's a surprising change: Lenovo, as well as its subsidiary Motorola, has a high profile around the globe, and Xiaomi has been positioned as an exciting upstart pushing for its big break. The combined Lenovo–Motorola fell from third place on IDC's charts in 2014 to fifth place last year; Xiaomi, meanwhile, fluctuated between fourth and fifth place during those years. IDC's latest stats suggest that both companies' market positions were far more tenuous than they may have seemed.
Behind the change, there appear to be major shifts in the Chinese market that have hurt even the most successful smartphone makers out there (Apple, notably, posted its first revenue decline in over a decade this week). Chinese market crashes have hurt spending power throughout the country, which is obviously going to pose a big issue for companies heavily marketing to consumers in China.
IDC suspects there's another factor at play here, too. It suggests that the smartphone market has begun to mature enough that consumers aren't buying as many phones, and those who are buying are looking at different options than what Lenovo and Xiaomi excel at.
"Huawei, Oppo, and Vivo ... are positioned for a strong 2016."
"Lenovo benefited with ASPs [average selling prices] below US$150 in 2013, and Xiaomi picked up the mantle with ASPs below US$200 in 2014 and 2015," writes IDC researcher Melissa Chau. "Now Huawei, Oppo, and Vivo, which play mainly in the sub-US$250 range, are positioned for a strong 2016."
The implication is that Chinese consumers are starting to look for more out of their smartphones, and year after year have been willing to pay more to get it. Top-tier phones like the iPhone remain largely out of reach, but interested buyers are still gravitating toward modestly pricier phones.
"Our assumption is that once first time buyers get a taste of life with a smartphone, once it's time to buy a new device they look upstream a bit," Ryan Reith, who oversees IDC's mobile tracking, tells The Verge. "Now, keep in mind we are talking about going from $150 to $250 on an unsubsidized device. So in comparison to mature markets this is very low cost, but for the majority of China that is pushing the means."
Xiaomi recently put out a great new $260 phone, and Motorola will likely announce new phones across all price points sometime mid-year. It's possible these new devices will reverse their fortunes, but the smartphone market's constant changes seem to mean that a company needs to be in the right place at the right time if it wants a phone to take off.