According to IDC, smartphone shipments in Indonesia reached 9.4 million units in the second quarter of 2018, a growth of 22% quarter-on-quarter and 18% year-on-year, marking the highest shipments ever recorded in Indonesia. While the top-five 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.
Market analyst Risky Febrian commented:
“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 and despite its minimal marketing campaigns and thin margins for channel partners, Xiaomi was able to supply handsets with competitive price-to-spec ratios, giving end-users more value for their money. With this strategy, Xiaomi gradually caught up and gained significant mindshare and market share”.
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 smartphones, as consumers who were seeking to upgrade their smartphones were enticed by these “loud” brands.
In the second quarter of 2018, the ASP for Oppo and Vivo phones were around $220 while Xiaomi was at $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. Febrian added:
“IDC expects Xiaomi will continue in this direction in an 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”.