Xiaomi slips over lack of innovation as Oppo, Vivo lead in China

Beijing: Xiaomi, touted as the `Apple` of China, slipped to fourth spot in 2016 as the demand for its smartphones declined 22 percent annually in the country, a report revealed on Friday.

The key reason for the decline was Xiaomi`s rivals racing ahead with key features, innovation, bigger marketing budgets and wider online and offline distribution channel during the year.

Huawei, Oppo and Vivo emerged as clear winners with Oppo and Vivo registering significant growth, said the report from by market analytics firm Counterpoint Research.

"The final quarter of the year was marked with series of flagship upgrades from key brands such as Apple, Oppo, Huawei, Xiaomi which catalysed the smartphone demand in China healthier than last year," said James Yan, Research Director, Counterpoint, in a statement.

The demand for smartphones in China remained healthy during the fourth quarter of 2016 as smartphone shipments were up 12 percent annually and nine percent sequentially, driving the full-year growth.

Only five brands registered healthy growth during the full year.

Oppo, Huawei, Vivo, Meizu and Gionee drove the majority of the volume, capturing a combined 58 percent of the total Chinese smartphone market.

"Demand for rest of the brands declined, especially last year`s star performers Xiaomi and Apple with lower-than-expected demand for their smartphones during the year," Yan added.

Apple, with slowing traction for its flagship iPhone 6s during the year, saw its double-digit negative growth, being somewhat offset by relatively healthy demand for the newer flagship iPhone 7 series in fourth quarter of 2016, the findings showed.

However, Apple still remains in a vulnerable position and there is higher expectation already with the next year flagship which is rumoured to be a substantial upgrade from both design and components perspective.

In terms of features, the key focus remained on proliferation of smartphones with fingerprint sensors, 4G+/VoLTE ready, fast-charging, OLED displays, battery, adoption of dual rear cameras and higher megapixel front-camera for selfies, the report added.