China's Xiaomi Moves In on Samsung, Apple

The "star performer" of the smartphone market this summer wasn't Apple or Samsung, it was a company you may not have even heard of—China's Xiaomi.

According to new data from Strategy Analytics and IDC, Xiaomi became the world's third largest smartphone vendor for the first time ever in the third quarter of 2014, behind only Samsung and Apple. Strategy Analytics said Xiaomi accounted for a record 6 percent of the 320.4 million smartphones shipped from July until September.

"Xiaomi's Android smartphone models are wildly popular in the Chinese market," Neil Mawston, executive director at Strategy Analytics, said in a statement. "Xiaomi's next step is to target the international market in Asia and Europe, where it may face stronger headwinds of low brand awareness and technology-patent challenges next year."

Strategy Anaytcis smartphone Q3 2014As part of that push into other markets, Xiaomi said recently that it is moving its Beijing-based data centers to Amazon AWS data centers in California and Singapore. The move, according to Xiaomi (and former Google) exec Hugo Barra "better equips us to maintain high privacy standards and comply with local data protection regulations" - something that's not always possible in China.

"Parts of this migration will be completed by the end of October, and all of it will be completed by the end of 2014," Barra said in a separate post that addressed security concerns in India. "In 2015, we plan to launch a local data center in India to serve the needs of (and store data for) our Indian users."

Samsung maintained its No. 1 spot, but saw its marketshare drop to 25 percent from 35 percent a year ago. Apple's share also dropped slightly to 12 percent.

"Samsung continues to face tough competition from Apple at the higher-end of the smartphone market, from Xiaomi and Huawei in the middle-tiers, and from Lenovo and others at the entry-level," Mawston said. Meanwhile, he added, "Apple's iPhone growth is slowing worldwide because of its limited presence in the fast-growing entry-level segment."

IDC smartphone Q3 2014IDC corroborated Strategy Anaytics's assessment, noting that new releases and an increased emphasis on emerging markets resulted in 25 percent growth compared to the same quarter last year.

"Despite rumors of a slowing market, smartphone shipments continue to see record-setting volumes," Ryan Reith, program director with IDC's Worldwide Quarterly Mobile Phone Tracker, said in a statement. "We've finally reached a point where most developed markets are experiencing single-digit growth while emerging markets are still growing at more than 30 percent collectively."

For more, check out the charts from Strategy Analytics and IDC below. Also see Hands On With the Xiaomi Mi3 Smartphone.