China's Xiaomi surges to become world's third largest smartphone vendor

Samsung saw its smartphone market share dip, while Apple iPhone shipments continued to grow, according to two research firms

Xiaomi's new flagship phone, the Mi 4.

Xiaomi's new flagship phone, the Mi 4.

Phones from Xiaomi still haven't arrived in the U.S., but the company's booming sales in China have been enough to make it the third largest smartphone vendor in the world.

Xiaomi reached the ranking, behind Apple and Samsung, in the third quarter, said research firms IDC and Strategy Analytics on Thursday.

The Chinese vendor only began selling phones three years ago but it has quickly risen to become a leading vendor in its home market, by offering feature-packed Android phones at affordable prices.

In the third quarter, Xiaomi had a 5.3 percent share of the smartphone market, still far behind second place Apple, which had a 12 percent share, according to IDC. But unlike its rivals, Xiaomi posted triple-digit year-over-year growth in smartphone shipments, of 211 percent, making it the fastest growing among the top vendors.

It is the first time Xiaomi has entered in the top five smartphone rankings, IDC said. During the quarter, the company began selling its latest flagship phone, the Mi 4, a device that has all the latest specs, but with a selling price starting at 1999 yuan (US$326).

Xiaomi this year has also begun expanding to other foreign markets, including India, where its phones have routinely sold out in online sales. "What remains to be seen is how quickly the company can move beyond its home territories to drive volumes higher," IDC said in a statement.

As for the leading smartphone vendor Samsung, the Korean company continued to struggle amidst heated competition from Apple and Chinese rivals including Xiaomi, Lenovo and Huawei Technologies. In the third quarter, Samsung's market share was 24.7 percent, down from the 35 percent share it had a year ago, according to Strategy Analytics.

Samsung's smartphone shipments could pick up later in 2014, with sales of its new Galaxy Note 4 and the Galaxy Note Edge, Strategy Analytics said in a statement. But in a Thursday earnings report, the Korean company said it expects competition in the market to remain stiff.

Rival devices are already taking a toll on the company's earnings. In this year's third quarter, Samsung said its operating profit from its mobile devices division dropped by 74 percent from the same period a year ago. This was partly due to reduced prices for its older models, and more consumers buying its middle and lower-end smartphones.

Apple, on the other hand, is still growing, with its third quarter smartphone shipments up 16 percent year over year, IDC said. At the end of the third quarter, the company began selling its new iPhone 6 and iPhone 6 Plus in select markets.

Helped by iPhone 6 sales at the end of the quarter, Apple posted its largest third-quarter smartphone shipments ever, IDC said. Older iPhone models, such as the 5s and 5c, however, made up most of the shipment volume during the period.

In total, vendors shipped 327 million smartphones worldwide, up 25.2 percent from a year ago, according to IDC. Much of the smartphone demand is coming from emerging markets, where growth is over 30 percent. Developed markets, meanwhile, are posting single-digit growth, IDC added.

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