The news that Huawei topped China’s smartphone market share rankings for the first time this past quarter, knocking startup Xiaomi out of the top spot, shouldn’t be totally unexpected.
The privately held Huawei has spent the last two years pumping considerable money into its smartphone operation. Other Chinese competitors using Google’s free Android operating system have also risen in the country to overtake once-dominate Samsung. But Huawei has the advantage of being a telecommunications equipment maker first, as opposed to solely a smartphone maker; that status has brought it deep relationships with wireless companies around the world that offer countless sales channels.
The market share battles in China make great headlines, but the companies are all facing stagnant market growth now that pretty much everyone in China who wants a smartphone has one. That leaves the companies to fight over consumer who are upgrading their phones, typically more discerning buyers. That may play to Huawei’s advantage—its wide selection of smartphones have received favorable reviews for their modest prices.
The latest market share estimates aren’t an indictment of Xiaomi, though. The startup, valued at $45 billion, is sticking to its target of selling 80 million smartphones this year. It’s also selling a host of appliances like air purifiers and smart televisions in its bid to create a Xiaomi home ecosystem, a strategy that is too early to write off.
But in smartphones, the excitement generated by Xiaomi has waned. Fortune said in July Huawei was hot, Xiaomi not. It appears the trend has continued.
For more about tech in China, see this recent Fortune video: