Xiaomi: A Growing Threat to Apple’s (AAPL) Dominance

If you haven’t heard of Xiaomi (pronounced SHAO-MI) yet, you probably will pretty soon. Some analysts already believe the four-year-old Chinese budget smartphone maker that outsells Apple (AAPL) in China, poses the biggest threat in the long run not only to Cupertino, but also to Samsung and other well established smartphone makers.

“A lot of people refer to [Xiaomi] now as the Apple of China,” Rosenblatt Securities’s Brian Blair told CNBC. “[Xiaomi] has definitely taken away from Apple’s share.”

In China, Samsung leads the market but Xiaomi, which became the world’s sixth-largest smartphone vendor in the first quarter of 2014, outsells Apple with its cheap yet sleek devices that closely resemble the iPhone and iPad mini. In October, the Chinese smartphone sensation launched its flagship Mi 3, 5-inch 1080p IPS display smartphone, selling 100,000 units in less than 90 seconds when it was released online.

For a young company, Xiaomi is doing great. It shipped 11 million smartphones in the first three months of this year and expects to sell a total of 40 million phones by the end of it. That compares to 18.7 million sold last year and 7.2 million the year before. The Beijing-based company, which  plans to enter 10 more countries this year as it accelerates international expansion, has set the ambitious goal of selling 100 million phones in fiscal 2015.

Xiaomi is valued at $10 billion and recently hired Google (GOOG) executive for Android, Hugo Barra, who will lead its international foray.

Apple’s market share dominance will be tested this fall when it is expected to launch the iPhone 6 in China with a screen likely on par with the 5″ or larger displays from Xiaomi and Samsung that are popular in Asia, CNBC quoted Blair as saying.

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1 Comment on Xiaomi: A Growing Threat to Apple’s (AAPL) Dominance

  1. In the US I see smartphones as less of a price sensitive commodity and more like sneakers and handbags. People pay up for the expensive “status” brands. Who would have thought people would pay $250 for NIKES or $2000 for a Fendi handbag but they do. It’s a status symbol, not just a tool. Apple is “affordable luxury” and has established a loyal following. People won’t want to downgrade at this point. It would be like showing up at the basketball court in a pair of Keds.

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