How Much Should Apple Sweat About Xiaomi's Flagship Smartphone?

Tests Show Chinese Phone's Performance Doesn't Live Up to the Specs It Markets

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Xiaomi's Mi4 phone
Xiaomi's Mi4 phone

Xiaomi, the Chinese startup-turned-giant that's now the world's No. 3 smartphone maker, boasts on its homepage that its flagship Mi4 phone has the "best and strongest configuration in the world." If you compare its specs to those of the iPhone 6, it looks like Xiaomi's phone beats Apple on screen and camera resolution, battery life, processing speed and more. (Not to mention price – the Mi4 sells for $327 in China, less than 40% of the cost of the most basic iPhone 6 here.)

But how does the Mi4 actually measure up in performance trials? After testing, a product watchdog says the Mi4 is a compelling offer and that Apple shouldn't be complacent. But despite those stellar specs, Xiaomi's top phone still can't match the iPhone 6 on most measures of performance, though it is more scratch-resistant and has longer battery life.

"People swap spec sheets and that's how they're marketing it … but specs alone do not equate to performance, and consumers need to know that," said James Feldkamp, co-founder of MingJian, an independent China-based product-testing watchdog that represents China in the International Consumer Research & Testing consortium, or the ICRT. (Consumer Reports is the U.S. member.)

Xiaomi is just four years old, and it produced its first smartphone three years ago. To save marketing and retail costs, it relies on fans to promote the brand through organic social media, and it sells the phones online. (As Xiaomi quickly expands to new markets from India to Singapore, Ad Age named its global marketing head a Woman to Watch in China.)

The company has had a blast of publicity lately. In the third quarter it was the world's No. 3 smartphone vendor after Samsung and Apple, according to market research firm IDC. Bloomberg just reported that Xiaomi is in discussions for a round of funding that would value it at $40 billion-$50 billion.

And Boston Consulting Group just put Xiaomi at No. 35 on its list of the most innovative companies, though critics knock Xiaomi for copying Apple on everything from design to product launches to the founder's wardrobe. Xiaomi has been defending itself since Apple design head Jony Ive lashed out at the brand's Apple-inspired touches. ("I don't see it as flattery. I see it as theft.")

More about the tests

MingJian, the watchdog, submitted the Xiaomi Mi4 to a lab in Germany to be tested with other brands' smartphones. Its camera took "pleasing" photos that nonetheless fell short of the iPhone, and it "took an inordinate amount of time to get its first GPS fix relative to any other phone we tested," Mr. Feldkamp said. Its Achilles heel was the poor quality of audio recording when using the phone to shoot video, he said. Xiaomi didn't respond to an email seeking comment.

The OnePlus One phone
The OnePlus One phone

MingJian said the tests of Xiaomi's Mi4 and another hot smartphone from China, the OnePlus One, were the first certified by the ICRT consortium. The OnePlus One, which has won raves from reviewers, also didn't outperform the iPhone 6, though its homepage proclaims it the "2014 Flagship Killer."

Several other global smartphone brands also have flaunted hardware and software traits to break out of the pack trailing Samsung and Apple. To promote its newest smartphones, Sony, for example, has leaned on the waterproof design and battery life. It's had little luck converting the tactic to sales, however – unlike Xiaomi.

"While nipping at the heels of Apple and Samsung, are they winning the race for performance? No," Mr. Feldkamp said. "Should there be any excuse for anybody making premium smartphones to sit idle? Absolutely not. The writing is on the wall. These phones have basically decimated the middle market and narrowed the entire playing field."

He added: "When you look at value for money, Xiaomi's got excellent build quality, it's durable, and if you're not planning to use it to record your daughter's choir performance or if it isn't your primary GPS device, why would you spend three times the amount to get an iPhone 6?"

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