Xiaomi Moves Into Higher End of Phone Market With New Devices

It's Another Challenge to Apple and Samsung From China's Hot Electronics Giant

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The Xiaomi Note
The Xiaomi Note

Xiaomi Corp. released its biggest, most expensive smartphones as the Chinese manufacturer challenges Samsung Electronics Corp. and Apple Inc. at the higher end of the mobile-device market.

The 5.7-inch Xiaomi Note debuts Jan. 27 for $371, Chief Executive Officer Lei Jun said at a press conference in Beijing today. The device is bigger, lighter and thinner than Apple's iPhone 6 Plus and has a curved glass display, he said. A second device, the Note Pro, will sell for $533.

After building Xiaomi into the world's third-largest smartphone vendor in less than five years, Lei has set his sights on overtaking Samsung and Apple within a decade. To achieve that goal, he's investing in startups that can provide hardware, software and services that complement its devices.

"Xiaomi is elevating its Note to the next tier with a premium positioning," said Neil Shah, a Mumbai-based analyst with Counterpoint Technology Market Research. "Xiaomi should be able to attract the bulk of the middle- and upper-middle class Asian consumers."

China's largest smartphone vendor said Dec. 29 its valuation was $45 billion following a $1.1 billion funding round that included investors such as billionaire Yuri Milner's DST, Singapore's GIC Pte and All-Stars Investment Ltd.

China Appeal

The company doubled revenue to $12 billion last year and committed to spending $1 billion on content as Mr. Lei tries to sell 100 million phones this year.

The Xiaomi Note "will be well-received in the market -- at least markets where large-screen phones are in demand, China being one of them," said Jessica Kwee, a Singapore-based analyst with researcher Canalys. The device also is comparable to Samsung's Note 4, she said.

In its home market of China, Xiaomi's current lineup includes the Mi 4, with a 5-inch display; the Redmi 2, with a 4.7-inch display; and the Redmi Note, with a 5.5-inch display. The devices start at about $112.

The company, which has no production facilities of its own, relies on contract manufacturers such as FIH Mobile Ltd. and Inventec Corp. to build its devices.

Xiaomi, which means millet in Chinese, was founded in 2010 to make software for mobile devices running Google Inc. Android system. The company introduced its first smartphone in China the following year and has since branched into other electronics including tablets, routers, televisions and set-top boxes.

In addition to the new smartphones, Lei announced the Mi Box Mini to stream online video.

Since November, Lei invested in online video and Internet service providers and announced that Xiaomi has also bought stakes in at least 25 startups as it looks to expand into Web-enabled devices for the smart home. The strategy has already resulted in products including air purifiers and light bulbs that can be controlled remotely by mobile phone.

--Bloomberg News --

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