Apple’s looming battle with Xiaomi

SeekingAlpha (free reg-wall):

Xiaomi, the world’s fastest growing phone vendor, has surpassed Apple (AAPL) in China. Canalys Report puts Xiaomi as the third biggest phone vendor in China in Q1 2014. Copycatting the iPhone has made Xiaomi, a four-year old company, the 6th largest global seller of smartphones.

The rapid rise of Xiaomi is due in part to Apple’s complacent attitude towards it. While Apple took Samsung to court for copying some of the features of the iPhone, Apple allowed Xiaomi to become a $10 billion company by selling iPhone clones using the Android OS. Xiaomi hired Google veteran Hugo Barra last year. Barra is spearheading Xiaomi’s expansion in 10 countries this year.

The linked article makes a pretty solid case comparing Samsung’s co-opting of the iPhone look-and-feel with Xiaomi’s approach. While Apple’s lawsuit against Samsung has made the headlines, there’s been nothing made about Xiaomi’s interface.

One possibility is that Samsung brought their business to Apple’s home turf, while Xiaomi has yet to challenge Apple in North America. That is about to change.

Android Headlines:

In an exclusive Android Authority interview with former Google guru Hugo Barra, now Vice President Xiaomi Global, said, “We will start working on North America next year…It’s in the pipeline.” When he said “next year,” he meant 2015, as they already have 2014 mapped out with ten new markets they are preparing to enter. Barra knows that North America represents a very challenging market to make inroads…just look at the problems Sony is having, and they already have a name and reputation for themselves, and let us not forget HTC. Barra has to convince the U.S. that Xiaomi is not just another cheap Chinese smartphone company and this will not be easy task, but I think if any person or any company can do it, Bara and Xiaomi are the ones.

The U.S. market is different from many parts of the world when it comes to purchasing a smartphone – we are used to getting a large subsidiary from our carrier to buy the device on a two-year contract. We pay $200 to $300 for a flagship device, with more perceived features, power and build quality, so why would we pay $250 for a Xiaomi device…in our minds we are getting a $700 device for only a couple hundred of dollars, so why buy a $250 device – even if it has the same features. Barra said, “I believe in the future, people will be less and less tolerant to unnecessarily overpriced devices.” Barra may be correct, but he also has the U.S. carriers on his side as well – they would like nothing more than to get rid of subsidies and they seem to be working towards that goal.

I wonder if Samsung will file suit against Xiaomi. After all, Samsung is the real target here. Xiaomi runs Android and will be more of a threat to Samsung’s market share than Apple’s. And Samsung might have a real case, claiming they were the first to copy the iPhone. Doesn’t that give them some rights?