Xiaomi's U.S. Arrival Could Be a Nightmare for Samsung

Flagship phone makers, take warning. This fall, Xiaomi could give you a run for your money with its lineup of low-cost, high-quality smartphones that could challenge the notion that you need to pay $500 or more for a top-notch mobile device.

Xiaomi already sells its phones in both its home market of China as well as other countries such as India, but its phones have yet to arrive in the U.S. That's about to change, according to Hugo Barra, the former Google executive who's now a vice president with Xiaomi. Barra told Bloomberg that "the U.S. is a market that we definitely have in our sights," adding that a launch would happen "in the near future."

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When Xiaomi's phones do make their U.S. debut, expect the company to follow the same strategy that's helped it become the largest phone seller in China. That means selling phones exclusively online and relying on social media to promote its products.

Xiaomi could be a big hit with consumers in the U.S., given that its phones typically boast high-end specs without correspondingly high price tags.

The odds of Xiaomi bringing its phones to the U.S. increased dramatically earlier this year when the phone maker struck a deal with Microsoft to buy 1,500 patents. Xiaomi may be feeling greater urgency to make a splash in the U.S., Bloomberg reports, as the company faces slowing growth in China and increased competition in India.

Xiaomi could potentially be a big hit with consumers in the U.S., given that its phones typically boast some high-end specs without correspondingly high price tags. That means Xiaomi's phones could siphon away customers from both Apple and especially Samsung, both of which command top dollar for their flagship devices.

Take Xiaomi's Mi 5, which we saw earlier this year at Mobile World Congress in Barcelona. The phone features a sleek design that reminded us of the Galaxy S7, with a 3D ceramic back cover and rounded-edges. The Mi 5 is powered by a Snapdragon 820 CPU, the same processor found in the S7. And optical image stabilization features make the 16-megapixel camera on the back of the Mi 5 a formidable challenger to even the top camera phones on the market.

Hands-On: Xiaomi Mi 5

What may be most noteworthy about the Mi 5 is its price tag. A 32GB version of the phone costs around $305 based on currency conversions. Samsung sells an unlocked version of the S7 for $669.

The Mi Note, Xiaomi's flagship phablet, features a similarly low price tag. Possibly launching this week, the Mi Note 2 is rumored to feature a 5.5-inch screen with 128GB of storage and 6GB of RAM along with a Snapdragon 821 processor. Android Headlines puts the cost of the phone at around $423.

Other Xiaomi devices include the lower-priced Redmi Note 3, another 5.5-inch phone, and the super-sized Xiaomi Mi Max. Both of those phones can be had for less than $250.

Xiaomi will have to do more than just show up to make a dent in the U.S. market. It faces formidable competition from other phone makers who've focused on premium designs at lower price tags — most notably OnePlus, ZTE and Huawei. Avi Greengart, research director for consumer platforms and devices at Current Analysis, says Xiaomi will have its work cut out for it.

"As we have seen from companies like Blu, Alcatel and ZTE, there is an appetite in the U.S. for low-cost unlocked phones," Greengart said. "Discount flagship phones, on the other hand, are a tougher sell, as many U.S. consumers can simply finance an iPhone or Galaxy S7 over 24 months, making the discount less of a draw."

Still, another lower-cost, high-end option could be good news for phone buyers — and a worrying development for makers of pricey flagship devices.

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