Xiaomi Goes Upmarket With New Devices to Arrest Sales Slide

The Mi Note 2.

Source: Xaomi

Xiaomi Corp., once the biggest smartphone vendor in China, unveiled its most expensive handsets as it seeks to recapture sales with a push into high-end devices.

The Mi Note 2, sporting a curved screen similar to Samsung’s Galaxy Edge, sells for as much as 3,499 yuan ($516), co-founder Lei Jun said in Beijing Tuesday. It also showed off the Mi MIX concept phone developed with famed designer Philippe Starck, featuring a ceramic body and bezel-less screen for as much as 3,999 yuan.

After blazing its way to the top of China’s smartphone market, Xiaomi has struggled to maintain its stunning growth and fallen to No. 4 as rival brands Huawei, Oppo and Vivo captured swathes of the market. Raising the design and specifications of its handsets thrusts the company into more direct competition with global giants Apple Inc. and Samsung Electronics Co., which collect the lion’s share of industry profits through high-margin devices.

The MIX is a milestone for Xiaomi’s efforts to target a less-crowded, more profitable spectrum of the market, said James Yan, a research director at Counterpoint. 

“Xiaomi is using the device to build brand awareness among high-end users, that is a critical step for the company looking forward,” he said.

The 5.7-inch Mi Note 2 comes just weeks after Samsung killed off its Galaxy Note 7 smartphone with the same-sized screen following a spate of fires and global recall. Xiaomi’s device has a similar design, running a Qualcomm Inc. Snapdragon 821 processor and featuring near field communications and a high definition camera.

The Mi MIX is 6.4 inches and its display covers 91 percent of the phone’s front, with sales due to start next week. Lei said it may face production shortages because of its unique design.

While both new devices target the Chinese smartphone market, the world’s largest, Xiaomi has made no secret of its plans to expand internationally. The Beijing-based company has opened its own retail stores selling handsets as well as fitness bands, rice cookers and vacuum cleaners from an expanding range of connected products.

“Xiaomi changed the entire smartphone industry over the past five years with aggressive pricing strategy,” Lei said. “We will continue to influence the industry with technologies and manufacturing techniques.”

— With assistance by Yuan Gao

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