Xiaomi Mi Note: A Death Knell for Apple (AAPL) Stock?

Apple Inc. (NASDAQ:AAPL) stock, one of Wall Street’s darlings and one of the best-performing stocks of the last decade, is facing a feisty new competitor in China’s Xiaomi, the smartphone-maker that burst into existence in 2010.

Xiaomi Mi Note: A Death Knell for Apple (AAPL) Stock?
Source: Xiaomi

The five-year-old company’s new phone, the Xiaomi Mi Note, is earning rave reviews and being championed by some as a superior version of the iPhone 6 Plus.

No stranger to competition, Apple consistently delivered innovation after innovation since the return of Steve Jobs in 1997. Gradually it got the best of competitors like Microsoft Corporation (NASDAQ:MSFT) and — in a far more commanding sense — BlackBerry Ltd (NASDAQ:BBRY).

While Samsung Electronics Co Ltd (KRX:005930) (KRX:005935) has been the biggest competitor to Apple in recent years, Apple needs to turn its focus to Xiaomi immediately or risk a steep AAPL stock price reduction in coming years as the fast-moving company seizes a greater and greater portion of the global market.

PCWorld lauded the brand-new Xiaomi Mi Note today, writing that the 5.7-inch phone illustrates that

“Xiaomi is stepping up with its smartphone design, and its new phablet goes to show that the company is no slouch in the business, but can run with the best of them.”

Don’t Sleep on Xiaomi, Tim Cook

Listen, I myself own AAPL stock, mostly because of a devoted (crazed?) fanbase that willingly camps out for new product releases and pays no mind to the obscene price tags. But Xiaomi presents a unique threat to AAPL stock because of its astronomic growth.

The most recent market share numbers from Gartner peg Xiaomi’s slice of the global smartphone market at 5.2%, “with an increase of 336 percent driven by strong performance in China where it became market leader.”

Xiaomi, whose first phone debuted in 2011, is now the world’s third-largest maker of smartphones.

But even more frightening for AAPL stock investors should be the matter of how Xiaomi gained so much market share so quickly — namely, its rock-bottom pricing. PCWorld writes of the Xiaomi Mi Note:

“The phablet is meant to be a high-end device, but will start at the relatively low price of 2299 yuan ($376) when it goes on sale in China on Jan. 27. For consumers in China, that could be a bargain, considering Apple’s iPhone 6 Plus starts at 6088 yuan in the country.”

Yes, you read that correctly. The Mi Note sells for a little over a third what an iPhone 6 Plus would set you back. And it’s not like Xiaomi is selling a completely inferior product: PCWorld calls the Mi Note “lighter, narrower, and sleeker than the iPhone 6 Plus.” Xiaomi CEO Lei Jun also noted that it was thinner, shorter and has a bigger screen than the blockbuster AAPL product.

Xiaomi also enjoys an intimate relationship with Qualcomm, Inc. (NASDAQ:QCOM), which was an extremely early investor in the company and serves as Xiaomi’s chip provider.

Are you starting to see why Apple CEO Tim Cook should keep a close eye on Xiaomi? A cheaper, arguably superior version of the iPhone 6 Plus, rapidly growing market share, and industry connections show that the company is no joke. If Xiaomi can continue making lower-cost phones with more attractive features, AAPL stock could take a serious blow as people start debating how much that coveted Apple brand is worth.

Xiaomi’s Mi Note doesn’t mean Apple’s going to implode tomorrow. But it’s a big threat that investors need to watch  carefully and take seriously.

In the meantime, I’ll be crossing my fingers for a Xiaomi IPO in 2015.

As of this writing, John Divine was long shares of AAPL stock. You can follow him on Twitter at @divinebizkid.

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