China's Hottest Smartphone Company Has Another iPhone Clone

Chinese startup Xiaomi launched its newest flagship smartphone Monday night, the Mi4.

The phone has specs that rival top-tier phones like Samsung's Galaxy S5 and the iPhone 5S. It has a 5-inch screen and runs a special modified version of Android that Xiaomi uses in all of its phones.

Xiaomi is the buzziest smartphone maker at the moment. It only sells phones in China and a few other emerging markets, but it's right up there with Apple and Samsung in terms of popularity. In fact, it sold more phones than Apple in China. Last quarter, the company said it sold 15 million smartphones. It hopes to sell 100 million phones in 2015.

And a lot of its success, like Samsung's, comes from copying Apple's playbook page by page. The company's CEO, Lei Jun, wears blue jeans and black shirts during product launches and demos, just like Steve Jobs did. At first glance, its products look exactly like Apple's gadgets.

Here's a better look at the Mi4:

And here's Xiaomi's first tablet, the Mi Pad. It has the same screen size, resolution, and general design as the iPad Mini:

During the Mi4 presentation, the company even had a "One more thing..." slide, something Apple was famous for doing back in the day when it had a surprise announcement during keynotes.

No they didnt? Yes, they did! The iconic "one more thing" slide. Priceless - Xiaomi Mi4 pic.twitter.com/bD9UamXVBl

- Sascha Pallenberg (@sascha_p) July 22, 2014

The big guys are already feeling the effects of Xiaomi's aggressive growth. Earlier this month, Samsung reported disappointing earnings. Its profits are shrinking, largely thanks to scrappy startups like Xiaomi selling high-end phones for next to nothing. Samsung's best Galaxy phones cost $600 or more. But Xiaomi sells its flagships like the new Mi4 for just $320.

And that's a big problem for Android manufacturers like Samsung. Apple has a great mobile ecosystem with iOS that you can only get on iPhones and iPads, but there isn't a big difference between what a Samsung Android phone can do versus a Xiaomi Android phone. So, why spend twice as much when you can get a high-end gadget that does the same thing for half the price?

So far, it's working for Xiaomi. It may not be massively profitable, but it is eating away at Samsung and, to a degree, Apple in terms of market share in the limited countries its available. Plus, Xiaomi plans to expand to a few more countries like India and Brazil by the end of the year.

As Samsung fights Apple at the high-end of the market, it's getting hammered on the low-end by Xiaomi.

It won't last forever, but over the next few years, we're going to see Xiaomi become the new Samsung in terms of volume. Xiaomi probably won't be massively profitable like Samsung is now, but it has already proven that it can have a significant effect on Samsung's business.