Samsung to hit back at Xiaomi with budget phone: Report

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Samsung Electronics is gearing up to release a low-cost Tizen-powered smartphone in the $100 price range, according to local media reports, responding to intensifying competition from Chinese budget smartphone makers shaking up the market.

The phone will be launched in India, the world's third-largest smartphone market, by end-January, South Korea's Yonhap news agency reported on Sunday, citing industry sources.

Tizen is Samsung's homegrown operating system which seeks to lessen its reliance on Google's Android. While the majority of Samsung's mobile devices run on an Android platform, the Tizen platform has been used to power some of its wearables, including its first smartwatch products.

The company originally intended to introduce the device earlier this year, but delayed its launch, saying that it needed more time to "enhance the Tizen ecosystem."

"Samsung is targeting first-time smartphone users in India, where there are still many feature phone users," Tom Kang, analyst at Counterpoint Research, told CNBC.

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By positioning it as a budget phone, the firm is trying to avoid a cannibalization of its mainstream android devices, he said.

Samsung's Tizen phone will have a similar look and feel as its Android-powered devices. However, the ecosystem of apps will likely vary, Kang explained.

Samsung, once regarded as an unstoppable force in the smartphone industry, has been struggling amid commoditization in the market, reflected in its latest earnings.

The company's operating profit fell 60 percent on year to 4.1 trillion won ($3.90 billion) in the third quarter as earnings at its mobile division collapsed.

In order to turn around its fortunes, analysts say the company needs to capitalize on rapid growth in demand for low-to-mid-range smartphones in emerging markets.

In India, Samsung faces the double threat of Chinese and Indian low-cost handset markers.

While the company is the biggest mobile vendor in India, its share in India's smartphone market fell to 24 percent in the third quarter from 29 percent in the previous quarter, according to International Data Corporation (IDC).

"If they want to test the waters with this low-cost Tizen phone, they need to do it sooner rather than later," Kang said.