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Xiaomi takes aim at Apple's phablet with new device

Xiaomi

China's budget smartphone maker Xiaomi took the wraps off its new flagship phablet, the Mi Note, at its launch event Beijing on Thursday, positioning it as the company's answer to Apple's iPhone 6 Plus.

The Mi Note, however, is thinner and lighter than its iPhone competitor, with a larger 5.7-inch screen and selling for a fraction of the price.

"What Xiaomi is doing is trying to attack its competitors, device by device. The Mi Note will target the iPhone 6 Plus and Samsung's Galaxy Note 4. While its Mi4 will target the iPhone 6 and Samsung S5," Neil Shah, director at Counterpoint Research told CNBC. "It's going to be a huge hit," he said.

Samsung, however, may be more at a loss than Apple from Xiaomi Note's launch, says Shah.

"It will hurt the Galaxy Note 4 more than the iPhone 6 Plus, because consumers buying the 6 Plus are typically willing to shell out a lot more for a phone. In addition, Xiaomi has not reached Apple's level of brand equity," he said.

"But cost-conscious consumers will definitely see the value proposition in the [Mi Note]… and this could dent Samsung's market share."

The device is priced at 2,299 yuan ($371) – less than half the cost of an unlocked iPhone 6 Plus in China, which starts at $980, according to Tech in Asia.

As Xiaomi's Asian competitors such as Samsung and HTC struggle to wow consumers with their new products, there is window of opportunity for the company to capture market share, say analysts.

Xiaomi has made great strides in the smartphone race in the past year, leapfrogging Lenovo and LG to become the world's third largest smartphone marker behind Samsung and Apple.

Read MoreXiaomi pulls a classic Apple move in lead up to launch

Xiaomi held a 5.3 percent share of the global smartphone market in the third quarter of 2014, trailing Samsung and Apple, who have 23.8 percent and 12.0 percent shares, respectively, according to IDC.

The smartphone maker's meteoric rise has caught the attention of tech tycoons including Facebook's CEO Mark Zuckerberg, who reportedly discussed a potential investment in the company ahead of its $1.1 billion fundraising last month, according to a Reuters report. The deal, however, did not materialize.

While Xiaomi is well known for its mobile offerings, the company has also ventured into the wearable and smart home segments – striving to develop an ecosystem of devices for consumers.

Last year, it debuted its first wearable device – a fitness tracker named the Mi Band– and a series of smart home gadgets including a smart light-bulb, webcam and power plug.