"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.