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How Xiaomi Is Moving to Take Over the Smartphone World

Xiaomi just raised $1.1 billion in new funding, sending its expectations higher. Its competitors had better hope they're not about to be run over.

Xiaomi smartphones

Xiaomi is a smartphone company that you may not know very well, but if the company has anything to say about it, you will be hearing about them much, much more in the future.

The Chinese company just brought in another $1.1 billion in investment funding, according to a Dec. 29 story by Forbes, as it continues to grow itself to take on the heavyweights in the worldwide smartphone marketplace. And that $1.1 billion is only part of the story. The 5-year-old company is now being valued at some $45 billion.

"Less than three years ago when it last raised money in June 2012, it was worth $4 billion," reported Forbes.

Even more amazing is that Yuri Milner, the Russian billionaire investor who controls the DST Global investment company, told Bloomberg on Dec. 29 that he believes that Xiaomi's valuation could even hit $100 billion in the future, based on its successes so far and on its new investment funding. Milner is also an early investor in Facebook and Alibaba Group.

If Samsung, Apple, BlackBerry and the rest aren't paying close attention to this nascent phone maker, they're going to be in big trouble.

Xiaomi is on a path of rapid growth as it offers low-priced phones in China and other developing markets. The company doesn't build its own devices, but instead uses contract manufacturers to build its products, according to Bloomberg.

Its next flagship phone, an expected Mi 5 successor to its existing Mi 4 phone, is rumored to be making its debut in January at the annual Consumer Electronics Show (CES) in Las Vegas, according to Forbes.

So far, the company's products have not yet arrived in the United States or in Western Europe, but this substantial new investment could certainly help the company make that transition to expanding into these markets. And if it doesn't happen right away, I certainly think it will happen at some point in the next year or two.

A Gartner study earlier in December found that Xiaomi is growing explosively—selling 15.8 million phones worldwide in the third quarter of 2014, compared with 3.6 million sold worldwide in the third quarter of 2013—while market leader Samsung continues to struggle with reduced sales and revenue, partly due to the rise of low-priced Chinese competitors like Xiaomi.

For consumers, this could be a good thing as new phones with good features and lower prices arrive, but for the established market leaders, this could be a tough battle in the future.

Let's hope Samsung, Apple and the rest don't bury their heads in the sand and instead come out fighting with more innovations, more competitive pricing and a new can-do attitude to fight the onslaught that companies like Xiaomi will eventually bring to the United States and elsewhere.