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Xiaomi Mi3 smartphone: Hands-on preview

Pretty much unknown, unheralded, and unpronounceable to English speakers, Chinese phone maker Xiaomi popped onto the Western radar at the end of last month when it poached Android designer Hugo Barra from Google. The company has been growing in China for a while, recently outpacing Apple on sales in that gigantic, hypercompetitive, but insular market.

Xiaomi's Mi3 shows the iPhone 5C's problem in China – and the Samsung Galaxy S4's, as well. For just $330 (£205) unsubsidised (and almost everything for China's billion-plus people is unsubsidised) you get a big 5in slab of Android running Nvidia's Tegra 4 chip, the first smartphone we've seen with that cutting-edge gaming processor.

Nvidia had a Mi3 at a recent ARM event, and the company let me have some time with it. The phone was a prototype, so I'm not sure what conclusions I can safely draw about performance. The body feels a lot like a Nokia Lumia 920: It's heavy, with smooth rolled edges, a big glass screen and a broad speaker grille on the flat bottom of the phone. The 5in 1080p screen speaks to a country where smartphones are growing as the primary method of Internet access, and folks want big windows onto the world.

But as I flipped through the heavily skinned Android "Mi UI" and played a game of Riptide GP2, I grew concerned about Xiaomi's build quality. Here's where things get murky, because all of my negative experiences could be waved away with the simple phrase: "It's a prototype!"

Screen transitions were a little jerkier than I would have expected with the powerful Tegra 4 processor, for one thing. The speaker made the whole bottom of the phone vibrate in a surprising way. And several of Xiaomi's custom apps quit upon launch. While the Mi3 looks great before you turn it on, after about five minutes it didn't feel like it had the finish of the latest top-of-the-line phones from Samsung, HTC, and Apple.

But at the handset’s wallet-friendly price tag, it doesn't have to. Bear in mind that the $330 (£205) asking price is less than half that of an iPhone 5C, which costs $728 (£455) in China, and has a much smaller screen and older processor. Xiaomi's on-going success will be a test of the "good enough" theory – if it is indeed buggy, it'll show whether Chinese consumers are willing to put up with some bugs to get something that's kind of like an aspirational smartphone, but at a more affordable price.

The other big question, of course, is whether the Mi3 will make any money for Xiaomi. According to Bloomberg, Xiaomi just started making a profit overall. You might think it's impossible to make money off a high-end $330 (£205) smartphone, but Xiaomi has a very different profit strategy from Apple.

"I feel that we're a very different company from Apple," Xiaomi CEO Lei Jun told Bloomberg. "We're probably more like Amazon's Kindle – to sell hardware at cost and then to stack services and content on top of the hardware."

If the Mi3 succeeds and helps the company make a profit, it's very bad news for Apple, which showed with its iPhone 5C that it isn't willing to compromise experience or profit margins to hit a lower price point. We won't be reviewing this China-only phone, but we'll certainly be keeping a close eye on it.