By now, most investors have heard that Apple had a blowout quarter. Thanks to the booming success of the iPhone 6, particularly in China, Apple grew revenue and earnings per share by 30% and 47%, respectively. The stock soared 8% after announcing earnings. But not everything is going Apple’s way right now. Apple faces stiff competition from low-cost alternatives like Chinese smartphone company Xiaomi. Xiaomi makes devices that look and feel like Apple devices, but for much lower prices. In assessing whether Xiaomi is a serious threat to Apple, I reached out to an expert for his opinion. EXPERT OPINION: “Any business should always be concerned with competitors, even smaller, lesser known ones. There are two reasons why I believe Apple is strong and can withstand competition from low cost providers, whether Xiaomi or better financed and technological experts such as Amazon / Microsoft, etc. First, the majority of devices are in a case anyway - which means people care about the inside of the phone. How well do the applications work? How well does the camera work? Etc. Apple has remarkably strong loyalty and satisfaction. In no small part, that is due to its app store, icloud, itunes, and connection to other Apple devices, which is harder to replicate than just building a sleek handset. Next, Apple has worked out remarkable agreements with cell phone carriers. The carriers would risk angering Apple if they offered subsidies for a knock off product, and the carriers have also acknowledged that the high quality device subsidy has made them a stickier solution and strengthened its customer loyalty.” -Carlos P. Sava, Portfolio Manager Clarendon Capital Management LLC