XML has a large amount of overhead, both in bandwidth and parsing (have a look at the amount of XML that is exchanged just for logging in with XMPP). For low powered devices and low bandwidth connections such as with mobile devices, there is an undeniable gain.
It's not necessary to break anything, just as TLS and compression are optional features of the connection, something like switching to ASN.1 would be possible, given a mapping of a pre-defined subset of the main XMPP protocol and commonly used extensions.
http://xmpp.org/extensions/xep-0322.html (originating from the IoT community, where XMPP is commonly, and successfully, used on embedded devices like you describe).
