Xiaomi Bets Big on Internet TV 小米押注互联网电视

Smartphone darling Xiaomi is in the new headlines again with the release of its new Internet TV product, including interesting comments by marketing-savvy founder Lei Jun indicating he intends to pour big money into this new endeavor. Specifically, media quoted Lei saying he has invested more than $100 million to acquiring a set-top box developer for Xiaomi’s Internet TV project — quite a hefty sum for such a young company whose business scale is still relatively small. (Chinese article)

We’ll have to wait for reviewers to start taking a closer look at this new product before discussing its longer-term chances of success. But in the meantime, let’s take a look at some of the details that Xiaomi has provided. Word of this new product was first leaked last month, most likely by Xioami itself, as the company looks for new products to fuel its growth. The move into Internet TV looked very similar to one by Xiaomi’s much larger role model Apple (Nasdaq: AAPL), which released its own Internet TV product earlier this year to mixed results.

But to return to Xiaomi, the company’s new Xiaomi Box will sell for a relatively modest 399 yuan, or about $64, and will officially go on sale November 16. (English article; Chinese article) I won’t discuss product specifications too much, since they look quite standard in terms of memory and operating system, which will be based on Google’s (Nasdaq: GOOG) Android OS.

One place where Xiaomi seems well prepared is in terms of content, which will be critical for this product’s success. Media reports say the company has signed agreements with many of China’s major video streaming sites, such as Tencent (HKEx: 700) and Sohu (Nasdaq: SOHU) video, which will ultimately provide the content that people can now watch on their televisions instead of on their computers.

Most of China’s top video streaming sites have been working aggressively to build up their original content libraries to offer the latest Hollywood moves and TV programs to their viewers, and the ability to watch those programs on TVs rather than PCs could become a strong selling point for Xiaomi’s new set-top boxes. This new product also looks like it’s priced quite affordably, which should help it appeal to younger users without lots of money to spend on the latest high-tech gadget.

The other key element that will be critical is the product’s design, specifically whether it’s user friendly. Lei is clearly placing a big bet on the product, based on the size of his initial investment. Judging from the success of the original Xiaomi smartphones and Lei’s strong marketing capabilities, I would say these new set-top boxes should sell reasonably well if they’re well designed. If that’s the case, Xiaomi should be able to boost its position as a company to watch as it seeks to succeed in an Internet TV space where its role model Apple has so far received only a lukewarm response.

 

Bottom line: Xiaomi’s new Internet TV product could experience moderate success if it receives positive reviews from users over the next few months.

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