Xiaomi Eyes Internet TV

Xiaomi preparing Internet TV?

Media are all abuzz that trendy smartphone maker Xiaomi may be preparing to launch an Internet TV, after a photo was leaked showing boxes of the packaging for such a product in a warehouse. Of course it’s always possible the photos are doctored and were created by someone trying to stir up gossip about this up-and-coming company co-founded by the marketing savvy Lei Jun. But I’ve had a look at the photo, which features stacks of boxes with the words “Xioami TV – L47M1-AA 47-inch” printed on them, and have to say the pictures look authentic, meaning the rumors may be true.  (English article; Chinese article)

This story becomes even more intriguing because media are saying that all the photos on Sina’s (Nasdaq: SINA) popular Weibo microblogging service mysteriously disappeared shortly after they were posted, hinting that Xiaomi may have requested the removal. Of course this could be just another smart marketing move from Lei, designed to create buzz before another Xiaomi product launch. But the nature of this latest leak does seem less intentional than similar moves in the past, leading me to suspect that perhaps this time Xiaomi is still trying to keep news of the product under wraps.

From a broader perspective, I was actually a bit surprised at this latest rumor since Internet TVs in general have not been very quick to find an audience. A wide range of companies have entered the arena, including global tech giant Apple (Nasdaq: AAPL), leading Chinese PC firm Lenovo (HKEx: 992) and homegrown Chinese player LeTV (Shenzhen: 300104). And yet none of these names has found much success in the space for these TVs that are optimized for Internet use.

All that said, let’s have a look at these latest rumors that are largely the result of the mysterious photo. Based on that image, Xiaomi appears to be preparing to launch a 47-inch TV, which would presumably be an Internet-optimized product similar to the ones from Apple and Lenovo. According to the reports, the new TV will include capabilities for wi-fi and Xiaomi’s own MiLink technology. The product is also certified by sound equipment specialists Dolby and DTS. The person who leaked the photo also said the product could be officially announced at Xiaomi’s annual event in August.

Xiaomi has spent most of its short life as a specialist maker of  moderately priced, high performance smartphones. The company has produced 2 generations of such phones so far, and has achieved strong sales through well-crafted marketing campaigns designed to generate lots of buzz before each launch. The company was also in the headlines a year ago when it received a relatively large $216 million in third-round funding from an international investor group that reportedly included Russian high-tech investor Digital Sky Technologies (DST). (previous post)

Xiaomi took its first step outside its original smartphone business late last year when it launched a low-cost set-top box product, the Xiaomi Box. But then it quickly withdrew the product after running into regulatory obstacles. (previous post) It appeared to have the problems solved when it announced a new tie-up earlier this year with CCTV, the well-connected state-run broadcasting giant. (previous post)

This new TV product, if the rumors are true, looks like an extension of its earlier diversification strategy, and would most likely be designed to work well with the Xiaomi Boxes. While I should commend Xiaomi for moving so quickly into new product areas, I would also caution that perhaps it is trying to do too much too quickly for a company of its size.

If even Apple couldn’t find success in Internet TV, then I doubt Xiaomi will be able to either, at least not initially. And it’s also quite possible that Xiaomi will spread its resources too thin with this new TV, causing it to lose focus on its core smartphones that are its most promising product line so far.

Bottom line: Xiaomi’s new plans for an Internet TV look intriguing, but will draw attention away from its more promising smartphone product line.

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This article was first published in the online edition of the South China Morning Post at www.scmp.com.

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