Xiaomi Moves Further From Apple With Game Box

Xiaomi tries its hand at gaming consoles

Up-and-coming smartphone maker Xiaomi’s recent campaign to distance itself from previous role model Apple (Nasdaq: AAPL) is gaining momentum, with word that it’s preparing to launch a game console. Industry watchers will know that Xiaomi’s charismatic founder Lei Jun has enjoyed seeing his company compared to Apple for most of the last 2 years, and I suspect Lei also considers himself as the equivalent of a Chinese Steve Jobs. But with Jobs no longer in Apple’s life and Apple’s own fortunes plunging sharply in China this year, Lei seems to have suddenly lost interest in his former role model.

I doubt that this new move into gaming consoles, if it’s true, has any direct relationship with Lei’s recent decision to distance himself from Apple, since such a major move must have been many months in the planning stages. Still, the move does highlight the fact that Xiaomi, after following a product lineup that closely mirrored Apple’s for most of its short lifetime, may be starting to diverge into its own development path.

In my view, Xiaomi may be moving into too many new product areas too quickly for such a young company. But Lei has shown that he isn’t a man who likes to move slowly, and Xiaomi’s recent winning of $2 billion in new funding (previous post) shows that investors with lots of money to spend believe in his vision for the company.

The latest reports cite an unnamed company source saying Xiaomi is developing a gaming console that would be based on Google’s (Nasdaq: GOOG) Android operating system. (English article) The reports indicate the product could be close to a launch, which could be announced as soon as next month during a previously planned Xiaomi event. The console would be part of Xiaomi’s bigger strategy to develop an ecosystem allowing users to move freely between different devices like smartphones, Internet-enabled TVs and gaming consoles, for a wide variety of functions.

This new product roll-out is just the latest for Xiaomi, which has risen quickly since the launch of its inaugural smartphone last year. Since then, Xiaomi has also rolled out a set-top box, and is reportedly developing its own Internet TV and is also eying tablet PCs. While nearly all of the products up until now have mirrored similar offerings from Apple, this gaming console would mark a major departure since Apple has no such product in a market dominated by Microsoft’s Xbox (Nasdaq: MSFT) and Sony’s PlayStation (Tokyo: 6753).

This departure would come after Xioami also launched a low-end smartphone, the Hongmi, earlier this month. That launch also differed from Apple, which for years resisted entering the lower end of the smartphone market but is reportedly now preparing its own cheaper iPhone model for launch later this year.

Lei said earlier this month that his company should be compared with e-commerce giant Amazon (Nasdaq: AMZN) rather than Apple (previous post), in one of the first signs I’ve seen of his new direction. I would say this latest gaming console move makes Xiaomi look more like Microsoft, though I doubt that’s a comparison that Lei would like since the US software giant is often considered a follower rather than a product leader.

So, what do I think of this move into yet another product area by Xiaomi? I’ll admit that Lei definitely seems to have a vision for his company, and investors have shown their confidence in that vision through their latest mega-investment. But I would still caution that the company is moving into too many new products too quickly, and could quickly become overwhelmed as different problems occur for all these new offerings. Regardless of what I think, it does seem clear that Lei is determined to quickly start using all of his new investment dollars, and I expect we’ll see many new Xiaomi products coming into the market over the next year.

Bottom line: Xiaomi’s reported plans for a gaming console reflect its rapid expansion into many new product areas, which could end up causing problems for the company.

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