China’s internet firms find new battle pitch in smart TV

September 24, 2013 Leave a comment

China’s internet firms find new battle pitch in smart TV

Staff Reporter

2013-09-23

Internet television is set to explode this year. In China, internet companies such as Alibaba Group, Tencent Holdings, and Xiaomi Technology, as well as online video portal LeTV.com, all have jumped on the internet TV industry, but which one can eventually stand out remains to be seen, China Entrepreneur Magazine reports.

Internet TV, or online TV, is the digital distribution of TV programs via the internet. Earlier this month, Xiaomi simultaneously introduced its Xiaomi 3 handset and the Xiaomi TV, but the backbone of the company — the smartphone — has yet to be tested by the market, the report said. Xiaomi described its TV product as “equipped with 47-inch 3D Smart TV, the first TV for young people.” In the eyes of Xiaomi chairman Lei Jun, a smartphone is the TV remote control, while the TV is the phone’s display. Larger phone screens are still not satisfying to the video-viewing crowd, Lei said. The best solution to resolve the small-screen problem is to link the phone to the TV, hence the creation of Xiaomi TV.Lei believes by linking internet TVs with handsets will effectively expand the smart TV market in the next few years.

Xiaomi’s pricing logic goes against the trend, selling the new product at half the market value in the first stage. Xiaomi stands to lose money, but later it can rely on the economy of scale and zero-cost component pricing to dilute the setbacks and grab a large market share. Xiaomi priced its TV at only 2,999 yuan (US$490), near production costs.

If TV sales are not big enough, Xiaomi might incur big losses in the internet TV business, Lei said.

LeTV.com, operated by Beijing LeTV Mobile Media & Technology, is an online video portal in Beijing. In 2009, the company set up a new unit to develop a set-top box, which can connect to a TV set and an external signal, such as the internet.

LeTV chairman Jia Yueting wants to redefine the TV by using the internet model, describing its product as a “super TV.” The device offers a large quantity of video platform content and third-party, big-screen internet applications. Jia believes internet firms will become the future leaders of smart TV, leaving behind traditional TV companies unless the latter can transform their business models.

Filed under TMT Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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