Xiaomi Beats Apple to Smart TV With $490 Set Coming Next Month

Xiaomi Corp., the smartphone maker that outsells Apple Inc. (AAPL) in China, has beat it on another front. The Chinese company will soon offer a TV that connects to the Web and runs on the Android operating system.

The 47-inch (119-centimeter) TV costs 2,999 yuan ($490) and will be available next month, Lei Jun, founder and chief executive officer of the three-year-old company, said at a press conference in Beijing today. Lei also introduced a new handset he said would be the world’s fastest smartphone.

After building market share by selling mobiles priced at less than a third of the iPhone 5 in China, Xiaomi is entering another market where Apple has said it is seeking to develop products. Xiaomi joins Chinese internet companies Baidu Inc. (BIDU) and Alibaba Group Holding Ltd. that have announced TV ventures.

“Xiaomi and the others are trying to change the business model and thus undercut hardware markers,” said Jean-Louis Lafayeedney, an analyst at JI Asia in Hong Kong. “They provide hardware at cost and make money from provision of content and advertising.”

Baidu announced this month it will start selling a 48-inch TV smart TV with TCL Multimedia Technology Holdings Ltd. to compete with Alibaba, which said in July it had designed a smart TV operating system and set-top box. Samsung Electronics Co. said today it would start selling a 98-inch TV.

Apple TV

Apple now offers a $99 Apple TV product that doesn’t carry live network broadcasting and is mainly used for downloading movies and shows from the iTunes media store or streaming content from services such as Netflix Inc. The Cupertino, California-based company, is working on a “grand vision” to update TV-viewing, Chief Executive Officer Tim Cook said in May.

Xiaomi plans to compete with Apple and Samsung overseas in the smartphone market. The company currently sells its devices in Hong Kong, Taiwan and the Chinese mainland.

Lei in June said the company this year would more than double handset sales to 15 million. Xiaomi is looking to emulate Lenovo Group Ltd. (992), Huawei Technologies Co. and ZTE Corp. (763), which all used the local market as a springboard to become among the largest smartphone makers in the world.

The company’s new handset, Xiaomi Phone 3, uses Qualcomm Inc.’s Snapdragon and Nvidia Corp.’s Tegra 4 processors, Lei said during the briefing today.

Xiaomi, backed by investors including Temasek Holdings Pte and Qiming Venture Partners, last month said it completed a round of funding that gave it a valuation of $10 billion.

China Smartphones

In the China smartphone market, Xiaomi rose to sixth place in the quarter ending June 30 from eighth a year earlier, researcher Canalys said Aug. 9. Apple was seventh.

Xiaomi has won sales with inexpensive handsets running Google’s Android system. Apple sells the iPhone 5 on its China website from 5,288 yuan.

Last month Xiaomi started sales of its first device for China Mobile Ltd. (941), the world’s largest phone company with 745 million subscribers at the end of July. The handset is priced at 799 yuan. Apple has yet to offer a device through China Mobile.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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