Meanwhile, TCL will invest $80 million in the first phase of a cloud service platform that it is setting up with Cisco as it steps up a push into Internet-focused services. The Guangzhou-based joint venture, in which TCL has 80% stake, will provide services including videoconferencing, which was showcased at the summit The videoconference services, which have been primarily offered to enterprise users, would be expanded to a wider consumer base with user-friendly functions and high video quality.
At the summit, Li announced plans to set up TCL’s largest R&D center in Hong Kong by renting an entire building in the city’s Science and Technology Park. It will be the company’s third R&D outside China after Silicon Valley and France. Expected to open in 2016, it would eventually house 1,000 people. Li also said the R&D center in Hong Kong is likely to work on cloud data and internet services.
Purely online retail
As TCL lays the groundwork for its new focus on internet services, Xiaomi had been upfront about its intention of putting the internet in the heart of its business strategy from the very beginning.
“Our key differentiator is that we set out to build a mobile internet company not a hardware company,” said Lin Bin, Xiaomi co-founder and president.
The fast-rising company is the world’s third largest smartphone supplier behind Apple and Samsung Electronics, according to market researcher IHS iSuppli. What sets Xiaomi apart from other mobile manufacturer is its purely e-commerce retail model, which allows the company to eliminate channel costs and offer high-end handsets at $275 and low-end ones at about $84.
Bin said that without good quality products, it is almost impossible to sell on the web. He added that competition in the smartphone market is so intense that one generation of success does not guarantee success in the next.
“The internet is an open platform, it’s so open that word of mouth is critical to internet companies’ success. And word of mouth plays either way. When you put out a good product, it goes viral and spreads. When you put out a bad product, it goes viral even faster,” he added.