Forbes columnist: Why I said Xiaomi wants to acquire Xunlei

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Yesterday, Xunlei CEO Zou Shenglong published an English article, but his purpose was not to show off his English skills to Lei Jun, but to clarify a column on the website of Forbes magazine. This column stated that Xunlei's current business model is very consistent with Xiaomi's needs, so the possibility of Xunlei being acquired by Xiaomi is increasing.

The author of this column is Doug Young. He is an American working in China. He is currently studying at the Fudan School of Journalism. Before writing a column for Forbes, he was a long-time Reuters reporter. He also has Weibo and WeChat public accounts, and his own website.

I met him three or four years ago when I was working at NetEase. At that time, I was responsible for contacting technology columnists, and now I have become a columnist myself - the person I served at the time. Yang Ge also published his column on NetEase at the same time, and I was responsible for contacting him to write a new column and publish the payment.

Although we hadn’t seen each other for a long time, after this incident, I saw this familiar name and found that our conversation was as natural as if we had just met yesterday. So the following is the content of our conversation.

LJ = Shuhang DY = Yangge

LJ: Xunlei CEO Zou Shenglong denied your hypothesis. You wrote in your article that Xiaomi would buy Xunlei. I think even so, there are still some interesting points to explore.

First of all, Xunlei has a long history of being supported by Lei Jun and Xiaomi and is part of the so-called "Lei Jun system", so why do you think now - rather than any other time - is the right time for Xunlei to sell itself?

Second, Xunlei's product line is attractive to Xiaomi. It has Internet infrastructure resources and a content platform, which can help Xiaomi's ecosystem. However, Xiaomi does not acquire all the companies it needs. As Zou Shenglong said, "Acquisition has never been Xiaomi's style." So what do you think about this issue?

Third, let’s get this straight, do you think Zou was “lying” in his response?

DY: Haha, I didn’t realize my article would have such a big impact! Let me answer your question now.

I think now is a good time to sell because there is enough money in the system to buy stocks, which is why many Chinese companies listed in the United States are preparing to go private.

Secondly, I think it is very difficult for video companies to support themselves. Youku Tudou is an example.

Third, I think Xiaomi would be happy to have its own exclusive content provider since they are in a tug-of-war with LeEco.

I think the video element is very critical among the company elements that Lei Jun wants, because he feels that he is under great threat from Jia Yueting.

LJ: What you said above is very true, but Xunlei may still not sell, even though Xiaomi wants to buy it. If both parties do not agree, the contract cannot be signed.

Xunlei is now more of a content delivery network (CDN) provider than a content provider, so Zou may not be too worried about his future.

DY: That’s right, but everyone has his psychological price. Lei Jun may give Zou some Xiaomi stocks - which are now much more valuable than Xunlei stocks.

LJ: Do you mean that Zou might just be complaining that Xiaomi's offer was too low and he couldn't accept it? If so, we may only be able to judge the possibility of this deal by listening to Lei Jun himself.

DY: That may be the case, and Chinese company founders are sometimes too proud. They may not sell their company even if they see it slowly dying. Dangdang is a good example.

LJ: This has happened before. I remember Wang Xiaochuan of Sogou chose to cooperate with Tencent because he was afraid of being controlled by Qihoo. At that time, almost everyone thought that Sogou might be together with Qihoo, and Wang Xiaochuan surprised us all.

Back to Dangdang, I haven't heard any news from them in recent months.

Is there another possibility? For example, Xunlei can continue to hold out for a few months and eventually be sold to a third party instead of Xiaomi?

DY: I am afraid that no other company would be willing to buy Xunlei now. It is not a strong video company, while each of the three BAT companies has video assets.

LJ: Well, you still think Xunlei is more of a video company than an infrastructure company, and Xunlei wants people to think of it as the latter. So Xunlei's assets are mainly video content - can this be reflected in, for example, Xunlei's financial statements?

If we believe that Xunlei still makes a living from video, then it is indeed in a dangerous situation. Otherwise, it should still have a chance.

DY: I actually don’t observe them very closely, so maybe I don’t understand their business model better than you do.

LJ: Actually, even if Xunlei is mainly busy with CDN business now, they still face strong threats from existing large CDN providers, so no matter which way they choose, things will not be smooth sailing. But if we don’t talk about the video problem, Zou Shenglong has stronger confidence that Xunlei can keep running independently.

And if he doesn't nod, it will be difficult for Xiaomi to force a deal. ——This is my personal opinion.

DY: That's right, although if Xiaomi decides to find another video partner without Xunlei's willingness, this will not be good news for Xunlei.

In any case, it's all just speculation.