Let me cut to the chase:
Amusingly (tragically?) Xiaomi’s underwear gnomes plan isn’t even a new idea. Among phone makers, you can see it as far back as Nokia’s catastrophically bad CEO (no, not the one you’re thinking of) proclaiming in 2007 that the world’s biggest phone maker was not to be a phone maker, but an “Internet services company” that just happened to be making phones.
That, of course, ended with Nokia being a company that makes neither.
It’s perhaps more difficult to ascertain what’s real in China than it once was in Japan. It’s a very weird set-up, more convoluted than Japanese keiretsu, with business relationships based on blood as well as reputation.
But I wouldn’t be at all surprised if Lei Jun had Xiaomi make so many non-phone investments precisely because Internet Services is a fiction.