"Long-term, that might be an option [to go to the Blues] but we're not that good at the Chiefs that we can just up and leave and do other things," Smith said.
"We are trying to create something special here and that's where a lot of my focus is. Our challenges are like the Blues' challenges so I already have what I see as an important job here.
"I'm loving the Chiefs. I'm hugely committed to this team. I love the players and the coaching set-up and the coaching team.
"I think we've got a chance to create something special so that was actually part of my decision-making process.
"I have got an existing contract with them, albeit I could have got out [of it] to go and coach someone like England but in the end, I didn't want to, so I probably don't want to go and coach anyone else."
NZRU chief executive Steve Tew said they would do "everything" to keep Smith in New Zealand rugby and the pair are yet to have detailed discussions. Smith said a role at the Blues had not been discussed.
"I'm yet to really do anything with the NZRU," he said. "That's in discussion about me wanting to stay at the Chiefs. So clearly the Chiefs come into that equation as well.
"I've got a job for the next year and I'm pretty comfortable that the NZRU will help out with something and I'll be contributing at some level to New Zealand rugby."
Smith admitted the temptation to join England was a strong but he would have struggled to coach against the All Blacks.
"When I finished with the All Blacks, I was on a high and I really enjoyed the international scene and the contest at that level. For a competitive person, it's the ultimate. I was really enjoying it and wanted more of it.
"This decision probably means that option is gone. I've made a philosophical decision about where I want to be for this part of my life. This is it and I'm pretty happy about it."
Meanwhile, for years the Chiefs have been known as the team with plenty of flash and dash but very little grunt up front.
Until 2012, which has seen a remarkable change in the franchise.
So what's the difference this season? Assistant coach Tom Coventry says there is no secret formula. "It's a lot of hard work the guys are putting in week in and week out to get this job done.
"We spoke early on in the [season] about working as a pack. I know it sounds a little old fashioned but sharing the workload among eight players rather than having guys who have a specific role to carry [the ball] and others to win lineout ball and making our defensive tackles," Coventry said.
It must be working, with the team on its best-ever winning streak of eight games in a row.
The Chiefs team for their next game against the Lions at Pukekohe on Saturday will be named today.
