Chinese firm LeEco looking beyond smartphone business

Looking beyond smartphones, Chinese company LeEco is planning to bring its Internet-enabled TVs and cars into India.

As the Chinese new year dawns, LeEco, the company formerly known as LeTV is hoping to usher in a new beginning in India. The initial signs seem imminent. It has sold 70,000 phones in the first sale and bagged orders of 1.5 lakh phones in two more flash sales. To address this burgeoning demand, LeEco has put in place 555 service centres across India and 24×7 toll-free helpline.

But this is not what the Beijing headquartered company is all about. “Phones are just the starting point. The larger play is around being a strong player across the content ecosystem,” says Tin Mok, Group Vice-President and CEO, APAC of LeEco. In a way, the company looks to be a combination of Amazon (with its Kindle device) and Netflix (content) but at a larger scale.

LeEco came into existence last year in China and has already sold 4 million smartphones and 3 million televisions in China. The company, however, believes that being a pure play device maker is a thing of the past. “Hyper competition, constant margin squeeze due to falling hardware prices will make it unviable,” explains Atul Jain, COO of Smart Electronics Business, LeEco India.

It is not about selling boxes anymore, which is getting commoditised but about giving a different kind of experience, having the mix of entertainment, utilities and other services that will ensure more stickiness, opines Huawei India Vice-President Sales Consumer Business Group P Sanjeev. LeEco has already signed contracts with Eros and Yupp TV, wherein users can watch content on their phones.

To understand the company strategy, one needs to look at its inception. Founded in November 2004 by Jia Yueting and Liu Hong, close friends, they decided to focus on digitalising content in China, to help people watch soap operas or football games on their phones, instead of relying on their television sets.

The company embarked on this journey by using its own money, with help from some well wishers. Currently, Letv.com owns most wide-ranging copyrights of TV series and movies in China, a feat that it is looking to emulate in other geographies — notably India and the US.

From there the company went on to other related businesses, got listed on the Shenzen stock exchange in 2010 and went on to launch LeTV film corporation, which is producing Great Wall of China , starring Matt Damon.

In internal meetings, Jia is often said to have outlined his vision of ‘six screens, one cloud’ strategy that aims to create an integrated experience for users of mobile phones, tablets, computers and televisions, people seeing movies in theatres and even on automobiles. The company has partnered with Aston Martin to jointly develop an electric vehicle.

All this also points to the increased confidence, higher risk appetite and a conscious effort to remove the ‘cheap’ associated with Chinese products.

“Chinese companies are getting more confident of the ecosystem play as they look to move up the value chain,” says Sanchit Vir Gogia, Analyst, Greyhound Research.

While all this sounds impressive, India is a tough smartphone market to crack, which is dominated by Samsung, with a 26.8 per cent marketshare in 2015, according to IDC. The share of smartphones in the Indian market was around 40 per cent in 2015, IDC added.

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