China’s LeEco to shake up consumer tech markets
Bigger TVs, cheaper smartphones, e-cars, movies all connected
SAN FRANCISCO — Most North American consumers haven’t heard of LeEco, but the Chinese technology company is setting out to become a household name with smartphones and flat-screen TVs that undercut the prices of Apple, Google, Samsung and other industry stalwarts.
LeEco heralded its entrance into the U.S. market this week during a showcase in San Francisco, where the company unveiled a sleek smartphone called the LePro 3 that will sell for $400, and an Internet-connected TV with a seven-foot screen priced at $5,000.
LeEco positions the LePro 3 as an alternative to Apple’s latest iPhone and Google’s Pixel phone, whose prices both start at $650. LeEco is promising its giant TV, called the UMax 85, will be as good as or better than other high-end home entertainment systems that cost $8,000. The company also is selling a smaller smartphone and smaller TVs with screens ranging from 43 inches to 65 inches.
Besides the phones and TVs, LeEco also is coming to the U.S. with a virtual-reality headset, a high-tech bicycle and an electric car in a challenge to Tesla Motors.
LeEco wants to bundle the devices with other services, including an online video package of shows and movies that ties into its origins as the “Netflix of China.”
LeEco, which stands for “Happy Ecosystem,” is branching out to challenge technology leaders who have been able to demand a premium for their products partly because they have been pleasing U.S. consumers for years.
“America is the most important global market for us,” LeEco CEO Jia Yueting said during a presentation. “Once we get the hearts and minds of U.S. users, we can move on to the hearts and minds of global users.”
Innovation in the U.S. has hit a “bottleneck,” making it an optimal time for LeEco to enter the market, Jia said in an interview with The Associated Press that was also translated.
The expectations for LeEco are modest. The research firm Strategy Analytics projects that LeEco will sell about 25 million smartphones worldwide this year. By comparison, Apple sold 214 million iPhones in the past year ending in June. Other Chinese companies that tried to make a splash in the U.S. consumer electronics market barely made a ripple.
But LeEco is making a major commitment. This summer, the company paid $2 billion for budget-TV maker Vizio, a well-known brand that sells in Costco and other prominent chains. It employs several hundred workers at its U.S. headquarters in San Jose, with ambitions to expand in Silicon Valley. Earlier this year, it spent another $250 million to snap up a 50-acre site in Santa Clara, Calif., where it has approval to build an office complex that could span up to three million square feet and accommodate about 12,000 workers.
“They are not taking a half-baked approach,” said Gartner analyst Werner Goertz. “But I think they are going to be hemorrhaging money for the foreseeable future.
“The question is how long they can sustain this strategy?”
Jia, who has accumulated an estimated fortune of nearly $5 billion, will shoulder a huge chunk of any losses because he owns half of LeEco. He declined to say how much LeEco has spent in the U.S. so far.
“We are financially prepared to bring a new model and a new value for the U.S. consumers,” he said.