China’s LeEco Enters US Consumer Tech Market, Shake Up Looms

LeEco is not a popular brand in the US, but the Chinese technology company is embarking on becoming a household name with smartphones and flat-screen TVs. They want to be known as a developer of products that undercut the prices of Google, Samsung, Apple and other industry stalwarts.

LeEco announced its entrance into the U.S. market during a Wednesday showcase in San Francisco. At the event, the company introduced a sleek smartphone called the LePro 3 that will sell for $400. They also showcased an internet-connected TV with a 7-foot screen priced at $5,000.

LeEco positions the LePro 3 as an option to Google’s Pixel phone and Apple’s latest iPhone. Both have prices that start at $650. LeEco is assuring its giant TV, called the UMax 85, will be as good or superior to other high-end home entertainment systems that cost $8,000.

Both the TV and phone will go on sale Nov. 2 in LeWeb.com, LeEco’s online store. Also, the company is offering a smaller smartphone and smaller TVs with screens varying from 43 inches to 65 inches.

Moreover, LeEco is coming to the U.S. with a high-tech bicycle, a virtual-reality headset, and an electric car in a challenge to Tesla Motors.

The company plans to package the devices with other services. These include an online video suite of movies and shows that ties into its beginnings as the “Netflix of China.”

LeEco, which stands for “Happy Ecosystem,” is diversifying to dare technology leaders who have been able to command a premium for their products, partially because they have been satisfying U.S. consumers for years.

LeEco CEO Jia Yueting said through a translator during a presentation that America is the most important global market for them. “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 come to a logjam. This makes it an ideal time for LeEco to enter the market, Jia said in an interview. He visualizes creating a platform that allows consumers to switch from LeEco TVs to phones to cars to watch its video service and utilize other applications that that company intends to introduce.

Gartner analyst Werner Goertz said the company is using the devices as “Trojan horses” to provide its digital services. “This is a general trend in the industry, and LeEco is a prime example of how companies are subsidizing hardware with ulterior motives.”

Goertz noted that Google is likewise selling its new Pixel phone in an attempt to direct more traffic to its search engine and other services. Nonetheless, that device is being offered at a superior price. Amazon’s Echo also is designed to boost sales at the company’s e-commerce site. Echo is an internet-connected speaker that understands and responds to spoken language,

The prospects for LeEco are reasonable. The research firm Strategy Analytics expects LeEco to sell about 25 million smartphones globally this year. In contrast, Apple had sold 214 million iPhones last year ending in June.

Other Chinese firms that sought to make waves in the U.S. consumer electronics market have hardly made a ripple.

But LeEco is making a major commitment.

Building Ecoworld

The company shelled out $2 billion for budget-TV maker Vizio during the summer. Vizio a popular brand in the U.S. that retails in Costco and other well-known chains. It retains several workers at its U.S. headquarters in San Jose, California, with plans to expand in Silicon Valley. It spent another $250 million earlier this year to grab a 50-acre site in Santa Clara, California. The company aims to build an office complex that could extend over to 3 million square feet and have room for about 12,000 workers. Jia plans to name the complex “EcoWorld.”

Goertz said that they are not taking a half-baked attitude. However, he thinks they are going to be bleeding money for the immediate future. The question is how long they can support this strategy?”

Jia has accumulated an estimated fortune of nearly $5 billion.

Jia will assume a large piece of any losses because he owns half of LeEco. He refused to divulge how much LeEco has splurged in the U.S. so far.

“We are financially prepared to bring a new model and a new value for the U.S. consumers,” Jia said.

 

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Samsung Offers Monetary Incentives to Halt Note 7 Losses

On Thursday, Samsung Electronics offered monetary incentives for customers in South Korea. These are for consumers who trade in their Galaxy Note 7 smartphones for other Samsung Models. The company rushes to shore up its name in the heels of a destructive safety disaster.

The South Korean giant is in damage-control mode as rivals Apple and LG Electronics attempt to steal market share from the global smartphone leader following the scrapping of its latest flagship device.

See Related Article: Samsung Temporarily Halts Note 7 Production

The company is enhancing its marketing and promotional efforts on the other Galaxy-series smartphones to soften the blow from the termination of the premium Note 7. The Note 7 was finally ditched this week after failing to put an end to overheating problems, which caused some of the phones to catch fire.

Samsung started distributing protective gloves and fireproof boxes to customers in the United States returning potentially explosive Note 7s.

In its home market, the smartphone manufacturer began to offer refunds or exchanges for other products. Customers who returned their Note 7s, which cost about $880, were offered a coupon worth 30,000 won ($26.91). Meanwhile, those who opted to swap fir another high-end smartphone will get an additional 70,000 won mobile credit.

Samsung said in a statement that the incentives would compensate consumers for their huge inconvenience.

Following days of heavy losses, Samsung shares had rebounded 2.4 % by 3:55 GMT in a flat broader market.

The firm cut its quarterly profit estimate on Wednesday by $2.3 billion to show the impact of the Note 7 withdrawal. This provides some investors hope that the monetary cost of the fiasco had been largely accounted for.

See Related Article: Q3 Profit Grew Amid Galaxy Note 7 Disaster for Samsung

The real damage is to Samsung’s reputation

However, several analysts acknowledge the real risk to South Korean conglomerate rests in the reputational damage it bears in a cut-throat industry.

The Note 7 letdown could challenge economic growth, South Korea’s central bank said. However, the institution said it needed more time to consider the effects.

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Samsung Temporarily Halts Note 7 Production

South Korea’s Yonhap news agency reported Monday that Samsung Electronics has temporarily stopped production of its Galaxy Note 7 smartphones. The company suspended production following reports of overheating of the replacements for the fire-prone phones.

Yonhap said Samsung took the exceptional measure for the sake of consumer safety, quoting an unnamed official at one of the electronic giant’s supplier.

The effort follows pronouncements by US carriers T-Mobile and AT&T to halt the distribution of new Note 7 smartphones to customers to exchange erstwhile models while replacement devices are being investigated.

Samsung did not respond to requests for confirmation on the news agency’s report.

The Note 7 recall is Samsung’s biggest crisis in years and is the company’s first and only smartphone recall to date.

Samsung pronounced on September 2 a global recall of 2.5 million Note 7s because of the phones catching fire due to defective batteries. However, similar problems occurred when a replacement Note 7 began smoking inside a Southwest Airline flight in the US on October 5.

The device was a Galaxy Note 7 picked up by passenger Bryan Green from an accredited AT&T store on September 21 as a replacement for his old Note 7 that he returned when the global recall was announced.

Airport officials and major airlines advised passengers not to use the phone on board.

Singapore Airlines banned the charging and powering up of Note 7 phones on all its flights.

Hong Kong International Airport also strongly advised passengers not to put the phones in checked baggage and to stop using or charging Note 7s on aircraft.

AT&T Inc announced that it would discontinue dispensing replacement Note 7s as Mobile carriers also took action on Monday. It would instead let customers with a recalled Note 7 swap their device for another Samsung smartphone model or any other smartphone of their choice.

Replacement and sales of Note 7 discontinued

While Samsung is investigating “multiple reports of issues” with its top-of-the-line device, T-Mobile US Inc said it was temporarily suspending replacement and sales of new Note 7s.

In addition, the no. 3 wireless carrier offered their customers who brought in their Note 7s a $25 credit on their phone bill.

Meanwhile, Telstra Corp, Australia’s largest carrier, said that Samsung had halted the supply of new Note7s, while fellow Australian carriers Vodafone and Optus acknowledged that they had stopped distributing new Note 7s.

Samsung said it was investigating reports of “heat damage issues” and would act immediately to remedy any problems in accordance with measures accepted by the US Consumer Product Safety Commission.

The Consumer Product Safety Commission had no further information on Friday as it is still investigating the incident.

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