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.
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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