LeEco, China’s Disruptive Hybrid

SAN FRANCISCO — LeEco is a tech-disruption smoothie taking the U.S. by storm. The company is an new blend, as if Netflix decided to feature its content on Apple iPhones, Samsung TVs and Tesla cars and sell it all over Amazon at Foxconn prices.

Just to complete the picture, it is working on an Android bike and a “Lord of the Rings” style movie starring Matt Damon. Oh, and there's a virtual reality headset, of course.

The China wunderkind officially launched with gusto its North America business here including an R&D center hiring engineers by the hundreds. The U.S. center, run by a former Qualcomm executive, will develop the hardware and work on deep-learning services run on its data centers already set up in L.A. and Washington D.C.

So far, the company has no plans to design its own chips, one of the few areas its ambitions do not embrace. Instead it is working closely with partners such as Qualcomm in handsets and MStar in TVs.

It's all happening very fast. A modem software integration specialist from Qualcomm said when he joined LeEco in December the company's San Diego office was right across the street from Qualcomm, but it had no tables or chairs. “I wondered if this was a scam,” he said.

Apparently not for nearly 400 engineers from Qualcomm, Huawei and other companies in San Diego now working there (with tables and chairs). Another 200 or so work in a 49-acre facility in Silicon Valley purchased from ailing Yahoo that will ultimately house as many as 1,200 employees.

LeEco is like a millennial version of the more staid Huawei, a company that grew up in China and is expanding to the rest of the world. “The U.S. will act as a headquarters for technology and strategic planning and a foundation for going global,” said Richard Ren, president of LeEco North America in a press Q&A after the event.

The company that started acquiring rights to movies in 2004 went public in China in 2010 as a video-streaming service. Three years later it started building its own smart TVs and in the last 17 months it has sold seven million smartphones in China. Earlier this year it announced still-vague plans for a self-driving electric car in collaboration with Faraday Future and Aston Martin.

More amazing than its ambitious and pace are its prices. LeEco will start selling in the U.S. on November 2 through its online store an 85-inch smart TV for $3,999 and a $299 high-end smartphone, after rebates of $1,000 and $100, respectively. That's about half the price of Samsung's and Apple's similar TVs and handsets.

The TV price “is very aggressive,” said Paul Gagnan who leads TV research for market watcher IHS. The product is most likely to cut into the market of value-oriented buyers who would have bought Vizio sets, calling into question LeEco's $2 billion acquisition of Vizio announced earlier this year, he said.

At that price, LeEco is unlikely to make much on the hardware itself. And at this point it's too late to change 2017 product plans for Vizio, which mainly sells by retail, Gagnan added.

LeEco is already the world's fastest growing smartphone vendor. Strategy Analytics expects it will ship 25 million smartphones and become the eleventh largest vendor worldwide in 2016.

Founder and chief executive, Jia Yue-ting, said his vision is about more than cheap hardware. He aims to create a new kind of open ecosystem, partnering with everyone from Hollywood studios to end users whose feedback it solicits online.

“We want to break boundaries between industries and countries to create an entirely new generation of products and user experiences,” said Jia whom the company portrays as China's answer to Steve Jobs. “Our model represents the future and if LeEco is successful or not, the new category it represents will succeed,” he said in his on-stage talk.

The launch was held just a mile away and about ten days after Google debuted its new hardware group and a suite of new consumer products.

To read the rest of this article, visit EBN sister site EE Times.

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