Lowenstein's View: LeWHO? LeEco is the most ambitious company you’ve never heard of

AT&T will be the exclusive U.S. wireless carrier for the LeEco Super Bike.

While most of the tech world’s attention last week was focused on the announcements in San Francisco and the latest idevices and iservices, a company with Apple-sized ambitions had a coming out party of sorts at the CTIA Wireless show in Las Vegas. This company recently: acquired Vizio for $2 billion; opened up an 80,000 square foot office in Silicon Valley; spent $250 million to buy land in Santa Clara from Yahoo, which can house up to 12,000 employees; hired top talent from Samsung, Qualcomm, Ferrari, and Paramount; and has acquired a controlling stake in Coolpad, the world’s 6th largest mobile phone manufacturer. This ‘leading global internet company’ plans to take on Tesla, Amazon, Netflix, and Apple, Google, in autonomous vehicles, cloud services, digital content, mobile phones, TVs, virtual reality, and e-commerce.

This Chinese company is called LeEco, and they have ambitious plans to expand into India and the United States. LeEco has already been a disruptive force in China, having become a leader in video streaming and content. Their vision is to be a connected digital ecosystem, leveraging film, television, music, and app content, much of which they own and produce, to leading-edge TVs, phones, and VR headsets that they manufacture and distribute. LeEco has also developed an autonomous electric concept car, and a ‘super bike’ that they showed at an industry analyst meeting at CTIA.

LeEco started by amassing a large catalog of content, being involved in many of China’s most popular films and TV shows. They have the largest video content library in China and are the largest cloud company in the Chinese B2B market. Then they got into making high end TVs for the China market (and were called LeTV for a time), and more recently, phones. The change to LeEco reflects their outsize plans to be a global digital ecosystem player. They are focused on the millennial market, and believe that they can be successful as a strong challenger brand in the mid-market, which is where Vizio has been in the U.S. and Coolpad has been in China.

The question is whether this highly successful Chinese company can be successful in taking on the big boys in the U.S. LeEco certainly has the physical infrastructure, with a 750-node content delivery network (largest in the world according to company claims), numerous key acquisitions and partnerships, and the recruitment of top talent.

LeEco has spent much of 2016 planting the seeds for their global ambitions, but has not provided a lot of details about their go-to-market plans for the U.S. One challenge is that their huge catalog of content is mainly in Chinese TV and film. They have plans to expand that, having hired ex-Paramount president Adam Goodman and established a presence in Los Angeles. The company’s LeMusic has produced 350 livestreamed concerts in 2016, which is popular in its target millennial market.

I believe that there is some good opportunity as a fighter brand in the mid-market for physical products such as phones and TVs. Vizio has been a big success here, and I think there is an opportunity to achieve a leadership position in smart TVs at a level below premium priced brands such as Samsung. LeEco demonstrated a voice driven smart TV experience at an analyst meeting here that was as slick as anything available to consumers today.

Even in the crowded U.S.  smartphone market, I think there is room for a breakout second-tier brand. My sense among millennials is that there is some ennui with overpriced Apple products, and Apple’s announcements last week affirmed that the capability delta between major smartphone brands has narrowed. There could well be an opportunity for a strong fighter brand in the young, urban market. Look at how T-Mobile’s ‘Uncarrier’ campaign has resonated.

Still, very few Chinese brands have achieved significant success in the United States. There’s Lenovo, of course, but major homegrown brands such as Huawei, ZTE, Alibaba, and even upstart Xiaomi have not made much of a run here.

The tougher piece might be the ‘digital ecosystem’ play. LeEco will need to develop some fairly extensive and deep content partnerships, and will have to produce some strong original content for a U.S. audience, in order to make the leap from product play to ecosystem play. Taking on the Amazon, Netflix/HBO, Apple, and Google juggernauts is a significant challenge. Only something on the order of LeEco’s ambition, hubris, and spend would have a shot at cracking these well-entrenched ecosystems. I could see millennials responding well to a fresh new brand with strong, value centric products, a great UI, and services that work well across multiple digital devices. Apple and Amazon are the two most dominant ecosystems in their spheres, and there might be room for a challenger.  

Mark Lowenstein, a leading industry analyst, consultant, and commentator, is Managing Director of Mobile Ecosystem.  Click here to subscribe to his free Lens on Wireless monthly newsletter, or follow him on Twitter at @marklowenstein. You can contact him at [email protected].

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