China’s LeEco eyes top 5 smartphone ranks after Coolpad deal

PUBLISHED : Tuesday, 09 August, 2016, 4:50pm
UPDATED : Wednesday, 21 September, 2016, 9:19am

Chinese tech conglomerate LeEco, the largest shareholder of Chinese smartphone maker Coolpad, aims to sell over 50 million smartphones this year under its dual-brand strategy and earn a spot within the top 5 smartphone manufacturers in China, according to a senior executive.

The company announced last week that chief executive Jia Yueting would become chairman of Shenzhen-based Coolpad, after it finalised a deal which saw LeEco purchase an 11 per cent stake in the smartphone maker for about HK$1 billion from the former largest shareholder Data Dreamland. LeEco will now hold a 28.9 per cent stake in Coolpad.

“Although LeEco and Coolpad will operate under separate brands, we will combine them onto one platform,” Hank Liu, co-founder and vice chairman of LeEco, said in an interview. “Users of both LeEco and Coolpad smartphones will receive a uniform experience.”

LeEco’s decision to take a stake in Coolpad stems from the latter’s sales and market share in China, which could give LeEco a boost in its smartphone business, according to Liu.

“Coolpad sold over 30 million phones in China in 2015 ... and LeEco has also sold over 10 million smartphones in just over a year,” Liu said, adding that he believes sales of both brands combined could help LeEco join the ranks of the top 5 Chinese smartphone makers in 2016.

LeEco, which runs an internet ecosystem of services including video and content streaming on its mobile devices and smart televisions, will also help Coolpad move away from being just a hardware maker.

In 2013, Coolpad was among the top 3 smartphone brands in China with a market share of 11 per cent, behind Samsung and Lenovo, which had 19 and 13 per cent market share respectively according to research firm IDC. Since then, the company has fallen out of top 5 rankings as more popular rivals Xiaomi, Oppo, Vivo and Huawei dominated the market.

Coolpad has a very strong research and development system and owns thousands of patents
Hank Liu, LeEco co-founder and vice chairman

“Much of Coolpad’s distribution channel for its smartphones is through mobile operators, whereas LeEco mostly sells smartphones directly to customers. We can help Coolpad refresh its business model and shift to a Internet business model,” Liu said.

He added that Coolpad’s vast number of patents was also an important reason for the investment.

“Coolpad has a very strong research and development system and owns thousands of patents, including one for dual-SIM cards. This will also be useful to LeEco especially since we only entered the smartphone business last year.”

The co-operation between both brands will also enable them to tap into different segments of the market. Coolpad’s larger user base will allow LeEco to gain more users of its content platform, and handsets sold under the Coolpad brand will likely be medium-level smartphones, Liu said. In contrast, LeEco’s smartphones will be positioned as more premium level.

“Many of Coolpad’s devices are priced at below 1,000 yuan, and LeEco has very few smartphones at that price point,” Liu said, adding that the dual-brand strategy will help LeEco to introduce more users into its ecosystem.