LeEco vs Xiaomi: A battle is inevitable

LeTV held a "breathtaking" press conference, and Xiaomi expanded its product line to the 3,000 yuan range. LeTV started with TVs and took the content route. Xiaomi started with mobile phones and took the hardware route. Starting this year, LeTV began to focus on hardware, and Xiaomi began to strengthen content construction. LeTV, as a representative of the A-share TMT industry, and Xiaomi, as a representative of unlisted technology companies, the two sides will inevitably come into direct contact this year and there will be a battle.

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LeTV enters the market with high-profile content

At the launch of LeTV mobile phone, Jia said that LeTV is not going to make a mobile phone, but a complete Internet ecosystem. LeTV mobile phone can provide three desktops, pushing video content to users more directly and quickly.

LeTV's decision to make mobile phones was not a whim. LeTV has always wanted to build a complete ecosystem from upstream content production, platform-based integration, CDN transmission, to terminal device coverage and external application input. LeTV's product line already covers LeTV.com, cloud video platform, LeTV Pictures, LeTV TV, LeTV Box and LeTV TV Store, etc. The only thing missing from LeTV's "content + platform + terminal + application" is a mobile terminal like a mobile phone, and mobile terminals are the most indispensable platforms in the mobile Internet era.

Another important reason is the current stagnation of the smart TV market. In the smart TV market, there are not only "hardware + content" manufacturers such as LeTV and Xiaomi, but also traditional TV manufacturers such as Changhong, TCL and Skyworth. Behind the fierce market competition is limited growth space. If LeTV wants to play its strengths in content, it must tap the potential of the "third screen". Even though the mobile phone market is already a bloodbath, LeTV has nothing in this market after all.

Crazy Years: Burning VC Money

Another major contribution of LeTV's entry into the market is the fluctuation of mobile phone market prices. LeTV launched three devices at once, with the price of LeTV 1 set at 1,499 yuan and LeTV 1 Pro set at 2,499 yuan. In addition, there is a preferential policy of reducing hardware costs by purchasing a one-year membership of LeTV content, and even hardware can be given away for free. This can only mean that no one is stupid enough to think that hardware is still the main channel for making money. What's more, whether it is Samsung or Xiaomi, they have already achieved the ultimate "fever" in hardware experience, and there is not much room for upgrade. It is basically impossible to make a breakthrough in the short term.

The obvious change is that the price of the top-end version of Xiaomi Note exceeded 3,000 yuan when it was launched, but it was reduced to 2,999 yuan at its second launch conference. The price reduction before it was launched was "talked about with great relish". The price reduction of mobile phones is inevitable. In the competition of low prices, it is expected that a group of "pure mobile phone manufacturers" will be eliminated, and the future will be an era of "ecological" giants.

Behind the unprofitable ecosystem is crazy capital

Hardware can’t make money, but “ecosystem” is a game that burns a lot of money. Take Xiaomi as an example. This company, which claims to be “the world’s most highly valued unlisted Internet company”, is still burning money. Last year alone, Xiaomi invested in more than 50 companies, including mature companies such as iQiyi, Youku Tudou, Carlife, Midea and Kingsoft, and more hardware start-ups. In early 2015, Xiaomi frequently launched smart hardware such as smart weight scales, smart sockets, and smart switches, which can be regarded as a typical representative of hardware ecology.

LeEco is lacking in hardware, but it has a dominant position in content. The super phone it launched this time can make up for the shortcomings in hardware to a certain extent. Along with the super phone comes the "ecosystem" described by LeEco. The capital market is also unusually excited about LeEco's grand blueprint. LeEco's stock price listed on the Growth Enterprise Market has risen by more than two times in the past month, from 40 yuan when it was deeply involved in the political whirlpool of Ling Jihua last year to 130 yuan now, which reflects the awe of Chinese investors for the new industry represented by LeEco. However, LeEco also bears a debt ratio higher than the industry average. LeEco, with a market value of 100 billion yuan, currently has an asset-liability ratio of 66.2%.

In addition to these two representatives, the companies that 360 and Coolpad have cooperated with have invested a huge amount of US$500 million, but they know that there is no product yet. Meizu has received investment from Alibaba. The reason why investors are still patient and continue to accompany manufacturers to burn money is that they are optimistic about the value of "ecosystem" in the future.

LeTV and Xiaomi will definitely have a fight

There is no doubt that low prices and ecosystems have become weapons in the game between manufacturers. Lei Jun’s Chinglish phrase “Are you OK?” in India is exactly the epitome of this game.

Xiaomi's advantages are hardware and fans. Although it is not a content provider, Xiaomi has occupied a place in the video content and navigation service fields by introducing Chen Tong from Sina and the subsequent 1 billion fund. The large investment is obviously not just for the output port of Xiaomi TV. The launch of LeTV mobile phones can obviously make up for LeTV's disadvantages in the mobile terminal to a certain extent. LeTV has a strong content output capability, and its current core users are family-based user clusters. Relying on the power of capital and marketing methods, both parties are currently accumulating capital rapidly to make up for their shortcomings.

In the short term, the situation is still a stalemate with each other chasing each other, but in the long run, there will be a battle between the two sides, and the competition for the market will be more intense in the future. However, it is undeniable that in this game of low prices and ecology, killing one thousand enemies will also result in eight hundred casualties of one's own. The VC's money has been burned, the bubble has come out, and the rest depends on who can hold on to the end.