Why LeEco is advancing instead of retreating when the mobile phone industry is cooling down?

There is no doubt that global smartphone shipments have fallen sharply. The reason why sales growth has quickly hit a bottleneck after rapid development is that smartphones have an oversupply of performance, and performance improvements have become less attractive to consumers. They are unable to break through the siege of hardware innovation difficulties, and naturally cannot form enough driving force to stimulate consumers to replace their phones. In particular, domestic mobile phone manufacturers, after hardware innovation stagnated, are at a loss about the next step of development. After losing conventional competitive means and publicity gimmicks such as parameter stacking and price-performance wars, the attractiveness of domestic mobile phones has plummeted.

However, the LeTV Superphone, which was released in May last year, has not declined but has advanced. At the one-year anniversary celebration of the product's official launch held by LeTV Mobile on May 19, 2016, Feng Xing, senior vice president of LeTV Holdings and president of LeTV Mobile, announced at the celebration that as of now, the total sales of LeTV Superphone has exceeded 10 million, which is thought-provoking.

Breaking out of the price-performance dilemma of domestic mobile phone brands

Since 2012, domestic mobile phone manufacturers, represented by Xiaomi, have quickly occupied the market with a low-price strategy. However, low prices are also compromises in all aspects of mobile phones. The pressure from costs has forced domestic mobile phone manufacturers to sacrifice user experience in exchange for superficial "cost-effectiveness".

Users' sensitivity to configuration parameters has forced Xiaomi to "cut" on easily overlooked parts while ensuring the parameters. I still remember the "Tianma Gate" incident last year where Xiaomi passed off domestic screens as Sharp screens; I still remember the "best smartphone in the Eastern Hemisphere" launched by Luo Yonghao with craftsmanship as the selling point the year before last; and in the "Luo Zhixiang" Youku fight incident, he revealed that his high-end Hammer phones "are at the normal level of friendly competitors" and "it is normal that they cannot be compared with Apple."

Today, with the overabundance of mobile phone performance, the term "cost-effectiveness" has lost its practical meaning. Configuration parameters can represent performance, but performance cannot represent the user experience at all. Xiaomi, which has a high cost-effectiveness, has frequent system crashes and severe heat generation. The user experience of holding a "hand warmer" in the hot summer may not be worthy of the low price. Samsung, which has high-end performance, has insufficient optimization of the manufacturer's deeply customized system TOUCHWIZ, and its user experience does not match its configuration and positioning.

That is to say, the user experience is determined by the comprehensive strength of the mobile phone, including hardware configuration, screen appearance, grip comfort, battery life, heat control, system optimization, and system stability. Any compromise in any aspect will destroy the user experience.

In contrast, LeTV did not stack parameters unilaterally, but introduced more and newer technologies into LeTV Super Phone. It eliminated the 3.5mm headphone jack, provided the world's innovative CDLA full digital lossless music experience, and for the first time in the world, applied ultrasonic fingerprint technology with higher security factor, better recognition rate, but also higher cost to mass-produced mobile phones.

Not bowing to cost or price/performance ratio, mobile phone design is driven by user experience. Of course, this does not mean that a high-price strategy is adopted. LeTV, which has the advantage of industrial chain ecology, uses hardware to drive content and content to subsidize hardware in a virtuous cycle, leading mobile phones into the era of negative profits and bringing the concept of experience-price ratio into the mobile phone industry.

Bringing mobile phones into the ecosystem and creating a unique operating model

Behind LeEco's tens of millions of sales is LeEco's careful layout since 2012 - LeEco's ecological strategy. As one of the entrances to LeEco's ecosystem, LeEco mobile phones, when purchased, means users enter LeEco's vertically integrated ecosystem of "platform, content, terminal, and application".

Feng Xing, senior vice president of LeEco Holdings and president of LeEco Mobile, said: The vast majority of consumers have cast their precious votes with their money. The era of smartphones has passed, and the era of ecological phones has arrived!

The current dilemma of domestic mobile phone brands is that they have not formed an industrial chain, and their profit sources are single. The industrial model of manufacturers relying solely on mobile phone hardware for profit is too risky. In the past few years when smartphones were popularized, the mobile phone market demand was huge, and domestic mobile phone manufacturers that took the low-price and high-spec route could also make considerable profits with huge sales volumes.

However, now that the smartphone penetration rate has peaked, sales growth has slowed down, and market fatigue has emerged, Xiaomi, Meizu and other manufacturers have realized that their operating model has come to an end. In the face of transformation, Xiaomi CEO Lei Jun bluntly said: "If big data technology cannot be converted into value before the year after next, I will go bankrupt."

On the other hand, LeTV's mobile phone business has never appeared in the form of a single industry. Instead, it is another charge at the entrance after LeTV TV has made great strides and successfully occupied the living room environment. Of course, in LeTV's layout, there will be LeTV cars to occupy the travel scene. In the process of acquiring these scenes and establishing core advantages in these scenes, LeTV has used content as an important weapon, from LeTV's advantageous sports, film and television dramas, variety shows, music, and animation content to TV in the living room scene, to LeTV mobile phones, which have sold 10 million units so far.

At the same time, the excellent LeEco ecosystem hardware products also attract more users to LeEco's content platform. LeEco will also make profits again through copyright distribution business, video advertising business, and membership payment business. The whole ecological chain layout will eventually form an ecosystem, using capital leverage and brand effect to attract more resources, and then with the help of the chemical reaction of the ecosystem, hardware will be softwareized, and value-added services will be used to subsidize hardware, thus quickly consolidating its core position. Finally, in the perfect LeEco ecological system, a unique brand charm and brand stickiness far higher than other manufacturers will be cultivated.

Under the huge downward pressure of the current domestic mobile phone market, LeTV does not follow the market trend, and does not care whether the trend rises or stops, but chooses to be a trend maker. Instead of following the trend in a high-profile manner, it makes low-key arrangements, and from the potential to the success, LeTV truly leads the "mobile phone ecological revolution".

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.