LeEco intervenes in the marriage between Coolpad and 360: a love triangle where both sides get what they want

A transaction worth 2.18 billion yuan brought LeTV and Coolpad together, but it also made the direction of the "marriage" between 360 and Coolpad half a year ago confusing.

"It is expected that the news that Zhou Hongyi will hold full control of Qihoo Technology will be announced soon ." An insider close to Qihoo told the reporter of "China Business News".

"If Coolpad disagrees, how can 360 announce it?" One of Coolpad's directors asked reporters after hearing the news on the same day. 360 and Qiku have not officially commented on this.

Just the night before LeTV invested in Coolpad, Qihoo announced its management list, in which Li Wang, the former executive president of Dasheng Mobile, was appointed as the president of Qihoo Technology, responsible for the overall affairs of the company; Zhu Fanghao, the former president of Coolpad Dasheng, was appointed as the chief technology officer (CTO) of Qihoo Technology, responsible for design, products and R&D.

The above-mentioned person said that QiKu currently has about US$400 million on its books. With the joining of former Coolpad executives Li Wang and Zhu Fanghao, and about 1,000 people who previously joined QiKu from Coolpad's hardware side, QiKu Technology has been operating well.

Just before the release of this article, the reporter learned that at an internal meeting held by Coolpad yesterday afternoon, Guo Deying officially resigned as president of Coolpad Group, retaining the position of chairman, and the group president will be succeeded by executive vice president Li Bin. At the same time, Zhang Guangqiang and Lai Ganfeng were promoted to senior vice presidents of Coolpad Group.

Is 360 in a hurry?

Before the announcement of the alliance between LeEco and Coolpad, Qihoo 360 Chairman Zhou Hongyi's WeChat Moments at 2 a.m. last Sunday sparked a lot of discussion in the industry. He wrote in his WeChat Moments, "Whoever stabs me in the back and tries to screw me, my principle is to fight back."

It is unknown who Zhou Hongyi was referring to. That evening, Coolpad announced the sale of 18% of its shares to a company under LeEco. After the announcement, 360 did not make any statement on the matter.

According to the reporter of China Business News, Zhou Hongyi flew to the United States last week and has not yet returned to China. He has not yet made a statement due to jet lag, etc. However, an insider told the reporter of China Business News that the news that Zhou Hongyi will fully control Qihoo Technology may be announced later.

It can be seen that since 360 ​​and Coolpad formed an alliance, 360 has been striving to gain dominance over Qihoo.

In December last year, 360 and Coolpad reached a strategic agreement, 360 invested $409.05 million in cash in Coolpad to establish a joint venture company, 360 held 45% of the shares of the joint venture, and Coolpad held 55% of the shares of the company, which was Qiku. But on May 26 this year, TechTime, a subsidiary of 360, increased its stake in Qiku for $45 million (about HK$349 million), and 360's shareholding ratio increased from 45% to 49.5%.

Zhou Hongyi revealed in an interview with China Business News that the capital increase was in preparation for equity crowdfunding. He said that the equity crowdfunding will be operated by an external company, and a plan has been reached with a financial institution to proceed through a trust cooperation plan, and 15% to 20% of the equity will be used for team incentives.

On June 8, QiKu officially completed the acquisition of Dashen's mobile phone business. The news released at that time showed that QiKu Technology would operate as a group under the name of QiKu Group, with two companies under it, QiKu and Dashen, both of which were directly managed by Zhou Hongyi, operating the QiKu brand and Dashen brand respectively.

However, whether Zhou Hongyi will fully control Qihoo Technology does not mean that 360 and Coolpad will "part ways." "It seems that Coolpad's factories, supply chain, sales, patents, etc. are still important assets to Qihoo," an industry analyst told reporters.

LeTV's calculations

"The rumor of LeEco's investment in Coolpad has been around for a long time, at least a year to be precise. However, LeEco has already completed its team building in the past year. Its investment in Coolpad should be mainly for the promotion of its video content." Wang Yanhui, Secretary-General of the China Mobile Alliance, was not surprised by the investment.

LeTV and Coolpad, the former has a huge amount of video content and is in urgent need of a mobile Internet entrance; the latter has a large shipment volume but finds it difficult to monetize through Internet services.

It can be seen that in May this year, Feng Xing, president of LeTV Mobile, said that the production of Le 1 will reach 450,000 units in June this year, and there will be sufficient supply in September, but the growth rate of Le 1 Pro is slower than that of mature products; it is expected that after the fourth quarter, the monthly production capacity of LeTV's super phone will reach one million units.

In Wang Yanhui's opinion, although LeTV TV is doing well, it is still difficult to compare with mobile phone sales. LeTV's mobile phone target this year is only 3 million, which is still very low compared with Coolpad's annual mobile phone sales of tens of millions. Therefore, if LeTV can promote video content by investing in Coolpad and incorporate video business into Coolpad's pre-installation or even deep customization, the benefits to LeTV's main business will be obvious.

Another insider told the reporter that in addition to the mobile phone portal, LeTV, which has just entered the mobile phone field, still values ​​Coolpad's inherent advantage as a traditional mobile phone manufacturer - a huge production supply chain capability. Coolpad's R&D advantages, mature traditional manufacturing and supply chain, and the value of channel advantages can help LeTV indirectly gain more voice in the industry chain, and even prepare for LeTV's mobile phone "going overseas" technology patents in the future.

Coolpad has the best of both worlds?

While everyone is watching how Zhou Hongyi fights back in this "love triangle", in fact the biggest winner has already emerged. The introduction of two investors in succession may be due to the low valuation of the Hong Kong stock market, which has made Coolpad, a long-term "honest man" in the capital market, realize that capital does not like to remain unchanged.

From the perspective of software and hardware layout, Coolpad is also improving its soft power by joining forces with 360 and LeTV. As early as 2010, Coolpad wanted to improve its soft power by establishing an app store and other means to change its business model of simply selling hardware, but the results were minimal. However, through 360, which has unique advantages in security and browsers, and LeTV, which has a vast amount of content resources, it is foreseeable that Coolpad will improve its soft power.

Most importantly, in the fiercely competitive mobile phone world, Coolpad is using capital operations to find a way out of the "reshuffle" more quickly, actively making adjustments and no longer clinging to the low profits of making phones.

It is not difficult to notice that even with strong supply chain capabilities and technological accumulation, Coolpad is still experiencing the pain brought about by changes in the external market.

From the perspective of mobile phone sales, Coolpad reached its highest point in the first half of last year since its founding more than 20 years ago. From January to August, Coolpad's 4G mobile phones have been ranked first in the Chinese market, but behind the glamorous figures, there are hidden worries. Not only does the high sales volume face the same embarrassing low profit as always, but more importantly, as the three major operators cut channel costs, the business model that relies on large-scale shipments through operator channels is also challenged.

Coolpad then began to change its channels and adjust its models. It can be seen that, whether actively or passively, the Dashen brand that focuses on the Internet channel is now dominated by 360, while Coolpad itself has focused more on building mid-to-high-end brands under the Coolpad Group. But even so, it will take time for Coolpad to regain its price control over the channel and reverse its brand image.

"It is no secret in the industry that Coolpad needed money in the past year, because the Coolpad Information Port it was building required a lot of capital investment," said Wang Yanhui. In fact, on top of that, there are also a lot of production line costs and R&D expenses. Whether it is 360 or LeTV's investment, it is quite tempting for Coolpad.

But why did 360 and LeTV still "take a fancy" to Coolpad and compete to invest in it under such circumstances? Perhaps the best answer is that in the tide of mobile Internet, if the combination of software and hardware is the direction that many terminal and hardware manufacturers are actively pursuing, then mobile phone manufacturers are undoubtedly the best choice.

"Coolpad's next step will be to integrate a larger value chain. In addition to the terminal business, Coolpad plans to conduct in-depth integration of the upstream and downstream value chains, application software, smart peripherals, and upstream core strategic suppliers. It will make a full strategic layout from the three major brands internally and hardware, software, and value chain externally to build Coolpad into an aircraft carrier group." Li Wang, former executive vice president of Coolpad Group, once described Coolpad's future strategic direction in an exclusive interview with this newspaper.

Now it seems that the investment from both 360 and LeTV has only made Coolpad move faster on this road.

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.