LeEco (previously known as LeTV) has been expanding its line up in a big way and it seems that the Chinese manufacturer wants to foster an ecosystem of its devices. Although the company has been little late into the smartphone game, it is widely known for its video streaming and content game in China. Since last year, LeEco has managed to create quite a stir in the smartphone market with disruptive pricing and content tie-ups.
Coolpad is yet another Chinese manufacturer known for its smartphones like the Dazen series and also the Coolpad Note 3, and is also one of the biggest ODM (Original Design Manufacturer) players in China, and has made phones for the likes of Micromax in the past.
LeEco has been a shareholder in Coolpad after it acquired 18% of stakes by injecting $2.73billion HKD (nearly $350 million USD) back in January 2015. This purchase had made LeEco the second largest shareholder in Coolpad.
Now the news is that LeEco has been trying to buy Coolpad for an undisclosed sum of money, thus eventually making it the largest shareholder in Coolpad. As per our sources, Coolpad has been struggling to keep up with its business ambitions and as a result it had dropped almost (-)40% when it comes to Year-on-Year growth. At one point of time, Coolpad was the seventh largest smartphone OEM in the world, but has struggled over the last year. LeEco on the other hand will benefit multiple folds with this deal, the 5,000 patents related to mobile technology, the R&D, the huge manufacturing units, sales channels and not to mention the after sales support.
Plot twist came in the form of Qihoo’s investment in a joint venture with Coolpad for Qiku (remember Qiku Q Terra?) for which Qihoo had invested $450 million in return for a non-controlling stake and this deal looked like a costly affair as opposed to the $350 Million deal the Coolpad inked with LeEco last year. The timeline of the deal is also of relative significance, the Qihoo deal happened a year before the LeEco deal and this indirectly depicts Coolpad’s weaker position and diminishing business. This move resulted in hurting the intentions of Qihoo as the room for both Qihoo and LeEco working together became an unrealistic possibility. We aren’t sure what happened to Qiku, but the buzz is that it’s nearly dead.
Business and politics aside, this deal is something that will come up a long way to revive Coolpad, the LeEco content offering has been the talk of town and that bundled with the Coolpad devices is expected to sell better. And for LeEco, it gives them control over manufacturing of their devices with Coolpad being one of the biggest ones in the arena. We had reached out to LeEco India, but they have declined to comment over this. We shall update the story with more details as and when we hear from either of the parties.
Raju PP contributed to this post.