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LeEco who? Meet China's Apple-Samsung-Netflix-Tesla mashup

The company, an online video powerhouse that used entertainment to break into peddling devices, is a success in China. Will it work in the US too?

James Martin/CNET
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LeEco will offer a whole universe of products and services.

Photo by James Martin/CNET

LeEco thinks of itself as the single source for all things tech.

In its home country of China, LeEco is just that, delivering movies it produces on phones and televisions it makes, and hosting e-commerce and streaming sports sites on its own cloud service.

"If you were to take Apple, Amazon, Paramount Pictures, Tesla, Uber and Netflix and combine all of those companies, you get what LeEco does in China," Danny Bowman, chief revenue officer for LeEco North America, said in an interview on Friday.

LeEco began as an online video portal, LeTV, in 2004. It switched its name to LeEco last year as it threw itself into devices and deeper into entertainment with traditional films and sports in China, while widening its offerings to televisions and phones.

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LeEco on Wednesday offered a taste of its do-it-all nature, unveiling the LePro 3 and Le S3 phones, the Super4 series of televisions and its flagship uMax85 TV, which go on sale during a "flash sale" on November 2. It also showed off its LeSee Pro autonomous driving smart car, as well as concept products such as its Explore VR headset (powered by the LePro 3) and smart bicycle.

Not your typical tech event, right?

LeEco is the latest Chinese company looking to break into the US market with a plethora of products, a tack that has yielded mixed results. Unlike past attempts, which largely aimed to undercut existing players, LeEco believes it stands out thanks to a more holistic perspective that includes hardware, software and entertainment.

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LeEco hopes to challenge other flagship phones with the LePro 3.

Photo by James Martin/CNET

The company's goal, after all, isn't to just pump out products, but to connect them. LeEco believes it's better for people if their devices and online services are all linked through the same company, a philosophy reflected in its name -- "Eco" for ecosystem, and "Le" being Chinese for "happy."

"Even the most tech-savvy individuals are stuck in a one-screen-at-a-time world, where screens do not interact without a dongle and definitely cannot do it seamlessly," LeEco founder and CEO YT Jia wrote in a blog post on Monday. "It isn't simply about the content or the hardware, it is about the full experience."

Building a launchpad

While Wednesday's launch marks its first splashy event in the US, LeEco has quietly laid the groundwork here for months.

In April, the company opened an 86,000-square-foot headquarters in San Jose, California, and in June it bought a 49-acre property from Yahoo in nearby Santa Clara to house its chief R&D center. It has also recruited US executives from companies like Google, Samsung and Qualcomm. One notable hire: Todd Pendleton, the former Samsung executive behind the "Next Big Thing" campaign, which helped propel the Korean company's phone business into the big leagues.

The spending spree has extended to US companies. In July, LeEco bought US TV maker Vizio for $2 billion. Last month, it acquired Dichotomy Creative Groups, bringing into the fold former Paramount Pictures' president Adam Goldman.

LeEco is giving its local talent a lot of slack, letting the Silicon Valley office run its US operations instead of calling the shots from China. Bowman said the company's innovation hub is in the US, where it will focus its research on autonomous vehicles, artificial intelligence and machine learning.

"LeEco is one of the most ambitious companies I have ever seen," said Avi Greengart, who covers consumer products for Current Analysis.

A different hardware game

None of that ambition will amount to much if US consumers don't give LeEco a second look.

Other Chinese manufacturers have jumped into this market with low-cost products. Think ZTE for phones or TCL for televisions. While those products boast a reputation for value, their makers aren't seen in the same league as high-end manufacturers like Samsung or Apple.

LeEco can lay claim to one feat. It is the world's fastest-growing phone vendor, expected to see shipments grow 500 (yes, 500) percent this year over 2015, according to Strategy Analytics.

Still, it's a guppy compared to Apple and Samsung. LeEco is projected by Strategy Analytics to ship 25 million phones in this year, compared with 205 million iPhones and 315 million Samsung units.

Another challenge: It plans to sell its phones directly to consumers in a market where a vast majority of people still get their devices from wireless carriers like AT&T. The company is offering rebates on its phones and televisions if people buy them on its LeMall website.

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LeEco executive Rob Chandhok talks up the flagship uMax85 television.

Photo by James Martin/CNET

"It's extremely tough for Chinese brands to break into the US smartphone market," said Jan Dawson, an analyst at Jackdaw Research.

Unlike its Chinese peers, LeEco eschews the idea of a budget brand. While the company offers hardware like TVs and phones at below-market prices, it packs in high-end components in the hopes of making money off services like streaming video and its host of other sites.

The LePro 3 phone has Qualcomm's fastest processor, a 4 gigabytes of RAM, a jumbo 4,070 mAh battery and Dolby Atmos tech for surround sound. The LePro 3 costs $399.

Its UMax85 TV boasts vivid colors, support for Dolby Vision tech and speakers from Harmon/Kardon. It costs $5000.

"It's a really different approach than the classic race to the bottom," Rob Chandhok, chief R&D officer for LeEco North America, said in an interview on Friday.

Entertainment aspirations

Even Chandhok wouldn't refer to LeEco as a hardware company. He called it a content and services business that happens to make devices. Chandhok spent a bulk of his keynote address on Wednesday talking about delivering "endless" entertainment to you on whatever LeEco device you own.

In China, LeEco has found success by tying everything together, on the notion that entertainment lures viewers in to buy devices. That's similar to how Amazon's vast catalog of digital books helped make the Kindle the de facto e-reader.

The company is also broadening its own film and video efforts in Los Angeles. Last month, it bought former Paramount exec Goodman on board to oversee the US arm of its Le Vision Pictures, one of China's biggest movie studios. Goodman's unit, called Le Vision Entertainment or LeVE, is a production engine primarily focused on film but also exploring television, digital originals and virtual reality.

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LeEco also showed off a concept autonomous driving car called LeSee Pro.

Photo by James Martin/CNET

Goodman said LeVE's aim is to make movies for cinematic release like a typical studio, but it wouldn't live or die on theatrical success. As part of a tech company, LeVE has myriad different channels for films to live after their run in theaters, he said. He wouldn't specify how LeEco would break new ground in content distribution to make pictures profitable regardless of how they fare at the box office.

Ultimately, he's most excited that LeVE can take filmmaking risks at a time when homogeneity -- sequels, Star Wars and superheros -- rules the box office.

"When you try to institutionalize [a Hollywood] success, you end up making the same picture over and over again with a different kind of lens on it," Goodman said in an interview on Monday. "We're not coming into this with the perspective that 'This is the only way we're making a movie.'"

Le Vision Pictures, its overarching studio, is taking its first stab at worldwide appeal with a co-production involving four studios, two in Hollywood and two in China. That mega-budget fantasy epic "The Great Wall," starring Matt Damon, is set to be released in China in December and in North America in February.

As part of the LeEco ecosystem vision, LeVE could play with production techniques that create offscreen interaction, he said. A horror movie character, for example, could send viewers a text in the middle of the film to their LeEco phones.

LeEco also announced a wide number of launch partners, including Netflix, Vice and Lionsgate, for its LeEco Live streaming service in the US.

While LeEco appears to have cobbled many of the entertainment pieces together, it's still unclear whether US consumers will care enough to pick up a device.

"It is certainly too soon to know if LeEco will succeed," Greengart said. "But it is clear that LeEco is worth watching; it won't be boring."