China Circuit: A Steve Jobs Disciple Dreams Big
October 07 2015 - 3:59PM
Dow Jones News
By Li Yuan
In China, Jia Yueting is known as "Jiabusi," or "Jia Jobs." The
nickname refers to his well-known fixation with late Apple founder
Steve Jobs, and "Jia" in Chinese sounds like "fake."
At product launches, Mr. Jia, founder and chief executive of
video and gadget company Leshi Internet Information &
Technology, wears bluejeans, gray sneakers and long-sleeve black
T-shirts--a close imitation of Mr. Jobs's signature outfits.
Leshi's first smartphone ad in April, which Mr. Jia said was his
idea, ran Apple's iconic 1984 commercial followed by a tweaked
version of it, in which Apple was portrayed as the Big Brother and
Leshi as a fearless boy who ate the apple in the end.
In speeches and interviews, Mr. Jia refers to Apple constantly,
promising to be the next innovative disrupter while bashing today's
Apple for complacency. After a recent Apple TV launch, he wrote on
his social-media account: "After Jobs, Apple has no disruptive
innovation. Disappointed."
Like Mr. Jobs, Mr. Jia's vision has been to more deeply
integrate content--particularly video--into devices. Leshi rose to
prominence in China by being one of the first companies to sell
local and Hollywood content to Chinese users eager to stream shows
on their phones and tablet computers. It seeks to leverage that
content to sell low-cost devices that feature streaming video front
and center. The company charges the equivalent of $160 for its
16-gigabyte Le 1 phone, $432 for its 64-gigabyte Le Max phone and
$272 for its latest 40-inch, liquid-crystal-display Internet
television. And Mr. Jia is talking about building a car.
Now Mr. Jia is eyeing the U.S. Leshi--known in English as
LeTV--is soft launching its online store LeMall.com in the U.S.
this month, with an official launch in the second-quarter of next
year. It isn't clear whether LeTV will sell its flat-panel TV sets
or its new line of smartphones, but Mr. Jia said it shows LeTV's
model is ready for a global debut.
Some are skeptical.
"LeTV has the potential to become a first-class company if it
focuses on its Internet TV business," said Fang Xingdong, a
consultant and longtime Internet observer. "Now it's doing all
kinds of things. I don't get it."
China's markets corrections have also intervened. LeTV's listed
arm, once the most valuable Internet stock in China's A-shares
markets, has lost half of its value since May, down to a market cap
of $12 billion. Its entry into the fiercely competitive smartphone
market is burning cash. And its profit-making video-content
business is competing with China's biggest Internet companies,
including Baidu, Alibaba Group Holding and Tencent Holdings, which
own or invest in the other top video sites.
Mr. Jia is undaunted. He said people either don't understand or
misunderstand his company because they can't envision what he sees:
a future in which people will consume LeTV's video content on
LeTV's television, smartphone and car screens. Combined with the
company's cloud system, those TVs, phones and autos will make up an
ecosystem that will support and generate revenue for each other, he
insists.
In the past few months, LeTV has added high-profile executives
to run its car, Internet finance and international
merger-and-acquisition units, respectively. It has set up a
600-person Internet car division with offices in Beijing and
Silicon Valley, including more than 50 hires from Tesla Motors, Mr.
Jia said. LeTV's Internet car will cost half of Tesla's, he claims,
without giving much detail about the car.
Mr. Jia said he needs to make LeTV's business model more
complicated so that Baidu, Alibaba and Tencent can't just copy it
or buy it.
But that is an expensive, uphill battle, and his products
haven't yet proven he can win. LeTV expects to sell three million
smartphones this year, a tiny fraction of competitor Xiaomi's
target of 80 million. Its Internet TV, launched in 2013, was a
market pioneer and won many praises for its intuitive user
interface. It sold 2.5 million units in 2014. Both devices are
frequently sold near or below cost.
Mr. Jia admits his board of directors disagrees with him on most
of his new initiatives, and wants him to follow video-content
models such as YouTube and Netflix. He has dismissed their
disapproval by putting the new businesses under a holding company
so he can put his own money behind them. Mr. Jia, who started the
company in 2004, owns over 40% of LeTV's listed arm and has used
shares multiple times to fund his new initiatives.
Mr. Jia believes Mr. Jobs would have done the same. He said
large cellphone companies such as Nokia and Motorola failed because
of their boards. "That's why Apple was successful," he said. "When
Jobs came back [from his exile], he had power over his board. His
charisma convinced everybody he was right."
Follow
Li Yuan
on Twitter @LiYuan6 or write to li.yuan@wsj.com.
Write to Li Yuan at li.yuan@wsj.com
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(END) Dow Jones Newswires
October 07, 2015 15:44 ET (19:44 GMT)
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