LeTV out of its depth with smart television

Chinese online video content provider LeTV unveiled its first smart TV set earlier this week, a move which makes it the world's first Internet company to manufacture a self-branded smart television set.

Tech industry watchers first began following LeTV's push into the hardware market earlier this month, when local media brought to light internal LeTV emails outlining the company's plans to challenge industry juggernaut Samsung in China's burgeoning smart TV space.

But as a video portal operator with little experience in manufacturing, LeTV faces an uphill battle on its quest to grab a share of the smart TV market, which has already been pushed nearly to the saturation point by its better-positioned rivals. Indeed, despite the name, "smart" TVs are not so challenging to produce - equipment makers with knowledge of traditional TV manufacturing usually just partner with software companies and app developers to turn out screens with interactive features - so it's little wonder that most of the world's biggest names in consumer electronics have plunged into the thriving market for these high-margin products.

Already in China, smart TVs now account for over 40 percent of all the televisions produced in the country, according to data from NPD Display Research, a household and consumer electronics data provider. As research and development accelerate, and more buyers replace their older sets with smart TVs, this figure will only continue to rise in the years ahead.

Right now, China's four largest TV manufacturers by sales - Changhong, Konka, TCL and Hisense - control about 60 percent of the country's smart TV market, according to data from All View Consulting, an appliance and home electronics consultancy. With a large chunk of the market already spoken for, there's not much left for LeTV. And with few competitive features outside of its over-the-top video content, LeTV has little to offer customers which other leading manufacturers can't also provide.

Without cutting-edge products or a reputation for manufacturing quality, LeTV probably won't find it easy to drum up business in the consumer electronics market, where brand appeal and technological prowess are vital.

For a glimpse of what the future may hold for LeTV, Lenovo Group Limited's ill-fated foray last year into this market may offer some clues. In May 2012, the computer maker introduced its own smart set. But a lack of features and the company's inexperience beyond the personal computing market quickly forced Lenovo to pull the plug on its smart TV ambitions. In the end, Lenovo sold just over 1,200 smart sets in the six months following their debut, the company's own numbers show - a paltry figure considering that TCL and Skyworth sold 12 million and 9.16 million smart TV units respectively during this same period.

The Chinese smart TV market may be revving up, but before LeTV can become a serious player in this market it needs to look carefully at its strengths and weaknesses. Specifically, I recommend that the company look at smart TVs not just as potential money makers, but as another channel for the development of its core business area: video content.

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