LeEcho CEO: Apple is "outdated" and losing momentum in China
Apple is losing momentum in China because it is “outdated”, according to Jia Yueting, the entrepreneur with a $4.8bn net worth who founded LeEco, best known as "The Netflix of China." After last week's launch of LeEco's self-driving LeSEE supercar to rival Tesla’s Model X, Mr Yueting explained this week at the China Entrepreneur Club the reason Apple’s sales have declined in China could be due to its lack of innovation in product design for the mobile internet. Mr Yueting believes it will be necessary to develop more cutting edge products for the next generation of mobile internet, which he predicts will be more open and ecosystem friendly, as opposed to the closed systems and lack of internet focus that may have stifled Apple's ingenuity.

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Jia Yueting introduces the all-electric battery 'concept' car LeSEE on April 20, 2016 in Beijing, China. VCG/VCG | Getty Images

Speaking at a meeting of the China Entrepreneur Club, an exclusive summit of business leaders, 43-year old Jia explained why foreign rivals did not worry him, particularly Apple, which is also expanding its ecosystem beyond consumer technology to driverless cars. "We think the difference between us and Apple is very large. Apple is a mobile phone company focused on hardware and software," Jia said at the weekend event in Jinan. "LeShi [another name for LeEco] is focused on the internet first, and only then on software, and finally on hardware." Apple's product design was also obsolete, he added. "Apple only has individual apps. This was the right choice during the first generation of mobile net, when CPUs [central processing units] and the mobile network speeds were not fast enough," Jia said. "However now we're moving into the next era of mobile internet, these problems no longer exist. Moreover, having separate apps just means great obstacles in the user experience. We hope to break down these obstacles."

Sales in China, Apple's second-biggest market, have also deteriorated, Jia noted. "One of the most important reasons [for slowing sales] is that Apple's innovation has become extremely slow," he said. "For example, a month ago Apple launched the iPhone SE. From an industry insider's perspective, this is a product with a very low level of technology...We think this is something they just shouldn't have done." Apple's SE phone could increase the company's installed customer base for other services over the long term, said Angelo Zino senior industry analyst at S&P Global Market Intelligence. But there's a possibility that the lower-priced iPhone SE could pressure Apple's margins, if its effort to attract customers in emerging markets means fewer sales of high-end products, Abhey Lamba, senior technology analyst at Mizuho Securities, told CNBC's "Power Lunch" Monday. "When we look at Apple they clearly need the next ... driver," Lamba said. "The Watch hasn't cut it. And they're looking at content on the services side, on the iTunes side. We'll see how that works out. But definitely they need something to drive the next leg of growth."



As an industry leader, Apple should be developing more cutting-edge products, Jia said. The iPhone was still a leader five years ago after being launched in 2008 but now the concept has "fallen behind," he said. Apple did not immediately respond to CNBC's request for comment.

"We believe the next generation of mobile internet will be more open, more ecosystem oriented instead of being a closed loop...Ironically, Apple's over-dominance, lack of internet-thinking and the closed off nature of its systems, all hindered innovation in the internet mobile industry," Jia said. The Cupertino giant is expected to report a fall in smartphone sales when it announces first-quarter earnings on Tuesday. "At this point we think Apple has now turned into this great valuation play, whereas if we do see some momentum on the iPhone 7 side, I think, all of a sudden, you start baking in some sort of growth driver for the company," Zino told "Power Lunch."

It noted "some signs of economic softness" in the Greater China region, particularly Hong Kong, when announcing fourth-quarter results in late January. But chief executive Tim Cook said the company remained "very bullish on China" given the low penetration of high-speed mobile data usage and the growing middle class.

