The partnership between Internet/Software biggie Qihoo 360 and Chinese phone hardware maker Coolpad has come to a not so pleasant end.
The partnership initially gave an impression of a promising future for both the companies, and the grand motive behind the coalition was to beat Xiaomi and China’s other domestic smartphone makers.
In December 2014, Qihoo had announced its a strategic partnership with Coolpad Group Limited, by investing $409.05 million in cash to take a 45% stake in a joint venture with the latter, which was eventually increased to 49.5%. However, less than a year later the companies have called it quits.
As per reports, the reason behind the split is stated to be Coolpad’s growing affiliation with rival LeTV following an 18% stake buyout by the latter in Jun 2015. Further, it has also been reported that the companies had closed the deal to follow a twofold strategy of promoting both Qiku and Dashen smartphones but each company continued to favour its own product. This resulted in friction between the two companies. Things went a bit far as Zhou Hongyi, CEO of Qihoo took to his We Chat account to vent his angst.
Qihoo is now demanding that in accordance with a noncompete clause in their original agreement, Coolpad must buy out Qihoo’s share in their joint-venture Qiku for double its market value. As per Qihoo’s estimation, the value is at around $750 million, meaning it wants Coolpad to shell out $1.5 billion as payment for its betrayal.
Hongyi told Forbes China that he knows it’s already late to be getting into hardware, and that anyone who doesn’t get into making mobile phones now will never be able to disrupt them with the next big thing because they’ll “always be an outsider,” reports TechInAsia.
Meanwhile, Coolpad has already fired back with in an open letter to Zhou Hongyi that concludes: “Please quietly be a beautiful product manager, rather than an emperor who howls crazily whenever he feels wronged.”