Wileyfox has launched with big ambitions, but James Pearce questions whether it has what it takes to firmly establish itself in the UK market
Last week we were invited along to the launch of a brand new British mobile manufacturer, Wileyfox, which in its invite promised to “disrupt” the mobile market. It wants to be the fox among the hen house, causing chaos, but I’m not sure its strategy is as sly as it hopes.
Offering devices that have powerful processors, quality screens and decent build quality at a low end cost is always going to sound appealing – on the surface at least. It has worked in China, and that is what Wileyfox is looking to emulate.
The problem any new entrant faces is that the UK’s mobile market is already extremely saturated, and the established players such as Apple or Samsung have such a large cash base to play with. They leave very little space for new entrants.
We’ve seen it before with the likes of Huawei, which has been selling handsets in the UK for around five years, but has only just started to gain a noticeable foothold. Huawei is by no means a small player – its position as the world’s third largest mobile phone vendor (according to Strategy Analytics) proves this, as does £1.7 billion in H1 2015 sales revenue.
It has set itself a lofty target of becoming the third biggest vendor in the UK by 2017, but currently represents just one per cent of the UK market.
If a Chinese giant with existing operator relationships can’t make major in-roads in the UK within five years, then what chance does a company of just five employees based in Bond Street have?
Of course, Wileyfox isn’t aiming at mobile operators – it is hoping to capitalise on the SIM-free market which it claims will grow due to the increasing price of premium handsets and contracts. This may be the case, but for now, the subsidised handset model is still the way the UK buys phones.
What is worrying about Wileyfox’s prospects is the state of the existing mobile market. In the last year, the financial results for some of the biggest players have caused worry.
Take Motorola, for example, which is currently owned by Chinese PC maker Lenovo. Just last month, Lenovo announced plans to axe 3,200 jobs after it saw its profits plummet by almost 50 per cent. Its mobile division lost $300 million.
HTC is a great example of a lesser known company that entered the mobile market and made a big splash, but recently, its position in the market has looked increasingly perilous.
It has also faced major losses and announced plans to slash 2,500 jobs following a horrible quarter where revenue halved.
Even Samsung, the world’s largest mobile manufacturer, has faced a tough few years despite having a massive budget, huge earnings and one of the strongest mobile brands.
The one positive that Wileyfox will cling to is the successes of the likes of Xiaomi in China (aiming for 100 million handset sales this year) and OnePlus – one million sales of its first ever device, the OnePlus One.
However, the Chinese market is far from saturated and Wileyfox has no plans to compete there immediately. With no marketing budget, its nearest comparison is OnePlus, but is there really room to compete directly with a company that managed a fantastic viral marketing campaign? If it can’t capture the public imagination, it won’t sell phones.
What makes this perhaps more obvious is who owns Wileyfox – Meridian Partners – which also owns KAZAM, another UK-based manufacturer. KAZAM may be well known within the industry but ask the average Joe if they’ve heard of the brand, and I bet they’ll say no.
Being a new entrant in any market can be a daunting task, but entering a highly competitive and saturated one is a huge challenge. Despite the branding, I’m not sure this manufacturer is quite the wily old fox it claims to be.