From CES 2015 – Brands to watch in the US: Alcatel (part 1 of 2)
During CES 2015, we were afforded the opportunity to meet privately and at-length with Alcatel and ZTE. There, we discussed brand strategies and upcoming devices from the two companies which, up to now, have seen most of their participation in the prepaid segment of the US market.
That is going to change however, as 2015 marks the beginning of new initiatives for US consumers from both of these companies. Both strategies are quite different, and yet, both are compelling. Are these the types of moves that will generate a giant flash-in-the-pan only to fizzle out into irrelevance? We do not think so. While we would not compare this to how T-Mobile has changed the services side of the market, there are some parallels to be drawn.
With the ideas that were discussed, the initiatives already underway, this may well be the beginning of a manufacturer-driven groundswell change for the US market. Here is a summary of where Alcatel is planning to go, and what we can expect from the company in the near term.
TCL Communication Technology Holdings, Ltd
Alcatel is the brand that TCL has successfully licensed to deliver mobile products throughout Europe and Asia. That is due in part to the long history of Alcatel as a brand name in France. That company traces its roots back to the formation of Compagnie Générale d'Electricité (CGE) in 1898.
Now known as Alcatel-Lucent, it is a major manufacturer and provider of telecommunications equipment used in mobile and traditional networks as well as internet backbones, software and services. TCL began licensing the Alcatel name as part of a joint venture with the French company in 2004, and a year later, TCL took 100% ownership of the effort.
Current state of the brand
Alcatel ONETOUCH (TCL) has established a wide portfolio of products at all level of the spectrum, from basic flip phones to flagship contenders with more affordable price tags. The company also makes a number of other consumer electronics devices. The brand recognition in Europe, and TCL’s base of operations in China, have allowed the company to grow rapidly. More than 85% of sales are in markets outside of China which gives Alcatel plenty of scalability and reach. In the United States, Alcatel devices are principally found in the prepaid segment.
Alcatel’s foray into wearables is a bold step in design as well as taking a bold step to be accessible to as many people as possible. The platform is a bit fenced in, a proprietary OS with both the hardware and software purpose built to handle the basics. This keeps the hardware from being overburdened, but it also limits feature expansion which does not lend well to being “future proof.”
However, an even bigger checkmark in the “plus column” for the ONETOUCH WATCH is the price, $149. Also, because the strap also serves as the main point to recharge the device, there are no extra cables or cradles to worry about. Regardless of what you may read about the economy, real purchasing power is down over the years. The level of functionality, the downward cost trend of technology, and app integration for the ONETOUCH WATCH make it accessible for just about anyone.
Getting unlocked devices in the US is not difficult. There are plenty of reputable retailers that will sell unlocked smartphones direct to consumers. Price is often the biggest obstacle for a consumer to get past, particularly in a market where enticing subsidized prices are available simply by committing to a service agreement.
Alcatel’s decision to offer unlocked devices adds a dynamic not often seen, manufacturer-direct sales that bypass middle players like Expansys. The initial thrust will be for well featured smartphones that start under $300. The octa-core ONETOUCH Idol X+ brings everything but LTE connectivity for $280, and the LTE connected ONETOUCH Idol 2S comes in at just $200. Neither of those are deals to shake a stick at.
The Color Run
These efforts are for naught if there is no marketing involved, and to that end, Alcatel is increasing its marketing budget by 5-times. The shift is evident by the work going into the direct sale website, and the infusion is also evidenced by Alcatel being the presenting sponsor for the The Color Run in the United States and Canada.
Known for colorful expression, The Color Run, is held hundreds of times per year around the world, more than 100 of which will be in the United States this year alone. It is a 5k run and even if you have not seen one up close, you have surely seen pictures of brightly colored people smiling while having looked like they lost a battle with a bunch of colored chalk.
In addition to unlocked devices, Alcatel aims to bring support for all carriers to the table, and we may see a new brand emerge as well. The company will remain engaged with developers and we will likely see continued engagement in things like the AT&T Hackathon and more.
The competition is not sitting still, but Alcatel is well situated to make an impact if it remains committed to this vision.