FREETEL Fighting to Crack the US’ Open Channel

Back in 2010, Dell unveiled the Dell Streak Android smart phone.  Sporting a 5” display in June ’10, it definitely was ahead of its time.  Reviews were mainly positive – especially on its esthetics and large display.  AT&T marketed the device as a ‘Tablet Phone’ and it sold for a subsidized price of $299.

In the old subsidy world, it competed against a much higher subsidized iPhone and never made traction in the US.  It did, however, do well within pockets of Asia and Japan.  Dell eventually exited the US market focusing on emerging markets.  Not much later, Dell discontinued phones altogether and continued to plug away at enterprise laptops and desktops.

How?

With some traction in the Japanese market, remnants of the Dell team joined forces with engineers plucked from Sony, Panasonic, ZTE, Huawei, Kyocera and Motorola.  FREETEL emerged in October of 2012 and the company has steadily grown to ~200 employees spread around the globe today.

Philosophy:

The company’s philosophy is focusing on craftsmanship, innovation, quality and design. Many accomplished hardware OEMs have met their doom focusing on hardware in recent years.  FREETEL hopes to differentiate by overseeing every stage of the manufacturing process and bringing both design & manufacturing in-house.  Daunting task.  However, FREETEL is now the #1 MVNO by subscribers in Japan.  The company has gained traction by offering both prepaid and postpaid services without contracts.

Portfolio:

FREETEL’s portfolio of 4 devices are detailed on its website: http://www.freetelwireless.com/.

The company’s devices are targeted at entry LTE and what US operators would describe as ‘flagship lite’ devices—near flagship specs but at retail prices $150 lower than the most recent crop of flagships.  Surpassing 1.5m phones in Japan, the company is now targeting a global reach including southeast Asia & LATAM: Cambodia, Vietnam, Mexico, Chile, Peru, Colombia, and Brazil.

Next challenge will be attacking the US market via the open & online channels.  The company will soon own service & call centers in the US, has received Google certification, and is on sound IP ground, which may give them a head start on many new Chinese vendors poised to expand in the US.  Many HW-focused OEMs have gone out of business without a meaningful ecosystem of services or a vertical business helping with margins.  So, FREETEL does have an uphill battle breaking through on a global level.  However, the company is streamlined and estimates it has near equal BOM costs of much larger, global players.  FREETEL has recently moved into a formerly ZTE-owned factory and continues to scale.  Backed by the Android ecosystem, FREETEL will be entering the US market later this year.

 For the most recent US open channel research, contact [email protected]