New smartphone vendor to try will it fly?

If the incumbent smartphone vendors give you the blues, all you have to do is wait a week for Velocity Mobile.
This new smartphone vendor will launch at CTIA 2008 and seems certain to draw the curious. In such a brutally competitive market, some of that curiosity may be morbid – are they crazy?
The company embargoed its pre-briefings and its Web site was under construction last week, but the available information will probably pique interest in the latest approach to the market.
Velocity Mobile is based in Seattle and London, led by a team of “design-focused industry veterans” and in collaboration with Inventec, a Taiwanese original design manufacturer (ODM) established in 1975. Inventec reported more than $11 billion in revenue in 2007 and claims to be the world’s third-largest notebook manufacturer.
“There is ambient activity at all these shows,” said John Jackson, analyst at Yankee Group. “Remember, the ‘Modu’ launched last month at the Mobile World Congress.”
“What that says is: barriers to entry are low, barriers to success are high,” the analyst added. “There’s lots of design and technology competency that you can access to get you into the market. Usually it’s a brand play or a niche play that leverages an ODM, a nifty design and, in the case of Modu, some clever software. But scaling and differentiating are still an enormous challenge.”
The need for a niche
Differentiation, to Bill Hughes, analyst at In-Stat, is crucial.
“Going after ‘the smartphone market’ is too broad,” Hughes said. “You need to pick a niche, like Research In Motion’s BlackBerrys and mobile e-mail.”
Hughes, who specializes in enterprise mobility, said that Microsoft Corp. has yet to fully exploit its own installed base of fixed enterprise customers for mobility solutions, though it has launched Enterprise Mobile, a fulfillment standalone, and a suite of mobile-related services, last fall.
Another analyst said that the real hurdle is the end user’s continued operating expense, rather than the one-time capital expense for the device.
“The problem with a smartphone start-up (getting traction) is the expense of the accompanying monthly service charge,” said Rob Enderle, principal at Enderle Group. “In a recession, corporations that often pay for that service will do less and individuals have to step up. So a new smartphone vendor has to pursue enterprise, or pursue a Danger business model that couples a handset with recurring service revenue.”
One tease from Velocity Mobile, which said it will “enhance” the (Microsoft Inc.’s) Windows Mobile “experience”:
“The formula is simple – combine Western design expertise with Eastern manufacturing efficiencies necessary to give consumers a no-compromise experience at great value,” according to a press release touting demos at CTIA 2008. (Velocity Mobile is in Meeting Room 191.) “Major partners” and more detail will be available at CTIA 2008, the company promised.
While “Velocity Mobile” principals and differentiators remain under wraps until next week, it’s hard to hide Inventec. The Taiwanese ODM has offices or factories worldwide, including in Redmond, Wash., home of Microsoft, Fremont, Calif., and Houston, as well as in Taiwan, Japan, Korea, India, Czech Republic, the United Kingdom and Germany.
New to the field
Modu, an Israeli startup which launched last month at Mobile World Congress, is pioneering a modular concept. (Thus “modu.”) The core is a mobile phone that also acts as a storage device, which when slipped into various jackets acts as another device – an MP3 player or a USB port for a laptop, for instance.
“This is the beginning of a revolution…” said Dov Moran, CEO, founder and a former SanDisk engineer.
The company said it has deals with network operators Telecom Italia, VimpelCom in Russia and Cellcom in Israel, as well as partnerships with content providers such as Universal Music Group.
You may hear more about zzzPhone as well. The company claims to be “a USA owned and operated company” with contacts only in China. Its factories are in Shenzhen, “where nearly 90% of the world’s cell phones are manufactured,” according to its Web site. zzzPhone’s shtick is a knock-off of Dell Computers’ offer: tell us what features you want, we’ll put it together for you.
“These unlocked, quad-band (GSM) cell phones deliver features comparable to the ultra-popular Nokia N95 and Apple iPhone, at a significantly discounted price,” the company’s Web site claimed. Want the same features as the N95, arguably one of the most advanced smartphones on the planet? Send zzzPhone $150, plus shipping.
No analysts contacted had heard of the company.
But, in the hothouse environment of mobile communications, the hope never dies, according to one analyst.
“There’s always room for a break-through product,” said Neil Strother, analyst at Jupiter.