The beginning of the 5G cycle is an opportunity for a brand reset
Chinese consumer electronics manufacturer TCL isn’t currently well known as a handset maker. To date, the company has primarily made phones under the Alcatel brand, thanks to a licensing agreement from a partnership formed in 2004 with France-based Alcatel. But TCL now has grand ambitions to establish a line of phones using its own name. Its showing at CES last week signalled that the company is serious about doing so, and the stars could be aligned for at least partial success.
In addition to Alcatel-branded handsets, TCL makes phones using other labels such as BlackBerry and Palm. However, the majority of its sales volumes have come from feature phones and Android smartphones under its Alcatel umbrella. The Alcatel name, which is somewhat ironically now owned by Nokia after the Finnish company acquired Alcatel-Lucent in 2016, has become recognized for smartphones and tablets that offer value for money. TCL is now preparing to go further, with a range of more premium products using its own brand.
At CES last week, TCL showed its ambition of being an innovator in the smartphone business, looking to take advantage of two major and converging industry trends: 5G and foldable devices. TCL is also exploiting the fact that it has become a major TV brand in many markets, challenging LG, Samsung and Sony with mid-tier TVs that often match rival devices on specifications.
TCL claims to be the world’s second-largest TV maker in terms of product shipments, meaning that its TVs already sit in tens of millions of homes worldwide. But it’s difficult to say how much of an advantage this really is. We can point to LG and Sony to counter this logic: these two companies are synonymous with quality TV hardware, but both have struggled in the smartphone business.
Nonetheless, we expect TCL to make a serious push in the coming year, particularly with 5G smartphones, where it has already committed to deliver products that will cost less than $500. Operators around the globe have been spending billions on spectrum and on building out their 5G networks, and need affordable devices to hasten a return on this investment.
TCL’s Alcatel phones are mainly popular in prepaid and SIM-free segments where consumers look for value for money rather than brand recognition. With the unveiling of its TCL 10 portfolio last week, the company is looking to force change in the market and move into a more premium space compared with its Alcatel positioning (see CES 2020: Monday 6 January). Its TCL 10 5G smartphone is based on Qualcomm’s 765 chipset, a platform designed to bring value to 5G devices. It might not be the ultimate 5G smartphone, but it will deliver a competitively priced device built on proven technology from Qualcomm.
TCL seems to be realistic about its fortunes. This provide a reassuring contrast to LeTV, a Chinese company that wanted to change the make-up of the US telecommunication industry in a matter of months with new business models, but failed spectacularly. TCL appears patient and cautious and has the advantage of being part of a larger company that makes components, including displays, which are used in its TVs and mobile phones.
During 2020, we expect to see the arrival of a growing number of TCL-branded smartphones. These products could appeal to mobile subscribers around the world that are eager to get into the next generation of connectivity without experiencing “sticker shock”.
TCL is seeking to make a name for itself in the smartphone world in 2020 and appears to have all the parts in place to do so.
At CES 2020, our Chief of Research, Ben Wood, attended the TCL press conference and was able to have a short interview with Jason Gerdon, TCL’s Head of Global Communications and Strategy, shown in the short video below.
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