Smartphone Vendor Verykool Pursues Its Own Niche

Instead of directly taking on iPhones and Samsung Galaxy phones, Verykool's CEO says his company aims to sell budget phones to the masses.

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Not every consumer can afford the latest top-of-the-line smartphones from Apple, Samsung and other premium vendors, said Joseph Ram, CEO, founder and president of InfoSonics, which makes and sells the line of Verykool smartphones.

For those users, Verykool is looking to be their budget mobile phone handset company, he told eWEEK. It's a matter of numbers, he said.

"In the U.S. population, about 40 million consumers are below the poverty line, and another 40 million are close to the poverty line," based on U.S. Census Bureau statistics, said Ram. "About a third of consumers can't afford an iPhone. They have bad credit or no credit, or no bank accounts. These are underserved, underprivileged consumers."

That niche is just the kind of consumer that Verykool is aiming to serve better than their high-end competitors, he said. "We think we can bring a great product to that population at a great price and that's what we have to do."

Many consumers today simply buy their mobile devices based on brand and status, without knowing much about the actual devices, he said. That will change slowly as people see that they can buy good quality devices with nice features without having to spend some $600 or more for a shiny new smartphone.

"I remember the days when everyone had to buy a Motorola phone" based on its reputation, he said. "That's how we [as a company] survived the last 21 years—we went through many changes."

To grow its sales against the premium vendors and the rest of the marketplace, from Huawei to LG to Microsoft Lumia and a bevy of budget competitors from India and China, Verykool is always surveying the retail market to see where it can compete, said Ram.

"One of the biggest sellers today is unlocked devices in Target, Walmart and other stores," he said. "It's growing at more than double digits a year. I think that's a testament to the [global] changes and that consumers believe that there are better deals out there."

With all of this in mind, this is how Verykool began serving its niche, he said.

"It's not easy out there," said Ram. "There's a lot of competition, but we have to understand what our strengths and what our weaknesses are and work to our strengths," including lower prices and good mixes of features. "If we are successful in identifying what consumers want, then we will ultimately be successful."

InfoSonics, which sells its Verykool smartphones in the United States, South America, Central America and the Caribbean, was founded in 1994 as a phone distribution company for Samsung and went public in 2004. In 2005, the company launched the first smartphone of its own, and about six years ago dropped its Samsung distribution business to focus on its own products.

One way this works for Verykool is that the company's cost structure is a lot lower than that of its larger competitors, said Ram. "We can provide feature for feature for about half the cost [of larger competitors] in many cases. That big price gap allows us to compete very successfully for the U.S. consumer business."

Verykool sells its phones through regional and prepaid carriers in the United States, including Cellular One as well as GCI in Alaska. Customers can buy the phones and use them with the GSM carriers of their choice.

Verykool designs its own phones and works out their components, then has them built in China by third-party vendors. The first Verykool phones were sold in South America.

Ram said he thinks that to be successful in the United States, a smartphone company has to be based here.

"You have to understand U.S. customers and what they are looking for," he said. "I think it's hard to be a Chinese or Indian company and have success here. The consumer here wants to buy products from a U.S.-based company."

What is also helping his company today, he said, is the move by the major mobile carriers away from phone subsidies for consumers, which makes it easier for companies like his to compete for increased sales.

"I think we are in a watershed moment for the industry," said Ram. "In the old contract-subsidized world, it was hard to sell phones to users. Retail is becoming the 800-pound gorilla and not so much the carriers anymore."