You’ll struggle to find a more passionate advocate for the Australian Mobile industry than Sam Skontos.
Skontos is the VP and Regional Managing Director, South East Asia & Pacific, for Alcatel / TCL Mobile and is based here in Australia with a team of people working to bring high-quality and affordable smartphones to market.
I caught up with Sam for a recent episode of the EFTM Podcast, where we discussed everything from the company’s latest affordable smartphone, to the importance of the Telco channel for both sales, credibility and compliance, and the broader issue of compliance and grey imports of mobile phones in Australia.
Trevor Long: Let’s get straight to the products. You announced three products this week, Three smart phones, all under $200. And look, they’re all, they’ve all got a place in the market, but this 3L at $199. You said in the announcement it was bang for your buck. You weren’t wrong. How confident were you given, you know, you’ve released a lot of phones over the years?
Sam Skontos: Yeah, we were very confident where as soon as we saw it, we saw the design, we saw the specs, we saw the opportunity in the market under $200 to have a top end device with some great features. We were pretty confident we were going to get it in market pretty quickly and be successful. We are very fortunate thatVodafone has picked it up and I think they’re going to do very, very well with it.
Long: How important is the telco deal like that? I mean, I can remember over the years, different moments where, um, you know, the telcos have come and gone with different brands. You’ve always had a pretty strong relationship with Vodafone and, many other carriers I’ve talked to as well. You’ve also got an Amazon store, you have some pretty good direct channels through JB HiFi, How much different is a telco deal for a device?
Skontos: A telco deal for us is very important. That’s our heritage. I say our DNA, we started, in fact, we relaunched back in the market back in 2009, with Vodafone. Vodafone was our first customer when we relaunched because not a lot of people know the history of Alcatel, but Alcatel was in the market for many, many years and then decided to pull out of Australia. And then I was tasked to bring it back into market in 2009. And coming back into the market, it was very difficult to convince the carriers that they should take us on. But they should partner with us because really they were either burned before or they were questioning how long we’re going to be around for and, and things like that. Vodafone was our first major breakthrough, so they’ve got a soft spot for us, We’ve got a soft spot for them.
The carriers are very important to us. We generally do probably 85 to 90% of our business through the three carriers. Why do we do that? Well, it’s credibility. It’s the fact that when a carrier takes you on, they put you through so much testing, so much auditing, compliance, regulatory. You know, after you pass the carrier testing and it’s been raised that that product is going to work in the market, it’s going to work really well on the network. And that to me is the most important thing , that the phones that we put in the market have been tested, have been finely tuned to work perfectly on that network. And that adds to the customer experience.
Long; I digress heavily here heavily, but Huawei comes to mind when you talk about credibility and telcos, because when, in my terms, unfortunately, Huawei we’re hit with the trade deals and bans that are going on. Their credibility was lost with the telcos and the telcos aren’t ranging their new products. That’s what average Australians look at what the telcos are selling. And I guess give respect to those brands, don’t they?
Skontos; Absolutely. And that’s why it’s important for us to work with the carriers because you get credibility when a customer buys a product that’s been endorsed or sold by the carrier, you know that it’s going to work, it’s been tested, it’s going to work perfectly on their network and it’s the credibility that you get with that. And um, I think that then reverberates through other channels and other customers
Long; when Sam Skontos brings, even if it’s a well pre production model of a final, like the 3L to Australia to muck around within the office, you’ve got a good team of people working with you on every range of the business, what do you do to give yourself some confidence in a product? Cause I’ll tell you what I do. Well, the first thing I did was go, what’s, what’s a more expensive product that has similar style specs? Um, and what’s a high end product that people are using. And I’ll try and compare them, not just not on speed, not a geek bench, but you know, taking a photo, taking a photo of my daughter, taking a photo of the Harbor. How do you go, how do you give yourself the confidence that not just the specs are good but it’s actually performing?
Skontos; Yeah. Well that’s a great question. The thing is about me and most people that know me well will probably laugh at this, but I don’t generally use one phone only for that long. So I’m always using a lot of different phones, not necessarily just ours. I like to test every phone in the market if I could. It’s possible, but I do test the the high end, the mid end, some of the the entry stuff. So I’m constantly changing my phones, making sure that I’m up to scratch on what’s happening in the market, looking at competitors, phones, using competitor’s phones, you know, I don’t want to just look at a product and look at the specs and make up my mind whether I think it’s gonna work or not or whether it’s good enough or not. I want to actually work with it, play with it, use it as part of my everyday.
I take photos, I check the emails, have a look at the messaging, at the social media, what’s the speed, what’s it like in terms of operations? Is it smooth. The audio, how good is it? I have a, a process if you like that I go through and that is, I look at all the human interfaces to a phone.
So the screen’s going to be great. So it’s good on my eyes. The audio has gotta be excellent so I can hear it well and I can listen to my music and get a good experience out of it. The touch is super important. So he make sure that the, you know, it’s smooth, it’s scrolling well, the refresh rate is excellent, you know, those sort of things. So all the human interfaces as well.
So by the time we have a phone that’s about to come into the market, I’m pretty much aware of what the top end phones and what the mid tier phones are like and then I’ve got a fairly good idea as to whether our phone is going to work and at what price will it work.
Long; I think the other part of this, looking at a device like the 3L is, looking back three years Sam at a $199 phone and seeing just how quickly this lower end of the market is developing in the same way that it is at the top end. Right? You get amazing innovation at the top end, but they very quickly cascade and the quality of $199 product today is leaps and bounds ahead of what it was three years ago.
Skontos; Very much so. And, and I think that, look, it’s technology evolving and, and that’s going to happen more and more and more as we’re finding new ways to put more power in a smaller device and try to save some costs. And you know, back in the old days we had a chip set and then we had a different chip set for this and, and different processor for that. In today’s world, we’ve got what’s called the SOC, so it’s not just a chip set, but it’s a complete solution in a chip. So it caters for more than just one processor on a chip. So the whole technology evolution is about making things smaller, saving money, and uh, and more powerful.
Long; So let’s talk about the business overall. The last 12 months has been been pretty big. We’ve gone through some troubles in the last few months, but you also launched the TCL brand in the middle of last year. How’s business been in the last 12 months?
Skontos; It’s been good. Um, I’m not going to tell you that it’s been brilliant and fantastic, but it’s been good. We’re still growing. We’re still achieving our targets. We’re still hitting our number three spot according to IDC by volume.
Long; just to be clear, that’s number three in Smart phones in Australia, which means Apple and Samsung is selling X number of phones, then Alcatel and then everyone else in terms of the number of phones being sold.
Skontos; Correct. Now I’ll clarify that and say that includes the Alcatel Brand, It includes the TCL brand and it includes the, the products that we do under the Optus brand and under the Telstra brand, because we also manufacture for those particular carriers. So if you look at all the volume that we ship into the market across multiple brands, we are number three by volume.
Long; So let, let’s talk about brands for a second. Because the TCL thing was fascinating. You know, TCL is one of the biggest manufacturers of screens in the world. You’ve got a television brand as well, but TCL mobile didn’t exist as a brand to the consumer until the middle of last year. Not only is that launched globally, but you’ve brought that here to Australia. Is that a strategy to make it very clear in the market that Aclatel is your low cost brand ,and TCL Is your way of saying these are a different phone they are there going to be a higher quality, perhaps they’re going to have higher specs and that’s why it’s a higher price.
Skontos; Yeah, it’s a little bit like that. Alcatel is always going to be our best valued phone. It’s going to get incredible value. As you could see with the 3L all at $199, it’s got amazing features. The TCL brand is positioned more to be the performance phone. What do we mean by performance? It’s got a brilliant display. It uses our next vision unique display. We own a display manufacturer that makes the panels for the TVs and we’re now using that same company to manufacture the displays for our TCL Smartphones. So the TCL has high end displays, high-end camera arrays, quad cameras, 48, 64 megapixels, etc. It’s got some new technologies such as in display fingerprint scanning and things like that. So it’s the more performance range and it is positioned a bit more higher than the Alcatel range.
So the actual range will go up to about, potentially $299. The TCL range will go from around $400 to about $800. So it is that mid tier in the market, but it is performance and it’s still great value in terms of what you get. Now, the thing about the TCL range is that we are going to grow that more and more and more each year. So this year we’re going to launch somewhere between four and five different models and very soon we’ll be able to discuss the first two models of the TCL that’s going to come into the market.
And you’re going to see some really nice, great looking designs, really good specs, up there with, with the best of them. But still very reasonable in price that is more geared towards the open market, the retail market rather than the carrier
Long; because that’s a huge market. I would argue, and I’d love to have JB’s sales numbers but we’ll never see them. But if, if, if I could get access to JB’s sales number and maybe gamble on it, I would argue that the $400 to $800 or $900 price point is, on volume where they’re doing big numbers if not their best potential growth area.
Skontos; Yeah, look, I tend to agree with you. I think once you get over the $800, then, most customers, and I’m not saying all customer, most customers are probably going to buy it on a carrier contract because you’d be crazy to fork out two or two and a half thousand dollars to get a phone when you can pick it up for 60, 70, $80 a month or a couple of years.
And looking back in my days of the carrier world, the research that we did said back in those days that the consumer had absolutely no qualms, absolutely no issue with signing a two year contract with a telco. And I don’t think anything would have changed today. It’s a great way still to get a top end high end device with, you know, one and a half, $2,000 without forking out one half, $2,000.
So I think most of the high end devices are going to be under contract with a carrier. Then it leaves you the $400 to $800. And they’re the guys that I guess don’t want to be in a contract. They want to have the freedom, the flexibility to maybe move around from contract to contract or carrier to carrier, but they want to have the latest and greatest. And you know what? We Aussies love our gadgets and we’d love to have the latest and greatest technology that is a fact. And you know, and I’m one of them.
Long; Yeah. And I think, I think that’s the other thing, back on the 3L just quickly on that. Having a macro camera, that’s a point of difference over almost anything. Like I, I try to take a photo of a small flower with raindrops on it on an iPhone SE, a $750 iPhone. Couldn’t do it. But on the Alcatel 3L beautiful. And I can imagine my son, a 13-year-old, and there’s going to be a lot of 13-year-olds rocking an Alcatel 3L cause it’s 200 bucks that are going to actually love the photography that they can get out of those phones. It is really just a matter of continually reinforcing to people that there are features in low-cost phones. All the, all the marketing in the world from Samsung and Apple doesn’t mean that you can’t get those features elsewhere.
Skontos; You’re a hundred percent right. This is one of the things that makes our job that much more difficult in the fact that unfortunately, brand is a very, very important part of the purchasing criteria and whether it’s brand and, you know, I wrote a paper on this and I’m hoping to get it published sooner or later. But Brand, I’m trying to understand brand, what does it mean to people? What brand does a brand really exist? Is it a perception? Is it in the mind of the consumer? Is it quality? Is it features? Is it price? Is it a belonging, a social belonging? Because you know, like there’s aspirational brands that says, well, if I walk around holding a particular brand, it means I’m successful. It means I’m in the elite class. You know, there’s a, there’s an association with a brand. So it’s an interesting topic. We could probably go on forever and ever and ever.
Long; It also relates to cars, you know, it’s everywhere, isn’t it? In our lives, our brand loyalty as Australians, I think is stronger than anywhere in the world. And also our brand snobbery, you know, that whole I’m successful, I’m driving or whatever. Which is probably why there are people that won’t want a TCL phone even though it’s got as much as everyone else. But hopefully the twist there is that there’s also that early adopter, tech loving a value fan that says, you’re mad. I got this and it’s got all those things and I paid half of what you did.
So I guess that’s, that’s the challenge going forward. But just, one last thing, I think that this is a critical thing and you’ve already touched on it. You talked about the value of the telco market in terms of validating a brand, and validating I guess a company’s commitment to this market. What’s your advice to average people who are clicking on the internet searching for phones, Unfortunately for me, they read reviews from everywhere in the world that aren’t directly focused on this market and they start then Googling to buy phones.
What’s your advice to people in those situations to ensure the phone they’re getting isn’t firstly a grey import. And secondly, it’s actually gonna work here and it meets our regulations.
Skontos; you know how to touch my heart because you know, that’s an issue for me that I’ve been grappling with for a long time in the market. And I’ve been quite vocal about it and I just would love the consumer to have a bit more knowledge around the phone that they’re getting – it Must, must be compliant to the Australian electrical safety standards. Must comply to the Australian SAR standards.
Now SAR is what’s called a specific ratio specific absorption ratio. That’s the amount of electromagnetic energy that the body can legally absorb. These SAR values should be prominent either on the packaging or on a website or somewhere and to make sure that the consumer understands that they’re getting a device that’s not going to be harmful to them. Getting a device that’s not going to cause an electrical fault or an electrical problem for them.
And the best way to do that is to buy from either an Australian carrier or from an Australian retailer. Any they are going to buy online to make sure that they should demand to see what the SAR values are and they should demand to if there’s a compliance certificate or some sort of documentation that proves that phone is actually to Australian standards its compliant with Australian standards.
Long; It feels like something we need to be taking up with a conversation with a regulators to talk about what kind of packaging requirements might be useful let alone advertising requirements to ensure that people know what they’re getting from their phones cause there’s so many bloody phones on the market. But as you say, I guess if the big box retailers are selling it, they’ve ticked those boxes, they’ve gone through that due diligence as have the telcos. So in the end, stick with the big brands in terms of where you’re buying from and you’re gonna get to have a phone that’s both safe and works. Cause that’s the worst thing. You take it to the bush and it doesn’t go on the frequencies the network are using.
Skontos; And it’s a big issue for the telcos because if you put a noncompliant or non-finely-tuned mobile phone on their network and it doesn’t work properly, the most of the time that consumers can ring up the call center and blame the telco. And it’s a big issue for telco. So they all of a sudden they start getting calls about “Oh your network doesn’t work properly”. But in actual fact it’s the phone because the phone has not being finely tuned the phone actually doesn’t work well on the networks cause it might be missing a vital frequency band or something along those lines or doesn’t support VoLTE or something, or some other technical aspect of the network. So all of a sudden the consumer is going to start blaming the network. When in actual fact, it’s the phone, that’s been imported that is not suitable for the Australian market.
Long; Thanks for your time. Thanks for your advocacy of the Australian mobile market. And congratulations on the 3L. It’s a bloody Cracker.
Skontos: Thanks. Thanks a lot. Trevor. Yeah, we’re very proud of it. And, uh, we got some big hopes for it. Thank you.