Tesco cans plans for Hudl smartphone

Tesco has shelved plans to launch its own smartphone after admitting that the smartphone market is now too competitive for the phone to be a success, with analysts predicting that this is likely the first of a number of brand extensions to be ‘sidelined’ as new boss Dave Lewis focuses on improving performance at the core grocery business.

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Tesco announced plans for the Hudl phone in May following the success of its tablet, which sold more than half a million units. The phone, together with a second updated version of the tablet, were expected to launch by the end of the year.

However, Robin Terrell, Tesco’s multichannel director, says he has decided to “put the phone on hold” to concentrate on the tablet. He claims that since the announcement about the phone was made, the mobile market has “become even more competitive”, making it difficult for Tesco to find a gap to fill.

“We were confident that we could offer customers something we saw was lacking in the mobile market: an affordable, quality 4G smartphone handset. As we developed the idea in the first few months of the year, we could see a gap we could fill with our customers. The technology sector is fast changing and constantly evolving,” Terrell adds.

Conlumino analyst Neil Saunders says Tesco has made the right decision because it would have struggled to gain a toe hold in the smartphone market and it should be focused on its core business. He believes that more small projects and brand extensions will be curtailed as Lewis focuses on getting things right in the grocery business.

“Inevitably what we will see over this period of change is some of the things that were done in the past couple of years will be sidelined. They might not have been wrong at the time but the full focus might be on the core business in terms of financial resources and where execs spend their time. The phone has been put on hold and likely will be shuffled silently out and we’ll see that in other areas as well,” he adds.

Saunders thinks there is “more potential” with the tablet because the market is not as mature and Tesco has found a price point that appealed to the mainstream.

Tesco is continuing with its tablet plans, with the second iteration of the device set to launch “in the next few weeks”. Terrell says it improves on its predecessor in areas including screen size, speed, design and the number of apps.

“Where the first Hudl was used by many as a secondary device, Hudl 2 has the capability to take its place as customers’ primary tablet in the home. We are very excited and when we launch it in the next few weeks I think customers will be too. The opportunity remains strong in the tablet market,” he adds.

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Tom Fishburne is founder of Marketoon Studios. Follow his work at marketoonist.com or on Twitter @tomfishburne See more of the Marketoonist here