Can Spain's Home-Grown Smartphone Compete With Samsung, Apple?

Source: BQ/Mundo Reader

BQ's smartphone, the Aquaris E5, goes on sale in Europe in June. Close

BQ's smartphone, the Aquaris E5, goes on sale in Europe in June.

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Source: BQ/Mundo Reader

BQ's smartphone, the Aquaris E5, goes on sale in Europe in June.

Spanish mobile company BQ has a strategy for taking on Samsung and Apple in its home country: Give the people a smartphone with decent services and a good camera. Just make it cheaper.

BQ's nine partners are convinced that's the way its Aquaris E5, the first smartphone fully developed in Spain, can slice away at the market share of the smartphone giants in a country with a youth unemployment rate of 53 percent.

"There are a lot of cost-conscious consumers in the Spanish market, especially with current economic conditions," said Tim Coulling, an analyst at Canalys, a research firm.

Homegrown companies in other countries have found success by focusing on affordable devices that still have a lot of features. China's Xiaomi keeps prices low by not advertising and selling directly over the Web. Its Mi 3 smartphone sells for about $270, about the same price of BQ's device.

Still, chipping away at the mobile leaders in Spain won't come easy.

"There are lots of possibilities for new players to enter the smartphone market," Jose Maria Lopez, an analyst at Barcelona-based research firm Penteo, said by e-mail. "There's always interest for something cheaper, but there doesn't seem to be much space to fight the top players' position."

Similar to Xiaomi, BQ doesn't advertise in order to keep a lid on spending. Its approach also involves working with lower margins and focusing on its price-quality ratio and client support. That is where "we have an advantage," said Rodrigo del Prado, the company's deputy director general and one of the controlling partners.

The new Aquaris, which went on sale this month, isn't the first smartphone sold by BQ. The original model went on sale in April 2013. The difference is that since then, BQ, which employs some 700 people, went from developing parts of the phone to developing the entire product. Manufacturing is outsourced to several suppliers in China, which in the past have included Foxconn, maker of the iPhone.

BQ sold about 400,000 handsets last year, according to Del Prado. The company had 3 percent of Spain's smartphone market in 2013, based on estimates by Canalys that set the size of the Spanish market at about 12 million units. BQ has also developed e-readers, tablets and 3-D printers in Spain.

The Aquaris E5 HD is priced at 199.90 euros ($272), compared with 699 euros for Apple's iPhone 5s and 599 euros for Samsung's Galaxy S5. BQ plans to sell its phone in Germany, France, Switzerland and Sweden.

(Corrects name of phone to Aquaris.)

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