HOW MOBILE PHONE MAKER BLU PRODUCTS, AND ITS LOW-OVERHEAD, LOW-PRICE BUSINESS MODEL, THINKS IT CAN BEAT SAMSUNG

Making cheap, high-end, unlocked smartphones one at a time

Sammy Ohev-Zion starts our chat with an economics lesson. It costs every company about the same amount to manufacture a phone, he says — the price of an Nvidia processor and a Sharp display is consistent whether HTC, Nokia, or Motorola is signing the check. But those costs are only a small piece of the price you wind up paying when you walk into a Verizon store and buy that phone — which either costs upward of $500 or requires a hefty two-year contract. You're also paying for Samsung's nine-figure marketing budget, HTC's HR department, or Sony's huge New York City skyscraper. What if you could buy the same high-end phone from a company without all that cruft and overhead? How much would it cost?

Ohev-Zion, CEO of Blu Products, a relatively unknown manufacturer based in Miami, Florida, says it would cost $299.  That's how much the company's latest flagship phone, the Blu Life One, comes unlocked from Amazon or a handful of other retailers.  

Blu Products' Blue Life One 5-inch HD smartphone (Click Image To Enlarge)

The Blue Life One is a 5-inch HD phone with a 13-megapixel camera and stocks Android 4.2 (save for a Blu wallpaper), in a thin and light solid aluminum body that appears to hold its own next to the Galaxy and Droid devices of the world. $299 also buys the Blu Life View, with a gigantic 5.7-inch HD display, a 12-megapixel camera, and even a 5-megapixel front camera. It's not surprising that Blu's phones bear more than a passing resemblance to the iPhone and a handful of Android devices, but neither is it an accident. Ohev-Zion and Blu are betting that people want a good phone, but that they want a cheap phone more than they want a Samsung phone.

You'd be forgiven for not having heard of Blu Products — it's a very small manufacturer, and has made inroads primarily with the Latin American community. But the company has larger, global aspirations, and the connections to back it up: CEO Sammy Ohev-Zion spent 17 years in distribution, working with what he calls "tier-one" manufacturers like Samsung and Motorola, before deciding to strike out on his own and create Blu.

He did so in 2009, partly because during the economic recession there weren't enough margins to pay distributors, and partly because the technology and manufacturing required to build a phone was more available than ever.   Ohev-Zion told me.

"Previously, for a startup company to be able to manufacture — if you weren't one of these billion-dollar companies you didn't have the access or the technologies to make your own mobile devices."

But that all changed, and Ohev-Zion found that he could build a good phone for the same price as the other guys, and sell it for a lot less. He used his connections to get Blu phones in stock at Amazon, Newegg, Best Buy, and others, and began rolling out newer, better phones at a blistering pace. He believes, and says without a moment of hesitation, that Blu is going to be a real player in the smartphone industry sooner rather than later.

Blu Products' Blue Life One 5-inch HD smartphone (Click Image To Enlarge)

There's some evidence that Ohev-Zion's confidence isn't totally misplaced as evident from the number of startups whose low overhead, lower price business models offer quality products at prices lower than major companies:      

• Warby Parker:  The company circumvented an entrenched supply chain of designers, manufacturers, suppliers, and retailers, and in doing so found a way to sell equally high-quality glasses for a much lower price.  
• Nicky Bronner:  Used his father's connections to get Unreal Candy into CVS, Target, and elsewhere — he tweaked the formula of candies like Reese's Peanut Butter Cups to only include natural ingredients, and found a huge and willing audience as soon as he had a place on shelves. 
• Vizio:  May be Blu's best analog, though.  Ohev-Zion says.   "Vizio is the #1-selling TV brand.  Why?  Because people understand, 'listen, it's the same technology and I'm getting a much better value without the enormous, billions-of-dollars overhead.'" (Incidentally, Vizio seems to have noticed this too — the company announced its first line of smartphones at CES.)

Ohev-Zion believes there's a huge and willing audience for unlocked phones, too. He pointed to the Nexus 4's success,

"It sells out in like five minutes whenever there's stock available."  

This is evidence that people don't want to be locked in to two-year contracts, and noted that thanks to MVNOs like Simple Wireless and Red Pocket, we're no longer forced to accept AT&T's brutal contract terms. If this becomes a trend, Ohev-Zion likes Blu's odds.

"A lot of other companies aren't going to be able to keep up. It's a cycle... right now I think it's going to be very tough for the manufacturers who aren't Samsung and Apple to keep selling at the high prices they're currently selling."

But the company may find itself with a new list of competitors, like Alcatel, who realize that Blu's strategy — lower overhead, lower prices — may be repeatable. And the fact remains that Apple and Samsung are successful — the market for high-end phones at high prices isn't gone yet, and given those companies' volume and supply chain control they may be able to make phones for considerably less than $150 anyway.  And, of course, it's hard to compete with Samsung without matching that nine-figure marketing budget (just ask HTC).

But Blu is growing — from 70,000 units in 2009, its first year, to 4.1 million last year — and it's growing in key areas. A third of the company's 300 employees are stationed around Latin America, where they're selling both feature phones and smartphones to a region that is only slowly adopting mobile technology. But as Latin American phone use grows, so will Blu: "we're in a supreme position" in the region, Ohev-Zion says. "We're the only ones."

And if the Nexus 4's success is any indication, Blu may have trouble keeping its flagship $299 phones in stock in the US as well.

COMMENTARY:  

The Good And The Bad

I am very impressed with the Blu Life One, but it has a way to go before it can compete with the likes of the Samsung Galaxy S4, Apple iPhone 5, HTC One or BlackBerry Z10, the market leaders in the high-end premium smartphone category.  See my blog post dated March 15, 2013 for a comparison of these four smartphones.

The Blu Life One sacrifices processor speed (Quad-core 1.2 GHz Cortex A7), display viewability (720 x 1280 pixels) and network speed (supports 2G and 3G networks only) in order to gain longer battery life (25 hrs - 2G and 20 hrs - 3G) .  

The Blu Life One's 5-inch display is not a huge plus.  It matches the Samsung Galaxy S4's 5-inch display and is only a bit larger than the displays on the iPhone 5, HTC One and BlackBerry Z10.

The Blu Life One also fails to match the package of features apps that come packaged with the new Samsung Galaxy S4.

If consumers are looking for an unlocked smartphone, a large display, and a display that's as clear as the iPhone 5 and BlackBerry Z10, at a price point that is a couple of hundred below the top four smartphones, then the Blu Life One is probably a good option.  

I would describe the Blu Life One as a poor man's Samsung Galaxy S4.  If you are willing to sacrifice processor and network speeds, compromise when it comes to display clarity (but it still matches the iPhone 5), limit yourself to a maximum of 32GB of storage capacity (the other four phones have up to 64GB storage, except the BlackBerry Z10's 16GB), and carry around a bit heavier phone (5.11 ounces), then the Blu Life One is a good alternative at only $299.

Blu Life Series Phones

Coming this April, BLU Products will have three new smartphones vying for your hard-earned dollar. The trio of dual-SIM handsets, known as the Life View, Life One (see above) and Life Play, will be sold unlocked on Amazon and will range in price between $229 and $299. As a nice touch, Android 4.2 will be common among the bunch, as will backside-illuminated sensors on the cameras and the quad-core, 1.2GHz MediaTek MT6589 (Cortex A7) SoC. Likewise, each smartphone will also feature an HD IPS display.

• Life View ($299), the largest of the bunch, includes a massive 5.7-inch display, a 12-megapixel rear / 5-megapixel front camera, 1GB of RAM, 16GB of expandable storage and a 2,600mAh battery.  
• Life Play ($229), includes a 4.7-inch display and measures 7.9mm thick.  Includes an     8-megapixel rear / 2-megapixel front camera, 1GB of RAM, 4GB of expandable storage and an 1,800mAh battery.  
  
• Life One ($299), is the more reasonably sized, includes a 5-inch display, a 13-megapixel rear / 5-megapixel front camera, similar storage specs and a 2,000mAh battery. 

You'll find the band support for each of the three phones in the PR after the break, but needless to say, you'll be safe on AT&T (and in many areas, T-Mobile).

 

Blu Life One Technical Specifications

For you techies in the crowd, here are the full Blu Life One Technical Specifications.          

GENERAL:       

• 2G Network - GSM 850 / 900 / 1800 / 1900 - SIM 1 & SIM 2
• 3G Network - HSPDA 850/ 1900 / 2100
• SIM - Dual SIM (Mini-SIM, dual standby)
• Announced - March 2013
• Status - Coming soon. Expected release April 2013

BODY:

• Dimensions - 144 x 73 x 8.9 mm (5.67 x 2.87 x 0.35 inches) 
• Weight - 145 grams (5.11 oz)  

DISPLAY:

• Type - LED-Backlit IPS LCD capacitive touchscreen, 16M colors
• Size - 720 x 1280 pixels, 5.0 inches (~294 ppi pixel density)
• Multitouch - Yes
• Protection - Corning Gorilla Glass 2

SOUND:

• Alert types - Vibration, MP3 ringtones
• Loudspeaker - Yes
• 3.5mm jack - Yes

MEMORY:

• Card slot - MicroSD, up to 32 GB
• Internal - 16 GB ROM, 1 GB RAM

DATA:

• GPRS - Class 12 (4+1/3+2/2+3/1+4 slots), 32 - 48 kpbs
• EDGE - Class 12
• Speed - HSDPA, 42 Mbps; HSUPA, 21 Mbps
• WLAN - Wi-Fi 802.11 b/g/n, Wi-Fi Direct, Wi-Fi hotspot
• Bluetooth - Yes, v4.0
• USB - Yes microUSB v2.0

CAMERA:

• Primary - 13 MP, 4032 x 3224 pixels, autofocus, LED flash
• Features - Geo-tagging, touch focus, image stabilization, face and smile detection, HDR
• Video - Yes, 1080p @ 30fps
• Secondary - Yes, 5 MP

FEATURES:

• OS - Android OS, v4.2 (Jelly Bean)
• Chipset - MTK MT6589
• CPU - Quad-core 1.2 GHz Cortex-A7
• GPU - PowerVR Series 5XT
• Sensors - Accelerometer, gyro, proximity, compass
• Messaging - SMS (threaded view), MMS, Email, Push Email, IM
• Browser - HTML5
• Radio - Stereo FM radio
• GPS - Yes, with A-GPS support
• Java - Yes, via Java MIDP emulator
• Colors - Black, White
• SNS integration
• MP3/AAC/WMA/WAV player
• MP4/DivX/XviD/WMV/H.264/H.263 player
• Photo viewer/editor
• Organizer
• Document viewer/editor
• Voice memo/dial/commands
• Predictive text input

BATTERY:

• Li-Ion 2000 mAh battery
• Standby - Up to 850 hrs (2G) / Up to 760 hrs (3G)
• Talk Time - Up to 25 hrs (2G) / Up to 20 hrs (3G)

Blu Products Diversified Smartphone Line-up

For such a small company, Blu Products has one of the largest lineups of smartphones (35 different models) I have seen in quite a while, rivalling even Samsung.  In addition to the Blu Life Series, the company announced two new smartphones in February 2013 which are worth looking into --the BLU Studio 5.3 II and the BLU Tank 4.5.

 
 BLU Studio 5.3 II - $199 (Click Image To Enlarge)

The BLU Studio 5.3 II, as the name implies, is the successor to last year’s 5.3-inch phablet. While the specs have been improved, it still comes with the same $199 price tag. Here’s a quick rundown of its specs.

• Dual-core 1GHz Cortex A9 processor
• 5.3-inch IPS display with 960 x 540 resolution
• 4GB internal storage, microSD slot (up to 32GB)
• 8MP rear camera with dual-LED flash
• 2MP front-facing camera
• 2,200mAh battery
• Dual SIM capability
• Android 4.1 Jelly Bean

BLU Tank 4.5 - $199 (Click Image To Enlarge)

The BLU Tank 4.5 is the company’s first rugged Android smartphone, and it can be yours for $199. Not only is it dust and sand proof, but it’s also water resistant. More of its specs below.

• Dual-core 1GHz Cortex A9 processor
• 4.5-inch IPS display with 960 x 540 resolution
• 4GB internal storage, microSD slot (up to 32GB)
• 5MP rear camera and a front-facing camera
• IP67 certification
• 1,760mAh battery
• Dual SIM capability
• Android 4.1 Jelly Bean

The BLU Studio 5.3 II and BLU Tank 4.5 both support 3G HSDPA connectivity and are offered unlocked. You should be able to grab them soon from various online retailers in America. 

Courtesy of an article dated March 18, 2013 appearing in The Verge, an article dated March     15, 2013 appearing in Engadget, an article dated February 9, 2013 appearing in Slatedroid, the technical specifiations per GSMArena.com, and a press release dated March 13, 2013 issued by Blu Products