Wileyfox’s administration shows risk of undercutting

Budget smartphone manufacturer Wileyfox has entered administration demonstrating the risk of trying to undercut established brands; small profits = small chance of doing anything.

Although Wileyfox has not provided an official comment yet, a Reddit post states the business has entered administration. The company entered into the world in 2015, claiming because it didn’t have legacy devices to support as well as a smaller workforce, the team would be able to offer high-end devices at budget prices. Unfortunately this attempt to shake the status quo has seemingly amounted to nothing.

“Wileyfox Europe Limited is in Administration,” the post reads. “Andrew Andronikou and Andrew Hosking are appointed joint administrators and act jointly and severely without personal liability.”

Back in 2015 the first two devices launched by Wileyfox, the Swift and the Storm, fared pretty well, delivering on the promise of performance and price. Following up proved more difficult, as it was forced to ditch the Cyanogen operating system and move onto Android. To try and keep prices low certain models were offered if the user was happy to content with lockscreen ads, though this was never going to be an idea which lasted. Later devices did not meet the high-spec features of the Swift and the Storm.

This is not necessarily the end for Wileyfox, administrators will try to secure the future of the business, but it does show the danger of the smartphone industry. Most consumers will be tough pushed to leave the brand that they currently have unless there is a compelling offer. Of course, undercutting competitors is a tried and tested strategy, but unless there is a substantial mountain of cash in the bank account it is a very risky game.

The lessons learned here are hard ones. If you want to operate in the Western markets, everything on the phone has to be high-spec and priced attractively (unless you are Apple); if you don’t have the scale of the global smartphone players, you will struggle. Wileyfox found out the hard way you the economies of scale work against localised players.