Everyone figured it was a smart business move when a joint venture funded by a Hong Kong investment firm launched a new smartphone designed by eager techies in Russia. That was three years ago. China-based developers Oppo, Vivo and other relative newcomers were already releasing phones into the giant Chinese market.
But the joint venture’s YotaPhone shows more and more signs of falling apart.
The Android handset got attention at first for the paper-like "e ink" display on its back, ideal for battery life and reading things under the sun. The handsets sell at mid-range prices in China, which is apparently their primary market. Today, however, Chinese consumers see YotaPhone ads but don’t buy the phone because there’s no longer anything unique about it, one tech analyst in Beijing says. The handset was due for release in the United States but Yota cancelled that plan in 2015 because of manufacturing problems despite a successful crowdfunding campaign, says The Verge .
As the YotaPhone 3 is due for release later this year, it must contend with low expectations from Chinese users, as well as continually increasing competition in a crowded market space. Yota's Hong Kong partner, China Baoli Technologies Holdings Ltd., is also facing open criticism from some of Yota's investors. China Baoli has declined to fund the new handset, possibly to oust Russian talent, tech site Engadget reports. The Chinese firm, which also has a hand in tourism and leisure enterprises, “effectively owns Yota after acquiring a significant share from its original Russian founders and backers,” a group of disgruntled investors said in a statement Tuesday. The YotaPhone 3 was initially due for release in early 2016, the statement adds.
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The handset developer should restore “positive perception,” explain the launch delay and appoint a CEO with a “proven track record” in managing a smartphone company, the statement says. “This group of investors is deeply concerned that China Baoli has mismanaged Yota since the acquisition, resulting in rapid deterioration in the value of intellectual property, brand and other assets that were originally valued at $154 million,” it says. The group also worries about “multiple lawsuits” filed against China Baoli and the JV chairman, according to the statement. “Details of these lawsuits have already entered the public domain and have been reported in the press, hurting China Baoli’s public standing,” it adds.
China Baoli could not be reached for comment. The peeved investors identify themselves only as people who “do not have significant shareholding in China Baoli, but are big believers in the YotaPhone project.” A former Yota CTO and former head of sales are listed among the contacts for information about the group’s complaints. Their statement does not elaborate on the lawsuits.
Even if the YotaPhone 3 came out by year’s end with no more management drama, it would have trouble selling, analysts fear. The handset, like its predecessors, should include a normal full-color phone display in front and a "low-power, grayscale" e-ink display at the back, news website Techradar.com says.
“The mobile phone market in particular is heavily dependent on channels and operators as well as big marketing budgets and it’s not an easy one to crack,” says Bryan Ma, devices research VP with tech analysis firm IDC. “Moreover, existing devices got better in extending battery life and speeding up charging speeds, while other devices like e-readers and wearables also helped satiate many of the use cases that YotaPhone was pitching.”
