German landline phone maker Gigaset formally entered smartphone market in 2015 by launching ME, ME Pure and ME Pro three models. All three models are premium tier models with wholesale price of US$300 and above. However, due to limited channel presence and higher price, the demand and volume was modest. We estimate Gigaset global smartphone market share stood at less than 1% in Q3 2016.

However, the vendor didn't give up. It has recently had another trial by launching GS160, a mid tier smartphone. GS160 features 5.0 inch HD display, MediaTek 6737 chipset, 1G RAM and 16GB ROM, as well as 13 megapixel camera and 5 megapixel front camera. In addition, like predecessor models, GS160 also supports dual-SIM, making us believe open channel will maintain as the key distribution platform for the new model. Unlike ME products, Gigaset is testing water in lower tier segment this time.

This is a wise move considering mid tier (wholesale price of US$100-190) will remain as the second largest segment by volume (behind premium tier) in West Europe till 2022. Moreover, lower tier models still dominate open channel, which is seeing an increasing share in smartphone distribution flow in this region. We would recommend Gigaset to further diversify distribution partners, by working with more third party online and offline retailers, rather than merely relying on own online store to sell smartphones. Channel is king, not only for big boys, but also for small players.