Overcoming High Production Costs, ByteDance Shuts Down Its Smartphone Business

Logo Smartisan Mobile (Smartisan)

JAKARTA - Smartisan, a smartphone manufacturer from China, has just stopped its business by its parent company, ByteDance. Yes, ByteDance is the holding company that also houses TikTok.

ByteDance itself is known to have acquired the Chinese company early last year because it wanted to expand its business to the hardware sector by producing smartphones.

According to a report from one of the Chinese media, ByteDance has stopped its smartphone hardware business last week (January 13).

ByteDance also announced that it has integrated the R&D team formed by Smartisan into its own educational hardware team.

The team is said to be led directly by Yang Luyu, founder of Musical.ly and will report to Chen Lin, ByteDance's senior vice president and head of the education business.

There are several reasons that have emerged regarding ByteDance's decision to close the Smartisan mobile business. ITHome reports that a cellphone distributor had previously revealed that the popularity and sales of Smartisan phones were very low.

This is because some are only sold online and those sold in offline channels are usually used units. In addition, they also bought several used units last year but they have not had time to sell.

Retail stores such as JD.com and Taobao reported that the total sales of the Smartisan Nut R2 flagship cellphone launched last year were less than 100,000 units. Currently, shops have also slashed their prices by 50% from 4,499 Yuan (Rp.9.8 million) to 2,299 Yuan (Rp.4.9 million).

Another reason is the cost of production. ByteDance does not have the advantage of a supply chain like the other big smartphone manufacturers, OPPO, Vivo, and Xiaomi, so production costs are more expensive. ByteDance has reportedly switched to developing table lamps for its new business.

Why the table lamp business? A research institute, Multi-Whale Capital Education Research predicts the K12 smart hardware market will reach 57 billion Yuan by 2022 and smart lamps are part of the products that will gain popularity.

Last October, ByteDance announced the Dali Smart Tutoring Lamp which has a built-in display and educational trainer.

This may not be the end of Smartisan as there is a possibility that other investors or buyers could strike a deal with the owner to bring the product back to market.