Social Handset Maker INQ Bets on Android & Multitouch

Frank Meehan speaking at Mobilize 09Frank Meehan, chief executive officer of London-based social handset maker INQ Mobile, said at our Mobilize 09 conference last fall that his company would adopt Android as its main platform. Yesterday, Meehan told GigaOM that it will launch the first of its phones based on Google’s (s goog) OS, a multitouch device, sometime in the fourth quarter.

“We are going all-Android and touch,” said Meehan. The shift will be yet another blow to Qualcomm’s (s qcom) BREW OS, the underpinning of current INQ devices. But INQ, which was spun out of 3 of the UK after it launched a Skype phone that used its 3G network, will continue to focus on developing devices that revolve around popular, fast-growing Internet applications. And the connections of Chinese billionaire Li Ka-Shing, the sole backer of INQ, will continue to help the company gain traction in China.

INQ in recent months launched a socially aware, Facebook- and Twitter-friendly QWERTY phone, the INQ Chat 3G, of which Meehan told us it’s sold more than 1.5 million units. He expects a big sales spurt soon as his phone company’s handsets are made available in new markets. INQ’s big markets currently include UK, Italy and India.

The Pivot

The shift to Android and touch devices is part of bigger pivot being made by the company. While Meehan declined to give any details, INQ clearly sees a bigger opportunity in selling pricier devices, two in particular.

The first is in retail. While INQ started out making handsets that were “budget” and carried low margins, it spent lavishly to build its brand, which is actually more premium than the products it offered. But in order to get traction in the retail channel, it needs to keep its salespeople happy. Low-end margins bring marginal commissions, which in turn offer little incentive to your salespeople to push your phones. From that perspective, it makes sense for INQ to pursue a different strategy.

Secondly, the world of mobile phones is in a massive flux. Thanks to the introduction of Apple’s iPhone and Google’s Android, the whole mobile industry has been up-ended — and some of the traditional handset makers such as Sony Ericsson and Nokia have been having a tough time. Instead of traditional feature phones, the market is likely to move towards the smartphone form factor. Which offers a golden opportunity for new entrants to establish a presence.

HTC, for example, is going after the high end of the Android smartphone market. INQ is focus on the market segment just below HTC, in the process taking on Sony Ericsson, LG and Samsung. Does it sound crazy? I don’t think so. INQ has an important thing in common with Apple and Google (via HTC): It’s a software company that does hardware – — specifically hardware that revolves around web services.

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