MGM Wireless launches Spacetalk in UK market

MGM Wireless ASX MWR launches Spacetalk UK market
MGM Wireless officially launched Spacetalk in the UK on 13 May.

Technology company MGM Wireless (ASX: MWR) has launched its all-in-one children’s Spacetalk smartwatch, mobile phone and GPS tracker in the UK this week after posting bumper sales of the device in Australia and New Zealand.

MGM Wireless even reported online sales in the UK prior to its official launch on 13 May in what the company is hoping will be a repeat of growth in Australia and New Zealand during the past 18 months.

The UK launch marks another milestone for MGM Wireless, which only began selling Spacetalk from a single online portal when it launched in October 2017.

Spacetalk enables parents and children to be in constant contact. Parents can see their child’s location on their smartphone. Via the AllMyTribe app, parents are notified when their child leaves designated safe spaces, such as school or home.

The app was deliberately designed and built without access to the internet and the nasties of social media.

Spacetalk, aimed at children aged between five and 12, enters the UK market with an updated model, which is specifically tuned to UK mobile bandwidth and UK conditions.

The launching strategy follows the successful marketing roadmap used in Australia and New Zealand.

Just as in Australia, Spacetalk initially sells independently through online channels, while negotiations continue with high street retailers.

MGM Wireless chief executive officer Mark Fortunatow said: “We are very keen to engage a high street retailer, just as we have worked with JB Hi-Fi in Australia and Spark in New Zealand.”

As a result, he said the company was actively negotiating and planning with several parties and an announcement was expected in “due course”.

“Spacetalk’s key advantages in the UK market are its quality, safety and security features. Incumbent children’s smartwatch vendors are mostly white labelled Chinese watches. Many had to withdraw their products because they didn’t meet watertight security standards required to support parental smartphone apps.”

In comparison, Mr Fortunatow pointed out that Spacetalk’s security had been tested in Australia and NZ and it meets the EU’s stringent general data protection regulation (GDPR) tests.

“A new version of Spacetalk has been specifically built for the UK, which operates on the 900/2100 bands. Interestingly, these bands make Spacetalk compatible with the mobile phone spectrum used across Europe.

However, Mr Fortunatow explained the company’s initial focus would remain the UK market.

“In February, our experience at the world’s biggest mobile technology conference MWC 19 in Barcelona tells us there is significant interest in Spacetalk’s high security and privacy features from European retailers and telcos, but we are throwing all the group’s resources at the UK as our first foray into this huge potential market.”

“With a population of more than 66 million people, the UK market is about three times the size of our home markets of Australia and New Zealand.”

“We feel we have an advantage in terms of quality, customer service in the aftermarket and a secure Spacetalk app, which really appeals to the UK market.”

To facilitate its UK market expansion, MGM Wireless has established a sales and servicing division and fulfilment centre of outside London, with senior consumer electronics sales executive Peter Thorpe leading the sales team.

Spacetalk growth

Spacetalk rapidly expanded across Australia after retailers JB Hi-Fi and Leading Edge Computers began selling the device in their stores and online in 2018.

Currently, Spacetalk is collectively sold in about 270 outlets across Australia.

Expansion to New Zealand soon followed when telecommunications giant Spark began selling Spacetalk in each of its 73 stores from October 2018.

Spacetalk features, including a stopwatch, torch and enhanced school mode, appealed to parents.

The enhanced school mode feature enables parents to specifically select which watch functions to disable during school hours, such as incoming and outgoing calls, messaging, step counter and location.

According to MGM Wireless, disabling functions during school hours prevents classroom distractions.

The Spacetalk story has also appealed to investors. MGM Wireless shares have risen from $1.295 on 15 May last year to close at $4.10 on 14 May 2019.

Record results for March quarter

The UK expansion follows record March quarter 2019 results for MGM Wireless, March quarter revenue was up 392% on the prior corresponding period to $1.4 million, while Spacetalk unit sales rose 975% to 5,100.

Financial year revenue to 31 March 2019 was up 193% to $5.47 million, with Spacetalk unit sales up 1,603% to 16,100 in the same period.

“March quarter sales are seasonally the slowest for the year in the consumer electronics industry, so we are absolutely delighted with these record results,” Mr Fortunatow said.

“We are also particularly pleased to see via social media, through growing subscriber numbers and low churn rates that customers who bought a Spacetalk device leading into Christmas are overwhelmingly positive about their purchases,” Mr Fortunatow added.

Anthony Black is a highly experienced business and finance journalist with over 25 years experience. He was finance editor of the Sunday Herald Sun for eight years and his reports were published in News Limited papers across Australia. He has since written for numerous publications, including BRW for several years and has interviewed numerous ASX-listed company chief executives.