Scratch Wireless Unveils New “Wi-Fi First” Smartphone for $99

Scratch Wireless is trying to make bills from wireless companies a relic of the past. It’s an ambitious dream, and the Cambridge, MA, startup has taken a step forward by partnering with a Chinese manufacturer to release an inexpensive smartphone that could move it a little closer to its goal.

The new Coolpad Arise is an Android-powered smartphone that can use Scratch’s software to make voice, text, and data services free whenever smartphone users have access to a Wi-Fi network. The device sells for $99 and can be bought from the Scratch Wireless website as of today. Users won’t have to pay Scratch anything more for service as long as they use Wi-Fi. It’s the first time Scratch Wireless is opening up its service to the general public.

Scratch is betting that customers, especially those on tight budgets, will go for low-cost smartphones even if the devices are dependent on Wi-Fi. Most of the time, that’s not a problem, as users are in range of their home or office network. Plus, public Wi-Fi hotspots are getting better, cable companies including Comcast are offering subscribers access to their networks when they’re away from home, and Google is testing out Wi-Fi-based mobile wireless services with its Project Fi. Wireless provider T-Mobile also is selling handsets that can make calls and send texts over Wi-Fi .

But everyone is out of range sometimes, especially when commuting. Scratch has a contract with Sprint that allows Scratch phones to use Sprint’s network for voice, texts, and data on a pay-as-you-go model. Scratch users pay an extra fee that’s as low as $1.99 per month for a limited amount of time on Sprint’s national 3G network.

In an interview last year with Xconomy, Scratch co-founder and CEO Alan Berrey said the startup’s approach is disruptive, both from a technical (the shift to Wi-Fi) and economic perspective. Scratch is going after consumers who want smartphones and data packages, but with low-cost plans.

“Our biggest competitors are not AT&T and Verizon. It’s actually more the entry-level folks, for people who want a low-cost service,” Berrey said. Typically those customers have relied on pre-paid services instead of using major carriers.

Scratch would not say how many customers it has, but it said it has operated on an “invitation only” basis since launching in 2014.

“Under the invitation only wall, Scratch has had hundreds of thousands of consumers express interest in purchasing a Scratch phone,” a representative said. “With the introduction of this new Coolpad device, Scratch will be removing the invitation only wall and make phones generally available to consumers.”

With the new product, they’ll have access to a capable Android smartphone with a 4-inch display, rear camera, and ability to run apps from the Google Play Store. Scratch also says Wi-Fi call quality, multimedia messaging, and call handoffs across networks are improved.

The phone is made by Coolpad, a Chinese company that makes low-cost handsets. Coolpad is a virtual unknown in the U.S.—the company only entered the market in 2012—but it expects to sell about 100 million smartphones and is one of the five largest sellers in the Chinese market.

The Coolpad Arise is the second model that works with Scratch. The previous phone was the Motorola Photon Q, an Android phone that sold for $269.

Scratch Wireless has raised $5 million from investors including CommonAngels and has the equivalent of 20 full-time employees. It declined to release sales and revenue information.

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