Tesco to release own-brand smartphone and Hudl tablet 2

Tesco is to launch its own Android smartphone by the end of the year to compete with the Samsung Galaxy S5.

The smartphone will come with Tesco services pre-installed, similar to the Tesco Hudl tablet that the supermarket launched in September last year, Tesco's chief executive, Philip Clarke, told BBC Radio 5 live.

The Tesco smartphone will run Android and will be designed to compete with "the best smartphones available". Top-of-the-line Android smartphones currently include the recently released Samsung Galaxy S5, Sony Xperia Z2 and HTC One M8. Clarke said the phone would be aggressively priced, putting it in direct competition with Google’s Nexus 5, which also undercuts competition at about £200 less than other premium Android smartphones.

Tesco also plans to launch a smartphone-based banking service in the near future, likely to use the incoming smartphone and the company’s Android tablets. Other details of the smartphone were not revealed.

Hudl mark two

Clarke said the second iteration of Tesco’s successful budget-Android tablet, the Hudl, which sold 400,000 units in its first three months and had subsequently sold a total of 550,000, would be released this September.

The budget tablet follow-up is expected to be similarly successful, fuelled by a low price and Tesco’s products and services such as its Blinkbox video and music services, as well as its Tesco Direct and online grocery shopping.

Battle of the own-brand, budget smartphones

Amazon is also expected to release an own-brand smartphone, after the success of the online retailer's Kindle Fire Android tablet range. The Amazon phone is expected to be aggressively priced and to compete with higher-end smartphones from Samsung, Google and Apple.

The mobile phone operator EE recently launched the UK’s cheapest 4G smartphone, the £99 EE Kestrel, which is the first in a range own-brand smartphones – all named after British birds – due to be released by the network.

Motorola, now part of China’s Lenovo, launched the Moto G last year, which undercut competition and reignited the budget smartphone market with mid-range performance and a quality, frustration-free user experience but at a lower price. The Moto G is available for under £100, but lacks 4G capability.

Motorola's Moto G grabs chunk of UK smartphone market, propelling Motorola from effectively zero to 6% marketshare in less than three months