ZTE's Grand Smartphone Plans
"Knowing the dynamic in the mobile market, the situation is very fluid, with some going through dramatic decline. This is an opportunity for ZTE to establish its brand," said executive board director and vice president He Shiyou, speaking to Light Reading Mobile at the U.K. launch of its latest Android smartphone, Grand X, in London last week. (See ZTE Unveils Grand X Device in UK.)
The company says it shipped 15 million smartphones worldwide in 2011 and that revenues from its devices business (which includes smartphones as well as other handsets and devices) were 26.9 billion Yuan Renminbi (US$4.2 billion), accounting for more than 31 percent of its annual revenues last year. (See Sales Grow, Profits Shrink at ZTE.)
Those shipments gave ZTE a smartphone global market share of just more than 3 percent, based on IDC's market numbers, so it has a long way to go before it's challenging any of the major brands.
In 2012, ZTE says it expects to ship 30 million smartphones and that its terminals division will deliver a greater proportion of full-year revenues. (See ZTE Issues H1 Profit Warning.)
Even with that growth, though, ZTE isn't going to catch up with Nokia, which has shipped more than 22 million smartphones during the first half of this year and is pushing hard to boost uptake of its Lumia line. (See Lumia Loses Luster Despite AT&T Marketing Push.)
But here are ZTE's longer-term ambitions: By 2015, ZTE's He says the device business is expected to account for about half of the company's total sales. Also by 2015, ZTE wants to be the third-largest smartphone maker by volume of shipments and rank fifth in the device market by brand recognition and revenue. (See Huawei, ZTE: Global Devices With Nice Prices.)
That's an almighty leap from where it is now, so how does ZTE plan to do all that? "By capturing this unique market opportunity," says He.
According to Pyramid Research analyst Daniel Yu, ZTE's smartphone growth targets for this year will be helped by the "smartphone explosion" going on in China, where the vendor is strong, but its global ambitions will take time.
"ZTE has been strong with low-cost feature phones for the past few years, and to make the leap to become a well-known brand for smartphones needs time -- of course the focus on affordable smartphones will help with the customer reach," says Yu. "If ZTE can continue to produce quality smartphones, strengthen their relationship with foreign operators, and improve their sales channel, they can certainly improve their position."
ZTE Meets Professor Green
In Europe, ZTE appears to be working on all of that. The vendor says it is in talks with European mobile operators and has lined up U.K. retailer Phones 4u Ltd. as a retail sales channel. Also, ZTE has focused its smartphone branding efforts on the U.K., France and Germany and it's targeting the 18-35 year-old age group with its devices.
To reach customers in that age group in the U.K., ZTE has teamed with British rapper Professor Green, who featured in this unboxing video on YouTube for the Android-based Grand X smartphone. (See ZTE Takes the Rap.)
According to ZTE's He, the vendor chose Professor Green because it would give the ZTE brand an image that's "young and vibrant."
ZTE's Fun and Games
The Grand X is ZTE's latest smartphone for the U.K. market and will be available in August from Virgin Media Inc. (Nasdaq: VMED) and device retailer Phones 4U. On a pay-as-you-go contract with Virgin Media, the device will cost £189.99 (US$295).
The device is based on the Android Ice Cream Sandwich operating system, which the vendor claims offers a totally different user experience. The smartphone is powered by Nvidia Corp. (Nasdaq: NVDA)'s Tegra 2 dual-core chipset and also has the Tegra Zone mobile games app store.
"[The smartphone market] is a very crowded space, but we're trying to address [the] user experience space," said ZTE's He, explaining that the vendor aims to differentiate in terms of the user experience on similar or more competitive commercial terms.
When asked if price was the key differentiator for ZTE's smartphones, He said: "I disapprove of your word that price is the 'key' differentiator. But it's an important differentiator."
— Michelle Donegan, European Editor, Light Reading Mobile