ZTE plays the long game of building consumer awareness

ZTE is virtually unknown in the US, and, at least for now, that seems to be OK with the company.

ZTE is virtually unknown in the US, and, at least for now, that seems to be OK with the company.

Lixen Cheng, head of ZTE's North America division, speaks during an interview at the CTIA Wireless show. (Credit: Lynn La/CNET)

The Chinese company, which is the fourth-largest handset vendor despite its minimal presence in the US, is focusing on building up its relationship with the carriers and supporting their needs, said Lixen Cheng, president of ZTE's North American business, in an interview with CNET.

"We do plan on building our consumer brand by working more closely with our carrier partners," he said.

While relatively unknown, ZTE is an up-and-comer in the US handset business. Its phones have long been supplied to the prepaid carriers, and are starting to show up with the top-tier carriers, sometimes with its own logo intact. Its rise underscores a shift in power from traditional brands to upstarts willing to undercut the competition.

While ZTE once followed HTC's playbook for entering the US market and establishing a consumer brand, HTC's recent struggles have given the company pause.

"We're learning from our competitors' mistakes," Cheng said. "We're not going to waste money on building a consumer brand and not delivering on products to our consumers."

HTC, for its part, has simplified its own product line to a few key devices, and its phones have been featured heavily during the CTIA Wireless conference.

Playing the long game

ZTE hopes to get to 5 per cent of the US market by 2014, a forecast that Cheng has acknowledged is conservative. By the time it hits that benchmark, the company will begin to spend money to market its brand directly with customers, he said.

Cheng downplayed the importance of brand in today's smartphone market, noting that when a consumer buys a phone, price is the main determining factor, followed by the operating system.

ZTE's presence at CTIA is a far cry from the splash it made at Mobile World Congress (MWC) just a few months ago. At the Barcelona conference, the ZTE brand was ubiquitous, with a presence on the lanyards holding the conference badges and the large posters adorning the venue.

That's because the company actually has a larger presence outside of the US, although a large part of its business still comes from China. In the fourth quarter, the company was fourth in the world, with 4 per cent of the global market, doubling its position from a year ago, according to Gartner.

ZTE's mobile-devices business in 2011 tripled from the previous year, Cheng said. Unlike some of the larger, better-known competitors, ZTE's mobile-devices business is also profitable.

Focus on affordability

ZTE has so far offered budget-friendly phones to prepaid and national carriers in the US, and hasn't yet played in the flagship game. But Cheng doesn't believe that a flagship phone is necessary; more important is the ability to support the carriers' needs, which often call for a number of mid- and low-tier phones.

So, rather than a home run, ZTE is looking for a series of singles and doubles with its phones. For example, Cheng said he is shooting to sell 2 million phones in the Score series by the end of the year.

ZTE's low-cost structure allows the company to sell a large number of phones, Cheng said, noting that it sold 13 models last year, and four so far this year, as part of a quick ramp-up of product launches. That comes as other vendors are reducing the number of products that they introduce each year.

"We're staying in the Quality Inn, when other vendors are staying at the W," he said of the company's focus on reining in costs.

That could pay off down the line, as more ZTE phones hit the market, generating consumer awareness through the product, as opposed to marketing.

Another trend that ZTE is slowly moving into is LTE. Cheng estimated that 10 per cent of its products in the US this year will work with 4G technology, including mobile hot spots, phones and tablets. Next year, he plans on even more devices as it further supports the carriers' expanded LTE networks.

ZTE's biggest challenge isn't its lack of an identity; it's keeping pace with the demands of the carrier, Cheng said.

"There are some high expectations from the carriers," he said.

Via CNET

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About the author

Roger Cheng is the executive editor in charge of breaking news for CNET News. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade. He's a devoted Trojan alum and Los Angeles Lakers fan.

 

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