@ MWC: ZTE Goes For The High End With The Skate


ZTE, the Chinese handset and wireless equipment maker, epitomises a certain kind of new entrant in the mobile industry: very determined, very cheap, and very much on the rise. At an overheated stand crowded with competitors, partners and non-partisan observers checking out ZTE’s newest devices — led by the Skate Android-based smartphone — I retreated to a quiet, air-conditioned room with Zhang Xiaohong, ZTE’s VP for handsets, to talk cannibalization, me-too Android competitors and more.

North America is our fastest-growing market. ZTE’s home market of China, where it ships devices with the three major operators China Unicom, China Mobile and China Telecom, is the company’s single largest market. But North America, shays Zhang is growing the fastest. Shipments in that region went up four-fold in the last year, with ZTE signing distribution deals with the U.S.’s four major operators (selling both handsets and data cards for mobile broadband). Europe also grew — by a rate of 100 percent, with notable increases also in Japan, Australia, Russia and Latin America.

ZTE has already made a crucial shift in the last year to exporting more devices than it sells domestically. Zhang says the current rate is 35:65. If you take IDC’s recent number that indicates that ZTE shipped 60 million units in 2010, that works out to 21 million in China and another 39 million everywhere else.

Is it all about the cheapest price? No, she says. ZTE has disrupted the market with devices like the Blade (which sold for under $200), but it looks like it is now trying to leverage that market share to expand into the more premium segment against higher-end competitors like HTC and Apple:

“We will continue to focus on low-cost solutions for developing and developed markets, especially developing markets” she says. “But it’s also about new devices like the Skate.” No prices have yet been revealed for the Skate, which features a 4.3-inch screen and runs using Android 2.3 — but the device, when I tried it out, seemed a little slow and jerky in its graphics. The specs say it runs on a 800MHz processor, compared to some of the newer devices from other Android OEMs built on 1GHz chips. The device is set to debut in May 2011.

Who is your biggest competitor? No straight answer on this one. Zhang says ZTE splits their competitors into two segments: “established” companies like Nokia (NYSE: NOK) and Samsung and “new ones” like HTC and Apple (NSDQ: AAPL). “ZTE can produce devices that compete with both,” she says.

What makes you different from other Android device makers? Ultimately a lot of these devices start looking more or less the same as each other, I say.

“We are good at customisation, according to different cultures and customs. We can differentiate.” ZTE says that it can and has developed devices for specific operators, making them unique in the marketplace. It also looks like ZTE is looking to take customisation to the software level, too: the company launched a new app store this week, to deliver services that complement those in the Android Market.

One other key area, says Zhang, is that, unlike a lot of the other Android OEMs, ZTE also sells network equipment: this means that ZTE can sell “total solutions” — at very competitive prices. She says that ZTE has such agreements with 28 of the top 30 operators worldwide.

What do you think of the Nokia/Microsoft (NSDQ: MSFT) deal, and do you have any plans for MeeGo? For now, Nokia’s choice to work on Windows Mobile phones “means the future does not look good for MeeGo,” she says. “Last week’s news may have been the last straw or it, and we have no plans to develop on it for now. But whether going with Microsoft will give Nokia advantages over the long term remains to be seen.”

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