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Amidst an uncertain global economy, Chinese handset maker ZTE is showing huge sales growth, with much of it in the U.S. The Shenzhen-based company today announced it sold 35 million phones in the first half of the year, a figure that’s 30 percent higher than the year ago period. ZTE’s smartphone line experienced a massive 400-percent increase and smartphone sales in the U.S. jumped more than 300 percent. With the company planning to launch 30 mid- to high-end handsets later this year, companies such as Motorola (s mmi) and HTC should have cause for concern.
Both the sales growth and market expansion of ZTE remind me of another China handset maker, Huawei, which just last week introduced a new Android 2.3 handset. The Huawei Vision offers mid-tier specifications in a high-end look, but the price isn’t set. I’d expect it to be well under the current $199 baseline price for cutting-edge smartphones, which can help it attract attention after launch. ZTE’s phone prices are likely to be comparable; both companies are aiming at first-time smartphone buyers that won’t pay for or need top-of-the-line hardware.
ZTE took this approach with its top-selling Blade handset, and it has paid off. The low-cost Android (s goog) phone debuted in February of 2010 — a lifetime ago in smartphone terms — and has surpassed 2.5 million sales. The ZTE Blade shows no signs of stopping, either. The company expects the handset to cross the 5 million sales threshold later this year and says 16,000 Blades sell daily. This for a phone that uses an older 600 MHz processor, which is relatively meager when compared to the latest and greatest devices! ZTE will continue to use Android to fuel growth, but also expects to leverage Microsoft’s (s msft) Windows Phone 7 platform this year as well.
Both ZTE and Huawei are following a smartphone strategy similar to that of South Korean rival and no. 2 smartphone maker, Samsung. Instead of a shotgun approach with many different handset designs, a focus on one solidly designed handset that can be adjusted for different carriers can yield better sales results. That strategy has worked well for Samsung’s Galaxy S handset last year, and it’s bringing in even better results with the Galaxy S II, which enjoyed 3 million sales in just 85 days.
Meanwhile, HTC and Motorola continue to churn out various models for the U.S market every few weeks or months. For the moment, HTC is still showing growth, while Motorola’s momentum has cooled. Both still sell more smartphones than ZTE and Huawei, but in terms of overall handsets, ZTE is already ahead of both and ranked no. 5 in the world, according to IDC’s latest data from the second quarter of last year. By transitioning away from feature phones and offering low-cost but capable Android devices, ZTE could become a more familiar brand in the U.S.; right alongside Huawei, that is.