Chinese telecommunications giant ZTE held a press conference in London this summer, announcing a departure from its previous strategy of self-abnegation, and putting itself forward in Great Britain. It will do this by starting the sale of its own smartphone brand through Brightpoint sale channels, a well known local trade chain specializing in mobile devices.
So far ZTE has achieved such significant success with its white label strategy (providing mobile carriers with devices who sold them as their own brands) and high dedication to the Android platform that it became the sixth biggest cell phone manufacturer in the world in the first half of the year. A few phones with the ZTE insignia were available here and there, but rarely outside the home Chinese market.
When ZTE equalled the sales of Taiwanese HTC — a global market share of 2.3% — a decision was made for the brand to be seriously launched on all world markets.
As of today, ZTE has surpassed HTC, delivering 9.8 million devices in the last quarter compared to HTC’s 9.3 million. The next in line for ZTE is Canadian RIM, which holds a 3% share of the market with 13 million delivered BlackBerries in the same quarter.
Everything Old Is New Again
Interestingly enough, HTC began a similar market development to the one now being executed by ZTE. Several years ago, the Taiwanese company started out as a white-label phone manufacturer and mostly created devices with the relatively uninteresting and not particularly successful Microsoft operating system (at that time) Windows Mobile.
At the moment when Android OS appeared, HTC immeditately accepted this platform, manufacturing the first smartphone with this operating system (it was called the T-Mobile G1), which launched the company to market stardom.
HTC was talked about as “the hottest tech company you never heard of” and global Android smartphones sales with HTC’s label soon commenced. The G1 was even sold as HTC Dream and today HTC smartphones are one of the most famous devices in the world. Furthermore, it was announced these days that HTC has become the biggest-selling Taiwanese brand — replacing sacrosanct Acer at the throne.
Big Things Are Coming
ZTE expects to sell 80 million phones in 2011, while it sold 60 million in 2010. At the above-mentioned conference in London, ZTE representatives said that their company would orient itself on much higher-end smartphones and massive markets from now on, hoping to become a recognizable name in every household and a synonym for high quality of smartphones and tablets.
According to developments, its plans are coming together. A device called the ZTE Blade has sold over two million units worldwide, making it the biggest-selling phone with Android OS in the world after Samsung’s Galaxy S I and II. It was first sold by the Orange carrier in Great Britain under the name San Francisco, and now it is sold under the ZTE brand in 30 odd countries, including Japan and Finland, the home markets of ZTE’s two great competitors. There was a period of time when Orange sold significantly more units of this device than it did of the Apple iPhone 4 in Great Britain.
Smartphone sales under ZTE’s own name, despite evident and huge success which was achieved through mobile carrier sales, definitely makes sense. So far ZTE sold devices to carriers at a low wholesale cost. Now it will have to reallocate its production resources in a way to manufacture more phones with its own market brand, decreasing delivery options of while-label devices to carriers. This way carriers will be forced to stock up on the devices with the manufacturer’s brand or proceed through usual distribution channels. Whichever option they pick, ZTE (i.e. HTC prior to them) will make more profit.
With ZTE’s success Asia filtered itself as a dominant region when it comes to smartphone production, given that five of top ten global smartphone manufacturers are from this continent: Samsung, LG, HTC, Huawei and ZTE. If the Japanese-Swedish Sony-Ericsson is counted, this amounts to six… It seems ZTE will actually become “the new hottest tech company you have never heard of”.
About Dragan Petric
For the last fifteen years, Dragan Petric (www.draganpetric.com) has been working as an IT journalist, editor and analyst, with special interests in telecommunication technologies and services. In addition, he authored five books and published over 2,500 articles in many magazines and newspapers in Europe. He has attended about 30 telecommunications and IT congresses around the world and won several journalists awards for his work.