By Lisa Johnston
New products on display at the American International Toy Fair, held in N
CTIA 2013 Las Vegas — Handset vendor ZTE USA is in a strong position to benefit from continued growth in the no-contract cellphone market, having already established a strong foothold in the segment through major no-contract carriers and MVNOs, said Waiman Lam, senior director of wireless.
With industry forecasts calling for continued strong growth in the no-contract market, and with ZTE stepping up its no-contract focus, ZTE handset sales are positioned for continued strong growth, Lam contended.
Studies forecast that in 2013, one in four cellular subscribers will have a no-contract plan, growing to one in three subscribers in 2014, he said.
Most of the 23 ZTE devices currently available to U.S. consumers are sold with no-contract service from such service providers as AT&T, Aio Wireless, Boost Mobile, T-Mobile, MetroPCS, Cricket Wireless and TracFone Wireless, Lam told TWICE. Most of the devices are smartphones, but the selection also includes several feature phones and a handful of data devices.
The company has already grown its unit share of U.S. no-contract smartphone shipments to 17 percent in the first quarter from a year-ago 8 percent to 10 percent, making ZTE the third largest supplier of no-contract smartphones, Lam said in citing research from ITG Market Research.
Strategy Analytics found ZTE’s handset sales grew 85.7 percent in units in the first quarter compared to the year-ago period, Lam continued. He attributed the growth to the company’s increasing share of the no-contract market.
ZTE’s no-contract growth also helped push the company into fourth place in combined U.S. shipments of smartphones and feature phones in the first quarter, up from fifth place in all of 2012, as measured by Strategy Analytics, said Lam. ZTE’s unit share was around 5-6 percent during those periods, he noted.
The company’s handset shipments have grown rapidly in the past three years, making handsets account for 95 percent of the company’s U.S. dollar volume, which includes telecom infrastructure, Lam said. In 2012, total revenues grew by more than 100 percent to $1 billion following more than 100 percent growth in 2011, Lam said.
Handset sales are also growing because the company began in 2012 to build up
its selection of mid- to high-tier smartphones to complement its low-tier selection, Lam said.
Despite its surging sales of no-contract phones, the company will continue to offer phones for the postpaid contract market, he noted.
ZTE excels in the no-contract market, whose service providers sell no-subsidy and low-subsidy phones, in part because of Chinese manufacturing, logistics and design-process efficiencies that enable it to make smartphones “more affordable but not inferior to other OEMs,” Lam said.
The company delivers quality and performance because it procures innovative technologies from such U.S. companies as Qualcomm, Intel and Google, he said.
Other reasons for ZTE’s no-contract success include the company’s quick time-to-market response and the ability to customize solutions for carriers and MVNOs, Lam contended.
The no-contract market itself is growing for multiple reasons, including sharp service pricing, consumer desire to forego service contracts, and the rising quality of no-contract smartphones to match the quality of contract smartphones, Lam said.
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