ZTE Expanding 2011 Line, Readies 4G LTE

By Joseph Palenchar On Nov 21 2011 - 6:01am

RICHARDSON, TEXAS – China-based supplier ZTE is preparing to launch three more cellular devices by year’s end, including at least one 4G LTE device, ZTE USA CEO Lixin Cheng told TWICE.

ZTE has already exceeded its 2011 goal of doubling the number of cellular devices that it offers in the U.S. — at least 28.

Two other products due this year will be a mobile Wi-Fi hot spot and a handset.

Cheng declined to say whether this year’s LTE device would be a smartphone or mobile data device, but he did say the company would expand its LTE devices in the first half of 2012 to include two to three products, including a smartphone and a tablet.

Also in the first half of 2012, the company plans to launch its first voice-over-LTE (VoLTE) handset, which promises to use spectrum more efficiently for voice calling because conversations are transmitted as data packets over a 4G LTE data network. The technology makes it unnecessary to tie up voice circuits for the entire length of a conversation.

Also sometime in 2012, the company plans its first “smart device” built on Google’s converged tablet/ smartphone Ice Cream Sandwich OS, but Cheng declined to say if the first product would be a phone or tablet.

ZTE, which launched its first U.S. phone in 2008, is increasing its focus on branded rather than white-label mobile devices in the U.S. as it moves up-market from basic phones and feature phones in a bid to gain share. Besides cellphones, the company offers mobile Wi-Fi hot spots and cellular USB modems in the U.S.

Most of the 28 ZTE devices available today in the U.S. are co-branded with a carrier name and the ZTE name, Cheng said.

This year, U.S. carriers began promoting the ZTE brand “in a bigger way” than in the past, he added.

ZTE is getting more attention from U.S. carriers because of its ability to offer tier-one technology licensed from such companies as Qualcomm and TI, deliver products with a cost advantage over other tier-one handset suppliers, and act more quickly on carrier requests for new products compared to other tier-one suppliers, Cheng said. “Normally it takes 12 to 18 months to launch a product in the U.S. with a tier-one carrier, but it takes us six to eight months,” he said.

Another factor that will further increase ZTE’s share is the expansion of iPhone availability through so many U.S. carriers, he continued. “The iPhone takes a lot of money from carriers’ budgets for phones,” he said of the high-cost devices. As a result, “our value becomes even more critical to carriers.”

ZTE has adopted what Cheng called “the ACW business model,” with A standing for American innovation licensed from such companies as Qualcomm, C standing for Chinese efficiency in supply-chain management and R&D, and W standing for worldwide sales that leverage economies of scale.

Last year, ZTE used those elements to focus on B2B sales to carriers, with products designed to carrier specifications. Carriers had the choice to get use their own brand or a co-brand on the products, he said. By the end of last year, ZTE had products placed with all tier-one and tier-two carriers except for U.S. Cellular, Cheng said.

In 2011, ZTE entered a phase in which it is establishing its brand by encouraging carriers to co-brand devices and by participating in joint promotions. He continued. As part of the brand-establishment effort, ZTE built regional sales teams to “create demand in the field” in carrier-owned and indirect stores.

The establishment phase, in which brand awareness is built up among salespeople and consumers, will take two to three years, he said.

Citing an example of ZTE’s efforts to build brand awareness, Cheng cited his partnership with prepaid carrier Cricket, which is offering the ZTE Score Android smartphone as “a featured product for the rest of the year.” The Score appears in print ads, outdoor advertising, online ads and billboards, and Cricket and ZTE might collaborate on some local TV ads.