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ZTE Expanding Line, Readies 4G LTE

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.

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

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 also hopes to bring a Windows
Phone 7.5 smartphone to the U.S. because the company is “committed” to both the
Windows and Android platforms, but Cheng declined to get specific about U.S.
availability other than to say a Windows launch wouldn’t happen this year. The
company already offers a Windows Phone 7 phone outside the U.S.

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

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.” It is the first Android phone with Cricket’s Muve music
service, which entitles cellphone users on select plans to unlimited music
downloads as long as they are a Cricket subscriber.

The Score appears in print ads,
outdoor advertising, online ads and billboards, and Cricket and ZTE might
collaborate on some local TV ads, he said.