ZTE shifts focus to smartphones

By Shen Jingting (China Daily)
Updated: 2011-04-27 09:33
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ZTE shifts focus to smartphones

A ZTE booth at China International Exhibition Center in Beijing last year. The company expects to ship 12 million smart terminals in 2011, almost 90 percent of which will be smartphones. [Photo /China Daily]

The company plans to seize more of the profitable EU and US markets

BEIJING - China's second-largest telecom equipment maker ZTE Corp is set to boost its smart-terminal business by becoming one of the top-five global makers of smartphones running on Google Inc's Android operating system this year.

The company also aspires to become one of the top-three tablet computer producers this year, competing in a market that is dominated by Apple Inc and Samsung Electronics Co.

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ZTE expects to ship 12 million smart terminals in 2011, almost 90 percent of which will be smartphones. The company plans to ship about 3 million tablet computers this year, compared with 300,000 in 2010.

He Shiyou, executive vice-president of ZTE, said at a news briefing on Tuesday that the company has started shifting its strategy from the feature phone to more advanced smartphones.

Though ZTE's net profit might suffer in the short term from the strategy shift, the company will gain long-term benefits if its smartphone business grows, He said.

"ZTE wants to become a leader in the global smart-terminal market," He said, adding that the company has hopes of becoming a second HTC Corp - the Taiwan-based company's market volume has grown enormously from producing high-end smartphones and it surpassed Nokia Oyj in market value this month.

ZTE has followed a path similar to that of HTC as it starts to conquer more of the profitable European and North American markets, instead of emerging markets, He said.

"If we want to become one of the most popular smartphone brands, we should win the battle in the United States, because more than half of world's smartphones are sold there," He told China Daily.

The four major American telecom carriers - including AT&T Inc and Verizon Communications Inc - have been offering ZTE handsets since August. ZTE's US revenue grew by 300 percent year-on-year in 2010, it said.

The company identified four strategic markets for its smart-terminal sales this year: China, Europe, North America and Brazil.

In mid-April, it signed a contract with the Brazilian government to build the biggest telecom-equipment research and production base in Brazil, with an undisclosed investment amount.

In the first quarter, ZTE's terminal shipments rose 46.6 percent year-on-year to 22 million units, including smartphones and feature phones. Revenue rose 51.4 percent over the same period last year, an increase attributed to the higher profit margin of smartphones.

ZTE became the world's fourth-largest mobile-phone maker last year, with a handset shipment of 60 million in 2010.