Could 2012 be ZTE's year to become a smartphone powerhouse?

Rich Fiscus
3 Feb 2012 23:13

IDC has released their annual report on the mobile phone market. As expected, Nokia and Samsung came out the overall leaders, with Apple finishing the year in third place.
While Apple moved fewer than a third as many units as Samsung, and a quarter that of Nokia, as the only vendor in the top five who exclusively makes smartphones, their showing was quite impressive. By contrast, Nokia's ability to retain the top spot, despite a sharp decline in Symbian smartphone sales, demonstrates just how dominant they remain in the feature phone market.
But perhaps the most impressive company last year was ZTE. The Chinese phone manufacturer maintained the fifth position, moving more than 66 million handsets and narrowing the gap with fourth place LG Electronics. While LG's sales plummeted more than 18 million units last year, ZTE improved by nearly 16 million handsets. ZTE's 17.1 million unit performance in the last quarter of the year was nearly a match for LG's 17.7 million.

_{(Data courtesy of IDC)}
Of course, there is an important distinction between ZTE and the rest of the top companies. While Nokia, Samsung, and LG are all major players in the low end feature phone market, they also sell high end, high profit smartphones. Likewise, the iPhone's substantial margin is probably the envy of every other phone vendor.
ZTE's smartphones, on the other hand, are low end units. Continuing along this path could be problematic in the long term because it significantly limits margins. They hope to change that in 2012. Last December LTE USA CEO Lixin Cheng told the Wall Street Journal his company is planning to make a play for the high end smartphone market in the US.
Cheng didn't offer any specifics about the phones ZTE could be introducing in the US, but did suggest their plan was to offer phones comparable, feature wise, to the iPhone. "By 2015, we expect the U.S. to be the largest market for handsets for ZTE," he said.