The crowded U.S. market for cell phones has witnessed a rapid rise to fourth position in sales from Chinese manufacturer ZTE. This should strike fear in the hearts of those, such as Samsung, Motorola and HTC, that currently do a brisk business stateside.
Why should it strike fear? Because Xiaomi, Huawei and a host of other ultra low cost Chinese manufacturers haven’t entered the market yet. ZTE is the first but by no means last and all look set to enter within the next 12 months.
ZTE’s current $60 model, the “Maven,” sports hardware only a couple years behind the iPhone 6. And it is, again, just $60. That price is without subsidies and the company’s phones are currently available at T-Mobile, AT&T, and Sprint.
One year ago the company controlled four percent of the U.S. smartphone market, which has now risen to eight percent. Head of ZTE’s U.S. operations Lixin Cheng stated, “We came from nowhere, and now we are a solid force.”
Previous presence in the U.S. market was limited to the company’s routers and mobile operator switches. The U.S. House Intelligence Committee accused the company in 2012 of using that technology as a vector for Chinese spying, along with Huawei Technologies.
Cheng claims that ZTE was unfairly implicated in what was really a Huawei issue, and is betting that American consumers will not remember or care about the issue.
ZTE’s start in the U.S. was with prepaid phones and smaller carriers like MetroPCS, eventually moving up to offerings in major stores like Wal-Mart and Target. Although smartphone brands are prolific in China, ZTE is currently the only potential U.S. contender from the nation as its competitor Xiaomi has instead focused on emerging markets in Brazil and India. For the moment, at least.
Xiaomi is rumored to be thinking of entering the electronics market with a cut rate Chrome-based laptop early next year. The company currently sells headphones and its super-successful portable battery packs via an online store.
As part of its marketing campaign, ZTE has recruited the NBA’s Houston Rockets along with the Golden State Warriors and New York Knicks. More importantly, it has dramatically increased its lobbyist budget, which grew from $170,000 to $950,000 in the last four years.
The company was able to dramatically increase its smartphone shipments in 2015, but that has not translated into equally impressive revenue growth, which increased from $354 million to $369 million. Once the company’s presence becomes more established, it’s higher priced offerings may be able to have a better effect on revenues. For now it and it alone is dominating the low end of the U.S. smartphone market.
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