ZTE moves to higher spec handsets

ZTE has focused on the low-end handset market, but is now beginning to target wealthier segments. If it is to make a serious move into producing mid to high-end handsets it needs to convince operators that it has the expertise and reliability to produce such devices. It must also re-educate operators and consumers on its brand and reputation.

From a consumer perspective, ZTE's handsets (2G and 3G) are inexpensive. This meets the demand of low-end consumers, but not mid- to high-end consumers. To target high-end segments ZTE must enhance its brand image through effective marketing.

ZTE must also continue its investments in research and development: if it is to compete in the more lucrative handset segments it must not only imitate but also innovate. This is one area that differentiates the top five handset vendors from their competitors.

ZTE is putting the right measures in place. It is working hard to build strong relationships with operators in mature markets. This is largely done by providing local resource (technical teams in the operators' market).

ZTE has a rigorous handset development process. Its local teams provide a valuable channel to facilitate communication between the client and ZTE's R&D teams. These teams support the whole handset development process from start to finish - managing the initial tasks such as defining handset specifications right through to testing and delivery.

Ultimately, ZTE's strategy allows it to keep doing what it does best, while learning and waiting for the best opportunity to push into the lucrative segments of the global handset market. At the same time, it must be careful not to neglect the low-end segment, as this will still remain its "˜bread and butter' business.

Raymond Yu, Analyst

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