ZTE laid out its U.S. handset strategy in detail, saying it was in conversations with Tier 1 operators and that it hoped to establish a brand identity of being able to provide a full spectrum of handsets, though the company did identify smartphones as a key area of focus.
The Chinese telecom equipment and handset maker, which just recently posted a 32 percent jump in net profit for 2008 and 40 percent growth in the handset division, is looking to expand its reach beyond its existing handset offerings with MetroPCS, according to a company official.
ZTE cut its teeth in the U.S. CDMA market by working with MetroPCS, according to Raymond Kim, general manager of sales for ZTE USA. He said that getting into the CDMA market was a prudent decision, since there are a greater number of CDMA operators in the United States, even though GSM is more popular worldwide. He also said ZTE's history of working with CDMA handsets and infrastructure in China contributed to its position. "We learned how to walk, now we're ready to run," he said in an interview with FierceWireless at the International CTIA Wireless 2009 show.
Kim declined to discuss the level of negotiations ZTE was having with Tier 1 CDMA operators--Sprint Nextel and Verizon Wireless--but did confirm that discussions were underway. Kim said that ZTE had to build up a sense of trust with the carriers, and would do so based on its track record. He also said that ZTE was looking to have the carrier or carriers launch one or two devices that would fit a requirement they needed to be filled.
Kim said that because the middle-tier of phones is disappearing, ZTE would try to focus on smartphones. He said that if ZTE focused on lower end feature phones it would be fighting a price war and would inhibit its brand identity. ZTE is actively focusing on business-to-business phones and needed to ramp up its business-to-consumer handset plans. Kim noted that carriers control distribution channels in the United States, and so ZTE needs to focus on fulfilling the needs of the carrier while also creating something compelling for consumers.
ZTE is also considering the possibility of creating a dual-mode CDMA/LTE handset. Kim said that such functionality is on Qualcomm's CDMA roadmap, and if the chipmaker launched such a chip with such functionality, ZTE would incorporate it into its handsets.
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