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Little-Known ZTE Now 4th in Smartphones Globally

Little-Known ZTE Now 4th in Smartphones Globally
By Adam Dickter

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About 65 percent of ZTE's sales are within China, said analyst Neil Shah. China now has more than 1 billion wireless subscriptions, due to a higher rate of businesses using multiple phones or multiple SIM cards than other countries like the U.S. ZTE also had a fourth-place share in the U.S. market based on first-quarter numbers, though second-quarter numbers are not yet available.
 



One of the big players in today's exploding smartphone market isn't a household name like Apple or Samsung or Motorola. But China-based ZTE is showing some serious momentum, leaping to fourth place in second-quarter numbers at a time when the top players are struggling to stay on top.

According to the research firm Strategy Analytics, ZTE's 11.5 million smartphone shipments lifted the company to a record 5.3 percent market share for the first time in its history.

Domestic Sales Strong

ZTE can thank the world's biggest emerging smartphone market for its success: About 65 percent of its sales are within China, said analyst Neil Shah of Strategy Analytics. The country now has more than 1 billion wireless subscriptions, due to a higher rate of businesses using multiple phones or multiple SIM cards than other countries like the U.S. ZTE also had a fourth-place share in the U.S. market based on first-quarter numbers, though second-quarter numbers are not yet available.

"They are one of the top five infrastructure vendors globally and now they have leveraged the operator partnerships to sell mobile handsets globally," Shah told us Friday. "They have a low-cost strategy to sell cheaper phones to Tier 2 carriers like Sprint, Virgin Mobile, MetroPCS and Cricket."

ZTE's Android-powered devices include the Flash (free with a contract from Sprint), Warp $99 from Boost Mobile), Merit ($79.99 for Net10) and Avid 4G ($79.99 at MetroPCS). They are attractive to those who favor lower price points over phones with more power and better features like Apple's iPhone and Samsung's Galaxy S4.

"It's more of a compromise at these price points," Shah said. "They are low on specs compared to others and the quality is not premium." Still, the huge prepaid phone market in the U.S., estimated at 25 percent to 30 percent of the overall market, is boosting ZTE devices for cost-conscious consumers. "For a non-contract plan, the barrier to entry is lifted."

Strategy Analytics estimates that global smartphone shipments grew 47 percent annually to a record 230 million units in the second quarter, with South Korean giant Samsung Electronics capturing one-third of the volume worldwide, while California-based Apple's share fell to its lowest level for three years, despite record iPhone sales for the quarter. Apple is under pressure to produce different screen sizes for the iPhone to compete with rivals.

Asian Brands Dominate

Samsung grew 56 percent year over year and shipped a record 76 million smartphones worldwide, capturing 33 percent of the market and shipping double Apple's yield, with strong Chinese demand for the Galaxy boosting volume.

Other strong players include South Korea's LG, with shipments doubling year-over-year to 12.1 million units, winning a 5.3 percent share and staying in third place, largely due to the popularity of the Optimus and Nexus models.

China's Huawei shipped 11.1 million smartphones worldwide for 4.8 percent market share, showing the global smartphone market is solidly dominated by Asian brands.
 

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