Services initiative promises more satisfaction to ZTE smartphone users

As mainland equipment firm expands its range of 4G phones, it plans to use its own software applications to boost users' experience

PUBLISHED : Friday, 28 March, 2014, 1:40am
UPDATED : Friday, 28 March, 2014, 1:40am

ZTE, the world's fifth-largest telecommunications equipment supplier, plans to step up the development of new consumer services to complement its expansion of 4G smartphone sales.

In an interview yesterday, ZTE chief financial officer Wei Zaisheng told the South China Morning Post that the goal was to directly provide consumers with a range of software applications and so-called "cloud" services to enhance their experience in using ZTE's smart devices.

"Our past business model relied too much on what the [mobile network] operators want when customising products for their subscribers. But what satisfies these carriers may not satisfy the end-users of those devices," Wei said. "We're keen to listen and better understand what products and services these users want."

ZTE wants to be more than [just] a mobile phone seller

That initiative is expected to support ZTE's brand-awareness effort as it ships about 60 million smartphones this year, with 40 per cent consisting of advanced 4G smartphones that range from high-end to low-cost models. It shipped 40 million smartphones last year, but saw prices for its 3G models take a sharp fall because of intense competition on the mainland - the world's largest smartphone market.

"ZTE wants to be more than a mobile phone seller," said Zeng Xuezhong, the head of ZTE's mobile devices division. "The revenue generated by the mobile phone sector last year was not ideal, which pulled down the whole group's performance."

In the year to December, revenue from ZTE's so-called terminals business - comprising mobile phones, data cards and accessories - was down 24.69 per cent year on year to 21.70 billion yuan (HK$27.35 billion) as prices of 3G smartphones and basic mobile phones decreased. While the Shenzhen-based company's net profit improved to 1.36 billion yuan last year from a loss in 2012, total revenue dropped 10.56 per cent to 75.23 billion yuan.

ZTE's new "consumer-centric" strategy to promote its brand and support smartphone users reflects the increased competition on the mainland. Beijing-based Xiaomi, a smaller but more marketing-savvy smartphone maker, has been ahead in the domestic industry to connect with consumers via social media and generate their input in the design of new smartphone models and useful apps, according to Hugo Barra, vice-president at Xiaomi Global.

Wei pointed out that ZTE was a bigger company with an "advantage in technology like cloud services", which allow users to buy or sell a range of software, data and digital resources over the internet as an on-demand utility. Wei did not specify which services and apps ZTE plans to roll out this year.

A Barclays report said: "Faster penetration rate on 4G smartphone should strengthen ZTE's smartphone business in China above a 6 per cent market share [this year]."

Technology research firm IDC forecast mainland smartphone shipments to total 450 million units this year, after the launch of 4G mobile services by the "Big Three" operators - China Mobile, China Unicom and China Telecom. Shipments last year hit 330 million units.

ZTE's share price was down 4.01 per cent to close at HK$14.86 yesterday.