Russia’s Yota Devices sees partnership with China’s ZTE on next dual-screen YotaPhone as means to supersize fan base

Hong Kong-based REX Global Entertainment to purchase majority stake in Yota Devices for US$100 million

PUBLISHED : Thursday, 29 October, 2015, 1:53pm
UPDATED : Friday, 06 November, 2015, 6:22pm

Russia’s Yota Devices believes its strategic partnership with two Chinese companies on producing its next dual-screen smartphone will help it break into the major leagues of smartphone vendors.

The company plans to mass produce its next-generation model in China next year under a strategic partnership with Chinese telecommunications company ZTE and Hong Kong-based investment company REX Global Entertainment Holdings, it said.

The Russian smartphone maker launched its YotaPhone 2 in the Chinese market in May.

Late last week, it was announced that REX Global will purchase a 65 per cent stake in Yota Devices for US$100 million, making it the largest stakeholder. The partnership with ZTE was announced earlier.

READ MORE: Russia’s YotaPhone targeting China’s tech-savvy with two-screen smartphones

“We are looking for a long-term investor, not a one-time investment,” said Yota Devices CEO Vlad Martynov in an interview with the Post.

“REX Global [as an investor] will give us access to financial resources and investments.”

Martynov added that he wanted to increase YotaPhone’s market share in Asia and China, which is the company’s “priority-one” market.

“Since REX Global is an Asian company … they can help us grow our business in Asia,” he said.

The YotaPhone 2 comes with an e-ink screen on the back, similar to the kind found on devices like Amazon’s Kindle e-reader. They eliminate the glare from backlit screens, making for more comfortable reading in a way that is less tiring on the eyes.

The YotaPhone 2 can last up to three days on a single charge if only the e-ink screen is used. When the regular touchscreen is also put into play, the battery still outlasts those of most other smartphones on the market, the company said.

Launched in over 20 countries, Russia and China are currently the two largest markets for YotaPhones, with China expected to make up over half of global sales soon.

The company has received support from the Chinese and Russian governments as both countries look for new ways to complement one another’s strengths as they ramp up economic ties, according to Martynov.

The YotaPhone 2 gained a stronger reputation in China last year when Russian President Vladimir Putin presented the device to his Chinese counterpart Xi Jinping as a gift at a conference in Beijing.

“Do [Russia and China] have any cooperation on this [smartphone]?” asked Xi, after being introduced to the YotaPhone, according to video footage of their conversation.

“There will be,” replied Putin.

WATCH: Russia’s Putin gives Xi Jinping a YotaPhone 2 as a gift

“[After that], we gained a big community of fans,” Martynov said.

“We hadn’t started selling the [Yotaphone 2 in China] but we had a lot of [Chinese] people on social media asking when and where they could buy it.”

The next generation of the device, which is expected to be called the YotaPhone 3, will feature a larger 5.5-inch screen and a longer battery life, according to the CEO.

It should retail for around US$550, he said, adding that ZTE will build it.

“[It] will be a mass-market product,” said Martynov. “We expect to sell millions … across the globe.”

But it remains to be seen whether consumers will fork out so much for a dual-screen device.

“Consumers are interested in the idea, but the YotaPhone is still an unusual device,” said Natalia Vinogradova, a research analyst at IDC.

“The dual-display idea could come in handy, [but] it is still not necessarily the preferred choice for the mass market, especially taking the [high] retail price into consideration,” she added.

Moreover, Yota Devices may face stiff competition from within China.

“There are too many smartphone players in Asia and bringing YotaPhone to the mass market is going to be a challenge,” said Vinogradova, adding that the device will likely remain a niche product for some time.

The YotaPhone may also have to fend off competition from Chinese smartphone makers that also have their sights set on producing a dual-display device.

At a recent Global Sources mobile electronics show in Hong Kong, Chinese company Jezetek Mobile demonstrated a dual-screen smartphone with an e-reader screen. Pundits expect this to retail for a lower price than the next YotaPhone.

“We don’t see it as a threat,” said Martynov.

“If someone is trying to imitate and follow us, it’s good because that means we are setting the trend,” he added.

“It means that there is a demand for the phone.”

Yota Devices spent three years researching and developing the Yotaphone 2, he said.

“I don’t think anyone else will be able to get … such quality [of performance] for a second screen.”