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August 19, 2010

ZTE Corp. is now extending its presence in the American market with the launch of its first mobile handset, the ZTE Salute smartphone that it will launch with nationwide operator Verizon Wireless sometime next week. The device has some very modest features, including a sliding form factor with a 2.4-inch screen, a traditional 12-button keypad, a 1.3-megapixel camera and support for Verizon’s CDMA-2000 1x network in most U.S. markets.

Those features are echoed in Verizon Wireless’ description of the new smartphone: “Let’s face it, you don’t need a mobile phone with a lot of bells and whistles. You need a reliable, easy–to–use mobile handset that can help make your hectic day a little less hectic.”

Despite not getting its name in the game, ZTE said the placement at Verizon Wireless was a major win for the company’s burgeoning mobile handset business. ZTE does sell a fairly large number of models through regional operators like MetroPCS Communications and has garnered a number of infrastructure contracts for its network equipment as well.

“This is a major step for us to drastically increase our presence in the U.S. market,” noted Jeff Ji, EVP of ZTE USA Inc.

Prior to joining ZTE’s U.S. operations last year, Ji worked for the company’s European division, and he noted that one of the challenges in producing a mobile device for the U.S. market is the specific set of requirements needed to meet both wireless carrier and customer expectations.

Highlighting the very lack of “bells and whistles,” the Salute sells for $20 after all rebates and a two-year contract and wireless subscribers aren't required to sign up for one of the carrier’s data packages as they are for so-called “3G Multimedia”.

While garnering a spot at the nation’s largest wireless operator was a huge win for ZTE, it did lose out a bit in that the device is branded as the “Verizon Wireless Salute,” a naming standard the wireless carrier uses for a number of mobile devices provided by lesser known handset vendors.

The new Salute does have the ZTE logo on the top of the device, however.

“Overall, the U.S. market has higher requirements than Europe,” Ji explained. “In terms of quality and after sales and support of services it’s much different from Europe as well.”

And while the company has so far only garnered interest for MIDs (mobile Internet devices) with a modest feature set, Ji added that the company is moving aggressively to bring more advanced devices to the U.S. market.

Ji added “We have invested a lot in the development of smartphones and that is our strategy going forward. As we understand more of what our customers want we will move to fill in those expectations.”

In 2007, ZTE had announced plans to enter the U.S. handset market and at the end of 2009 ZTE was the No. 5 handset vendor globally, accounting for a little over 3.92 percent of total worldwide mobile device shipments.

Last week, Verizon Wireless said it would begin taking pre-orders on the Motorola Droid 2 smartphone beginning today, ahead of its expected launch previously scheduled for August 19.

The new device will retail for about $200 after all rebates and a two-year minimum contract.

The Droid 2 is expected to replace the original Droid 1 that launched in Oct. 2009 and was bolstered by an ambitious advertising campaign targeting Appl's then iPhone 3 GS.

The Droid name has now become the brand for some of Verizon Wireless' devices powered by Google's Android OS.

The Droid 2 greatly improves on the original model using Google's latest Android v. 2.2 operating system, enhanced Qwerty keyboard, greater social networking integration, mobile hot spot capabilities, more enterprise functionality and support for Adobe Systems's new Flash v. 10.1 that debuted last month.

More importantly for those drawn to the Droid name, Verizon Wireless also said it would offer a limited edition R2-D2 version of the device in honor of one of the stars of the “Star Wars” movie franchise.

The model, which will be available only online beginning in September, will include exclusive Star Wars content and an external hardware design to look like R2-D2. Verizon Wireless licenses the Droid name from Lucas Film Ltd.

The smartphone segment of the wireless industry is becoming increasingly important for wireless carriers as the devices typically require extra-cost data plans and typically encourage consumers to download more apps.

Strategy Analytics recently noted that smartphone shipments jumped a little over 42.7 percent year-over-year to almsot 60 million units globally in the second quarter of this year, making up almost 19.8 percent of all mobile devices shipped.

Verizon began offering the Motorola Droid X last month for $200 after all rebates, and prior to that, it launched the HTC-built Droid Incredible for the same price.

The Droid 2's presale availability falls just one day before AT&T Mobility is set to begin exclusively offering Research In Motion's Torch smartphone. The competition is in deed rapidly escalating.

According to IE Market Research Corp., AT&T Mobility is expected to beat Verizon Wireless in the number of total mobile subscribers during the second quarter of next year. The research firm also says that AT&T Mobility will post the highest earnings before interest, taxes, depreciation and amortization results among domestic operators by 2014.

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Source: ZTE Corp.