Global mobile phone makers ranked ZTE to fourth

If you haven't watched the global mobile phone manufacturers for some time, you might want to take a closer look at the global mobile phone shipments in the first quarter of 2011—Nokia, Samsung, and LG still occupy the top three as they did two years ago, but Sony Ericsson and Motorola It has long since been lost, replaced by Apple, and China’s ZTE.

Apple has no suspense on the list, and ZTE's performance is somewhat surprising. Although there may be few people around you using this brand of mobile phones, data from market consulting firm Strategy Analytics and IDC shows that in the quarter, ZTE mobile phone shipments reached 15 million units.

In all mobile terminal sales of ZTE, the overseas market accounted for about 70%, and Huawei's 75% more mobile phone sales were completed overseas.

In September 2010, when Huawei began to promote the Android smartphone of the independent brand IDEOS series in Europe, ZTE’s independent Android smartphone Blade has maintained the same-file sales championship in Finland for eight consecutive weeks, and has repeatedly won the United Telecom operator Orange. The number one smartphone sales. At about the same time, ZTE’s smart phones entered the US market and reached an agreement with telecom operator Verizon to sell another Android smart phone—Salute. The first smartphone jointly developed by both parties will also be available in the second half of the year.

The two companies have chosen a common growth path - from low-end machine + OEM, to high-end smartphone products + independent brands. In terms of sales of mobile terminals, ZTE is even better than Huawei.

Especially in the European market: In 2010, ZTE Mobile cooperated with almost all operators in Europe and achieved sales growth of more than 100%. ZTE’s financial report data shows that ZTE’s mobile phone sales in France, the United Kingdom, and Germany accounted for 5.6%, 3.5%, and 3.8% respectively. "We have achieved large-scale development in Europe this year," said Lin Qiang, general manager of the European Business Department of ZTE's mobile phone product system.

These ratios are not high, but for ZTE, which has been using telecom equipment to sell overseas handsets since 2004, this data means that it is finally eligible for entry and can try to deal directly with consumers. .

As overseas operators dominate the business model of mobile phone sales, the brand image of mobile phone manufacturers must maintain a delicate balance between the interests of telecom operators and the preferences of consumers. In this regard, ZTE quickly found the object of learning - HTC. "This company has brought us a great deal of thinking," said He Shiyou, executive vice president of ZTE, to "First Financial Weekly". HTC, which started as an Asian company and a private label company, has become a smart phone brand popular in Europe with its reputation for product features and long-term cooperation with operators. Its image of “Quietly Brilliant” has been deeply rooted in people’s hearts.

ZTE also summed up the secret of Apple iPhone's success. "One is the brand power, the second is the ability to innovate, the third is the supply chain, and finally all point to the user experience." Zhai Yulun, chief technology officer of ZTE's mobile product system, told China Business Weekly. He said that ZTE does not intend to duplicate the success of the iPhone, but it can help the entire team understand the essence of the smartphone.

Sui Yulun leads a R&D team with more than 4,000 people. The offices are located in Shanghai, Nanjing, Xi'an, Chengdu, Shenzhen, and also Europe and the United States. However, most of the R&D work is undertaken by the Chinese team. Less than 100 overseas teams are responsible for tracking new technologies and developing localized product strategies. "Beginning with mobile phones in 1998, the R&D team is expanding at a rate of 10% every year," said Qiu Lun.

Most people in the R&D department are responsible for software system and hardware adaptation and targeted application development. The user interface (UI) design and interactive research of mobile phones also belong to the R&D department, but such high-end work is also partially outsourced to mobile phone design companies in Korea and Japan. In order to meet the needs of operators, ZTE also needs to help operators do some customized services.

This is not enough to really cool a smartphone. When the first smartphone based on the Android system was launched in 2010, ZTE tried to negotiate deep cooperation with Google.

With the rapid expansion of the Android camp, in order to ensure the user experience on high-end smart phones, while maintaining the stability of the Android system itself and its own commercial interests, Google specifically launched the compatibility test suite (CTS) compatibility test, only through the test The device can obtain Android's trademark and permission of the program store Android Market. Google even took the challenge of “more and more monopoly of Android”, and blocked a large number of non-line mobile phone manufacturers from being authorized outside the more advanced Android system.

In early 2011, ZTE, along with Samsung, Motorola and HTC, became Google’s first Android2.3 authorized partner. Soon after, Zate’s flagship ZTE smart phone Skate was equipped with the latest Android 2.3 operating system.

For such a high-end image, ZTE must accept no choice on certain things—the application chip can only have two main suppliers: Qualcomm and NVIDIA—their superior performance and low power consumption on dual-core microprocessors. Unmatched. This expenditure accounts for about 20% of the cost of ZTE smartphones. The cost of another crucial expenditure can not be too costly - the display purchase also accounts for 20% of the cost of a ZTE smartphone. This is why the current high-end Android smartphones, including Motorola and Samsung, are generally high prices.

However, ZTE still insists on lowering the price of mid-to-high-end smart phones to 150 US dollars or even 100 US dollars - other mainstream manufacturers offer is usually more than 200 US dollars. Because for a newcomer, there is nothing more than the cost advantage to capture the operator's heart.

According to the usual practice, when telecom operators in Europe and America sell smart phones, they often have to provide up to hundreds of dollars in subsidies for each mobile phone, which reduces the profitability of operators. If it can provide operators with low-cost and subsidy-free smartphones, it will be easier for operators to promote their brands.

Most smartphone assembly factories and parts manufacturers in the world are in China, which means that ZTE can purchase low-cost spare parts and realize low-cost integration. In addition to chips and displays, ZTE mobile phones have achieved almost all domestic purchases. Moreover, there are more than two suppliers for almost every key component.

ZTE does not have a factory that produces mobile phones and adopts an OEM model. In mainland China, a total of more than a dozen companies provide ZTE core components and terminal products. Most of them are located in Shenzhen, and this is also where ZTE headquarters are located.

Even so, ZTE still has to bear the necessary price. According to the 2010 financial report of ZTE Corporation, the operating income of end products during the period increased by 37.15% year-on-year, but 20.26% of gross profit margin decreased by 5.88% compared to the same period of the previous year. If gross margins of products such as internet cards were removed, the gross profit margin of mobile phones was reduced. Lower interest rates.

"In fact, we only sacrificed some profits in exchange for the market," He Shiyou said to the "First Financial Weekly."

The low price helped ZTE smartphones to capture a series of top telecom operators. ZTE has listed the 36 most influential telecom operators in the world as its main direction, referred to as TOP36. As of 2010, 90% of the cooperation between TOP36 and ZTE mobile phones has been established.

The next step is to highlight the problem of the brand in the game with the operator. In the global sales system of ZTE's mobile phones, China uses 100% of ZTE's own brand, 1/3 of the overseas market uses ZTE, and 1/3 uses ZTE. The joint operator brand, in addition, 1/3 is the use of the operator or a third-party sub-brand.

He Shiyou said that ZTE’s mobile terminals are facing “second startup” issues in 2011, and its core is to expand the scope of the ZTE brand. He found that vendors like Apple and Samsung are particularly willing to spend money on branding, and even their brand investment exceeds ZTE's R&D investment, and the brand's investment and return are obviously in direct proportion.

However, this still depends on the operator strategy. “No one will pay attention to you in cooperation with operators in Africa. But if you cooperate with the mainstream operators in the United States, people will automatically pay attention to you. Therefore, our strategy is to grasp the big national carriers.” He Shiyou said.

Their first step is to let small operators know that ZTE is the best partner, and then establish contact with the big operators through small operators, and then pass them to consumers through big operators.

"When the product becomes a star product, small operators all play the ZTE brand, and when those strong operators cooperate with me, I demand it must use my brand. We often use this method in Europe." He Shiyou said.

For ZTE and Huawei, the problems before Nokia and Motorola came before them: In the process of becoming a mainstream mobile phone manufacturer, it is necessary to handle the balance between speed and effect, and also to balance the market share and profit. : The market share must be greatly increased - Nokia is such a successful; and profits can not be lower - Motorola is such a failure.