Mobile and Connected Device Strategies

China-based mobile handset manufacturer ZTE is working to gain a greater foothold in the massive and still-expanding U.S. mobile market. Lixin Cheng, CEO of the company’s U.S. division, says ZTE’s plan for expansion will take shape throughout 2013.

Cheng told CNET that ZTE will approach its goals on a number of different levels. In addition to developing and releasing new mobile devices, Cheng said the company is also working to improve relationships with mobile carriers and use $30 million to expand and improve its infrastructure, warehouses and local research and development in the U.S. “There are a lot of things already in the pipeline,” Cheng told the news provider.

However, the company will have to deal with the U.S. government’s concerns over security. In the fall of 2012, the U.S. House Intelligence Committee investigated ZTE and fellow Chinese manufacturer Huawei over ties to China’s government.

Yankee Group Senior VP of Research Wally Swain comments

“Those carrier relationships that Cheng noted have traditionally been ZTE’s U.S. channel strategy. ZTE’s devices in the past usually featured the carrier’s name and not the ZTE brand itself. As a result, buyers haven’t gotten to know ZTE as a consumer brand.

That branding issue may change as newer ZTE products such as its 5-inch Grand S smartphone hit the U.S. market, though. While ZTE doesn’t intend to spend a lot of money on a U.S. branding campaign, rapid iterations of high-profile products such as the Grand S will help get its name out with consumers, especially if it can place those products within the big four U.S. carriers—Verizon, AT&T, Sprint and T-Mobile.

I also think that ZTE has unfairly gotten a bad security reputation, based upon some allegations by the U.S. House Intelligence Committee. While ZTE’s Grand S will be manufactured in China, its core processor is a Qualcomm Snapdragon S4 Pro and its software is Google’s Android. In my opinion, I don’t think these represent any more of a security threat to consumers than a Samsung Galaxy SIII or an HTC One X does; most Android phones are made by non-U.S. companies and singling out ZTE for special security concerns without more justification doesn’t make much sense.”