Mobile phones have become an inseparable part of our lives. In developed countries such as the US, owning a mobile has become a necessity rather than luxury. Therefore the mobile industry has been booming at an unimaginable rate today. Companies such as Apple and Samsung credit their success to the highly popular design and user interface for which they ‘extort’ a chunk of money from its loyalists. Any new model launched by these two giants brings with it a large media coverage, speculations and exorbitant prices. LG, the third largest player of the US mobile market has a relatively lower participation but when it comes up with a new device, it is bound to be welcome by the customers with open arms. Recently the throne held by these three giants has been challenged by new forth player.
A Chinese firm that goes by the name of ZTE has been successfully able to establish itself as the fourth largest participant of the US mobile sector. The success of this new form has been hailed by many market gurus as the strategy used by the firm has taken into account the need of the large and diverse average citizens class of the country.
The question burning in every interest holder’s mind is that how has a foreign firm established itself among the big players so quickly when it has failed to crack the top five even in its domestic country? The answer lies in the characteristics of the products that is sold by ZTE.
With features that are a little better than an IPhone 5 and a little inferior to IPhone 6, this firm has been able to flood the market with products that have very good specification its price range. With prices only a fraction of the products of its giant competitors, its products successfully cater to the customer base which requires best of the features at minimal price range. This combination of good specifications and reasonable price has attracted many customers and given them an incentive to choose ZTE over other high end costly smartphones. With smartphones available at prices as low as 30$, the phones are in no way short in features with even the low end phones equipped with QWERTY keyboard and multimedia features.
The fairy-tale run of this not so small Chinese firm has been a result of factors other than its products too. China, the domestic market of ZTE has many big and global players of its own. Like Huawei and Xiaomi, these firms could have halted their run to the top 5. Xiaomi one of the fastest growing mobile firms in developing countries such as India and Brazil has refrained from entering the US market. It has sighted that it is not ready for catering need of US market as of now. The other player Huawei was once a big phenomenon in the US mobile market.
In the early 2010s reports of China spying in the US using the technologies of ZTE and the phones of Huawei concerned the customers. Though the firms denied and rubbished the charges, the damage had already been done to the reputation of Chinese made phone and Huawei, which had a good market share at that time had to gradually move out of the US market and shift its focus in North American region to Canada. ZTE meanwhile moved from only making equipment to also producing fully functional smartphones resulting the firm holding a sturdy 8% of the market as of 2015, a jump of almost 4% from the previous year of 2014.
Soon after entering the market, ZTE began its move to capture a good market share and was able to land its latest smartphones in the shelves of large scale stores such as Walmart, Best-Buy and Target. This enabled the firm to reach the commoners residing in parts of the country.
Although the firm doesn’t enjoy the same respect in the eyes of the customer base as Apple and Samsung do but they are trying to establish a name for themselves in the market. To move forward with it, they have tied up with sports teams such as Houston Rockets of the NBA and are also strategizing a deal with the Golden State Warriors and New York Knicks. This would boost their status as a well-established firm in the country.
The next challenge that ZTE faces would be converting high sales into high revenue. Sale of low priced smart phones puts pressure on its revenue generation and the recent crunch in the Chinese stock market has also shrunk its stock’s market value at the Hong Kong stock exchange by 36%. The future for ZTE in the US market are seems to be bright. Signs such as a 4% increase in its quarterly revenue depict the acceptance of the firm and its new products by the customers in the market.