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ZTE looks to become more the latest Asian OEM to become a household name in the world's most valuable market

In late Oct. 2013, American buyers of unlocked handsets gained an interesting new option, with the release of the Grand S and Nubia 5, a pair of Android smartphones from Chinese OEM ZTE Corp. (SHE:000063).  ZTE is looking to expand this push in a big way with five new high-end to mid-range smartphones, plus a smartwatch set to be announced next week at the 2014 Consumer Electronics Show (CES 2014) in Las Vegas, Nevada.
 
I. Veteran Turn Fresh Blood
 
American shoppers might mistake ZTE for a young startup, but in reality it's been in China's telecommunications market since virtually day one.  And it's been quietly selling rebranded devices in the U.S. for over a decade now, having long-standing contracts with AT&T, Inc. (T) and Sprint Corp. (S)
 
Founded in 1985 as Zhongxing Semiconductor Comp. Ltd., the company quickly emerged in the 1990s as a top provider of cellular base station equipment in the Asian-Pacific.  In 1993, the Chinese equipment maker was renamed Zhongxing New Telecommunication Equipment Co., Ltd, before finally taking on its current name (ZTE Corp.) by dropping the "New" when it was listed on the Shenzhen stock exchange in 1997.
 
In 1999 ZTE made the transition to handset maker release a crude feature phone, the ZTE 189.  Like Samsung Electronics Comp., Ltd. (KRX:005930) and others, ZTE spent the early half of the last decade slowly making its feature phones "smarter".  In 2006 it officially started marketing its products as smartphones, but arguably its first smartphone was the E3, a device that resembled the Motorola RAZR but added a unique swivel technology that turned it into a PDA/smartphone of sorts.  It included a stylus for touch support when used in PDA/smartphone mode.

ZTE 189      ZTE E3
The ZTE 189 (1999, left) was the company's first handset; the E3 (2005, right) was arguably ZTE's first stab at a smartphone.

And last October ZTE launched a pair of mid-range smartphones running Google Inc.'s (GOOG) Android OS, marking ZTE's first foray into self-branded devices in the U.S. market.  The unlocked Grand S and Nubia 5 were backed by a marketing push featuring the U.S. National Basketball Association’s (NBA) Houston Rockets.
 
But 2013 will be just a tease at what ZTE has in store for U.S. buyers in the new year.

II. Five Handsets and More

At CES ZTE will unveil:
  • Grand S II
    • Company's flagship Android OS device

      ZTE Grand S II
                                     [Image Source: GizmoChina]

       
    • Faster than the Galaxy Note 3 in AnTuTu mobile benchmark [source].  May be using new Qualcomm, Inc. (QCOM) Snapdragon 805
    • Features new voice recognition unlock technology
    • 3x microphones for industry-leading noise cancellation
       
  • Nubia 5S
    • Undisclosed quad-core Qualcomm Snapdragon SoC

      Nubia 5S
                                              [Image Source: PC Pop]

       
    • Display
      • 5.0-inches
      • 1080p (1920x1080 pixel)
      • Sharp Corp. (TYO:6753)
      • FHD technology
    • Camera
      • 13 megapixel, rear
      • Sony Corp. (TYO:6758) lens and sensor
      • f2.0
      • DSLR-like capabilities
      • 4K recording
         
  • Nubia 5S Mini
    • Undisclosed quad-core Qualcomm Snapdragon SoC
    • Display
      • 4.7-inches
      • IGZO display tech.
      • Sharp Corp. (TYO:6753)
    • Color finishes
       
  • Sonata 4G
    • To release on AT&T prepaid subsidiary Aio Wireless.
    • 1.2 GHz dual-core Snapdragon 400 CPU
    • Display
      • 4-inch
    • 1 GB DRAM
    • Camera
      • 5 megapixel, rear
      • 720p video
    • 1780 mAh battery
       
  • Iconic Phablet
    • undisclosed dual-core processor
    • Display
      • 5.7-inch
      • 1080p (1920x1080 pixelsHD
      • Gorilla Glass
    • Dolby Digital Sound
       
  • AT&T Wireless Home Base
    • mobile to landline conversion station (for those landline holdouts)
    • plug standard telephone jacks into wireless base
    • $20 USD/month, unlimited local and long distance calling
       
  • BlueWatch
    • built-in pedometer
    • body fat tracking
    • smartphone Bluetooth syncing
    • social networking
III. Legal Troubles?

So far, ZTE has avoided litigation for the most part after agreeing to pay Microsoft Corp. (MSFT) $23-30 USD per Android handset [source].  However, given its propensity for "borrowing" its competitors names and design cues, it wouldn't be surprising if ZTE drew some scrutiny from Samsung or Apple, Inc. (AAPL), the market's dominant powers.
 
Apple probably isn't a big fan of the "5S", while Samsung is probably a bit irked at the whole Grand S/Grand S II naming scheme.  The latter seems particularly brazen, given that the first Grand S borrowed slightly in terms of design cues from the Samsung Galaxy S II.
ZTE Grand S
Grand S (left) versus the Galaxy S II (right)

It should be interesting how American buyers perceive these hot new handsets and whether ZTE faces any new legal scrutiny in the new year.

ZTE also is pushing its new "Open" phone, which runs Firefox OS v1.1, a budget smartphone rival to Android.
ZTE Open

ZTE is also rumored to be preparing smartphones running Microsoft Windows Phone 8 for international release.  A Windows Phone license, which can be had almost for free these days, would pad ZTE's margins by $20 or more per handset.

Sources: ZTE on BusinessWire, GizmoChina





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