Interview with Dr. L V Qian Hao, Head of Handsets Strategy, Handsets Strategy and Marketing Department, ZTE Corporation

A couple of months back ZTE entered the India smartphones market with its range of six new handsets. Prior to this move, the company had been supplying phones to Indian telecom service providers only.

At PT / EXPO COMM 2013 Beijing (September 24-28), CMR analyst Tarun Pathak caught up with Dr. L V Qian Hao, Head of Handset Strategy, Handset Strategy and Marketing Dept. ZTE Corporation. Excerpts of the interview are given below for the benefit of our readers:

Tarun Pathak, CMR: How does ZTE see the India smartphone market?

Dr. L V Qian Hao, ZTE: India has always been a strategic market for ZTE. It is a big market in terms of scale, profits and branding as far as ZTE’s future strategic growth is concerned. The market is complex, price sensitive and dynamic but at the same time offers tremendous opportunity in terms of smartphone shipments growth. Indians like colourful, richer, bigger and affordable smartphones. With our foray into the open handset market in India, we want to become a dominant player in the next couple of years.

Tarun Pathak, CMR: What is the present product portfolio of ZTE smartphone devices?

Dr. L V Qian Hao, ZTE: ZTE smartphones have been categorised under the Grand series and are further classified into five different sub-categories, each representing a distinctive set of specifications. We have Grand Y series where “Y” refers to “Young”. It is in the price range of US$ 90-150 and is an entry level smartphone offering targeted to the young audience. Then we have Grand X where “X’ refers to “balance” and is in the price range of US$ 150-200. Next come the Grand E where “E” refers to “experiments” and is in the price range of US$ 200-300. We then have Grand S, where “S” refers to “Super”. This is the flagship offering from ZTE in the price range of US$ 400-500 and has top-end design, hardware and service associated with it. We have another offering in the form of Grand M where “M” refers to “Memo” and is equivalent to Samsung’s Galaxy Note offering. It has big screen and provides best-in-class experience. All ZTE smartphones have “Mifavor” User Interface which means “my favourite UI”, which delivers three fundamental characteristics – intuitive operation, personalised customisation and an exciting new user experience.

Tarun Pathak, CMR: Why has ZTE decided to enter into the open market for smartphones in India?

Dr. L V Qian Hao, ZTE: Three years back ZTE had been one of the Top 3 featurephone vendors providing handsets to the operators like Tata Telecom, Reliance etc. ZTE’s CDMA-enabled featurephones were welcomed by both customers and operators. Now the India market is moving from featurephones to smartphones; it makes a lot of sense to enter this growing segment in India independently. The 3G market is growing and there is a still significant volume of shipments in the grey market. To meet this demand ZTE has already done a thorough research on smartphone demand for the local market to explore which are the best design, best service, best price and best solution we can bundle together into our offerings for the local market, in the smartphones segment.

Moreover, earlier we used to manufacture phones on the demand of operators and not customers, but now we want to bring innovation directly to the end consumers and channel partners along with the operators. We want to shift from ODM partners to OEM partners.

Tarun Pathak, CMR: Does this mean that ZTE will be active in the open market and not only with operators?

Dr. L V Qian Hao, ZTE: No, we will focus both on operators as well as end consumers but the strategy will be different. Our Grand Y and X series of entry- to mid-level smartphones will be available for operators, while the Grand E and S series would be made available in the open market and the Grand M in the premium segment, for both operators as well as open market. The high end smartphone offerings with operators will be highly customised.

Tarun Pathak, CMR: What is the distribution structure of ZTE smartphones in India?

Dr. L V Qian Hao, ZTE: India is a very complex market as far as distribution is concerned. We are still evaluating various distribution structures and channel options and I won’t be able to comment in detail at this stage. But we will be available pan-India soon. We will make our devices available to both end consumers as well as operators with a great focus on after sales service.

Tarun Pathak, CMR: What are your views on Fire Fox OS and ZTE devices on the Fire Fox OS? When can we expect them in India?

Dr. L V Qian Hao, ZTE: The sales of the ZTE Open Firefox OS phone have started on the ZTE store on eBay US and UK. Recently launched with Telefónica in Spain, Venezuela and Colombia, the ZTE Open will now be available for the first time to Orange subscribers priced at US$ 79.99 (GBP 59.99) and will be unlocked to allow use on all mobile networks. The initial responses are positive and we look forward to launch more such devices by the end of this year. In India too these devices will be positioned in the entry-level smartphones segment and can be seen by the middle of next year.

Tarun Pathak, CMR: When can we see ZTE 4G-enabled handsets, USB modems and Tablets for the India market?

Dr. L V Qian Hao, ZTE: 4G is a very small market in India as of now. We plan to introduce our 4G products in India by the middle of next year (2014) as testing of the 4G devices for the India market has already taken place.

Tarun Pathak, CMR: What are future plans of the company in reference to the India market?

Dr. L V Qian Hao, ZTE: We will continue to have strategic partnership with India operators. As far as end consumers are concerned, we will expand the reach of our high end and flagship products to a larger number of cities through the channels and reach directly to customers. We have seen that internet shopping in India is on the rise and hence we plan to launch our own e-commerce portal where the end consumers can buy their ZTE products (smartphones, datacards and tablets) directly from that portal. Not only will they be able to buy, they can also customise the phone according to their preferred / specific traits like colour, name customisation etc. Moreover our whole smartphones experience will be customised for Indian customers along with certain innovative features like safety guarantee, cloud services and business services in our high-end models.

Apart from this we also plan to open our customer innovation and design centre in India. The aim of the design centre will be to understand the true demand of India’s local smartphones market.