* Huawei sees 2012 smartphone sales rising 3-fold to 60 mln
* Huawei says ready to undercut rivals prices by 15-20%
* Huawei rolls out top-of-the-range model Ascend
By Tarmo Virki and Lee Chyen Yee
BARCELONA/HONG KONG, Feb 27 While veterans
Nokia and BlackBerry struggle for survival, the power in the
surging smartphone industry has started to move to China where
agile manufacturers are coming out with models comparable to
their Western rivals, but at cheaper prices.
In 2012, Chinese vendors Huawei Technologies Co Ltd
and ZTE Corp are set to grab more market
share globally, analysts say, as they shift away from making
basic feature phones to churn out more smartphones, a sector
where growth is strong and profit margins are bigger.
The two vendors combined sold 35 million smartphones last
year, around 7 percent of the global market, and see 2012 sales
rising to 90 million, doubling their market share to 14 percent.
Huawei and ZTE, among the world's largest makers of telecom
network equipment, have expanded into handsets and the tablet PC
business and are now selling smartphones running on Google's
Android operating system, taking on the lucrative
market dominated by Apple Inc and Samsung Electronics
At the Mobile World Congress in Barcelona this week, Huawei
and ZTE unveiled their top-of-the-range models Ascend and Era,
with technologies comparable to any of the top Android models.
Huawei said it aims to sell more than 60 million smartphones
this year, a three-fold increase from 2011, while it is ready to
sell products at prices 15-20 percent lower than the market.
"Huawei has firmly laid down the gauntlet to established
rivals and its sales goal is an eyewatering target that will
send a shiver down rivals' spines," said Ben Wood, head of
research at CCS Insight.
Chinese smartphones, such as Huawei's IDEOS and ZTE's Blade,
are gaining popularity worldwide, especially in emerging markets
from Africa to India, mainly due to aggressive pricing and
helped by selling network equipment to telecom carriers.
"Having the infrastructure business is a great benefit for
us," He Shiyou, chief of ZTE's phone business, told Reuters,
adding the company was packaging phones together with network
gear when approaching carriers.
ZTE expects operator-partnerships to help it to double its
smartphone sales to 30 million handsets this year.
Even at retailers, some of lower end models of Huawei and
ZTE can be bought for around $100, the level where the demand is
the highest, and there is no end in sight for falling
Chipset vendor Spreadtrum, smaller rival to
Qualcomm and Mediatek, has rolled out a platform for
$40 smartphones for the Chinese market. Late last year, Qualcomm
launched a new set of its flagship Snapdragon chipsets targeted
at low-cost Android smartphone makers.
"Mass market smartphones represent an important
opportunity," said Steve Mollenkopf, Qualcomm's president and
chief operating officer. "The mass market smartphone segment is
very competitive and device manufacturers need to launch
products faster at lower engineering costs."
Growth in the global smartphone market is expected to slow
in 2012 from around 60 percent growth seen in 2011, but it will
still expand around 40 percent this year, helped by falling
prices, research firm Gartner said.
ZTE and Huawei roughly doubled their global cellphone sales
last quarter, outselling BlackBerry's RIM and HTC
. In the smartphone sector, they continued to gain
market share as they expand their reach in markets such as North
America and through improved Android models, Gartner said.
"Chinese vendors are on the roll. China's smartphone market
is surging and they use this momentum as a springboard to grow
abroad as well," said Neil Mawston, analyst at research firm
Nokia has seen its global market share in smartphones
falling to 12 percent in the last quarter from 30 percent a year
earlier and has suffered also from ageing smartphone offering as
it revamps to use Microsoft software.
Nokia warned last month sales of its Symbian smartphone
platform would not reach its expectations of more than 150
million units, while LG has struggled with shrinking market
share for several quarters. Analysts said the success of the
Chinese firms was starting to hit Sony and HTC
Consumers like 15-year old Lin Jingfeng, a student in the
southern boomtown of Shenzhen in China, bought a smartphone from
ZTE last year at a fraction of the cost of an iPhone.
"I bought ZTE because it's much cheaper than the other
phones that I saw and it's good enough for my purposes," he
said. "I don't play much games and I usually just use it to call
my friends, surf the Internet or update my weibo (microblogging
Analysts said Chinese firms needed to invest more into
building their brand in developed markets, and could take a page
from Taiwan's HTC, which has made a splash in mature markets.
"I believe we will become world's top class brand in
devices," Shao Yang, marketing chief of Huawei's devices unit,
said in an interview.
Huawei and ZTE said the key for kick-starting smartphone
sales was close co-operation with operators.
"The device is a big pain-point of an operator and we have a
good channel to discuss with their technology and marketing
departments. In Huawei we solve a lot of problems for them,"
Yang said. "We care for our customers like no-one else."