ZTE pitches Nubia smartphone at high-end market

ZTE Corp, the fourth-largest mobile phone seller by shipments globally, has released a new smartphone brand called "Nubia", targeted at high-end users.

Officials from the Chinese vendor, the country's second-largest telecoms equipment maker, also underlined its ambition to become the world's third-biggest smartphone maker, after Samsung Electronics Co and Apple Inc, by 2015.

Its Nubia brand will be marketed separately from the company's current mobile phone brand of ZTE, under which a large number of inexpensive mobile phones are produced, grabbing a noticeable share of the market both in and out of China.

ZTE has just announced that its net loss in the third quarter was 1.95 billion yuan ($312 million), compared with a profit of 299.3 million yuan a year earlier.

He Shiyou, ZTE's executive vice-president, told analysts that he expects its mobile phone arm, which produces mobile phones and other devices, to take up half of ZTE's revenues by 2015, as the company, also the world's fifth-largest telecoms equipment maker, looks to fuel growth outside the telecom gear market.

Ni Fei, handset general manager of Shenzhen ZTE Mobile Telecom Co Ltd, a ZTE mobile phone subsidiary, said: "Nobody knows about the outcome, but I think there is a chance that we will succeed (with the new smartphone brand)."

Although operated independently from the ZTE brand, Nubia will benefit from various ZTE resources, including research and development, and after-sales services, the company said.

In 2011, ZTE's mobile phone arm registered revenue of 26.9 billion yuan, accounting for 31 percent of ZTE's total.

Analysts said releasing smartphones targeted at high-end users is an important step to help the company grab more market share and profits.

"ZTE provides mainly low-price mobile phones in China. This helped it gain market share, but still brings low profit margins," said Ji Chendong, a senior consultant with KPMG China.

A majority of ZTE's mobile phones are sold via outlets run by telecom carriers, which also affects profits as carriers have an influence on pricing, Ji added.

The Nubia brand, however, will take a different approach, in that it will be sold online and in store, which analysts said will deliver ZTE better profits.

The company has said it expects half of its mobile phones to be sold in venues other than telecom carrier outlets by 2015.

Overseas sales are also high on the company's priorities for the new brand, but ZTE didn't elaborate on specifics.

The first Nubia smartphones, with a five-inch screen and a quad-core central processing unit, will appear in December.

ZTE plans to increase the number of smartphones it produces this year to 35 million, even though total shipments of all types of mobile phones are likely to remain the same as last year, He said in September.

On Wednesday, Reuters reported that He said ZTE now expects to ship around 50 million smartphones in 2013.

In the third quarter, ZTE shipped 7.5 million smartphones globally, ranking fourth with 4.2 percent of the global market, from 3.3 percent a year earlier, according to research company IDC.

Samsung was in first place with 31.3 percent, followed by Apple with 15 percent, and Research In Motion at 4.3 percent.