Plagued by profit warnings, trade disputes and even an FBI investigation, Chinese telecoms giant ZTE has come out fighting with a new mid-range smartphone for the yoof market. Guy Daniels reports.
In the bowels of the tiny 24 Club in London’s West End, where electric lighting appears to be the stuff of legend, ZTE launched its latest smartphone into the UK market. France and Germany are next, with more countries expected to follow later.
The Grand X is a dual-core smartphone that runs a stock version of Android 4.0 (Ice Cream Sandwich) with minimal customisation – an alternative keyboard software is the only change we could see. With a 4.3-inch screen, Dolby Mobile Sound and an NVIDIA Tegra 2 chipset, it is being marketed as an affordable high-end entertainment device.
Gaming is prominent, with access to Tegra Zone for additional downloads. There were rumours prior to launch that ZTE would come up with a hybrid gaming device, rather like the unsuccessful Sony Ericsson Xperia Play, complete with games controller-like hardware buttons. Thankfully, it’s a regular TBS – thin black slab.
Speaking at the launch, Mr He Shiyou, ZTE EVP and head of its terminals division, said:
“ZTE Grand X brings high-end mobile video and gaming within the reach of a whole new audience. It provides a world of entertainment in a single device – combining high quality and a wide range of functions for a great mobile multimedia experience.”
Christopher Edwards, European marketing and business development director for ZTE, went further, saying this is a phone for “a market segment that is current under-served”. Really? This segment is, according to ZTE, the 17 to 35 age group. Are these people really under-served today? Not if they have the cash for an iPhone or Galaxy III. Those that don’t have to look elsewhere. Which is why ZTE – well known for their low-cost products – are pitching this phone at a much lower price point.
Because ZTE is selling the Grand X in the UK via retail partners Virgin Media and Phones 4u, it was reluctant to give a recommended retail price for when it goes on sale in August. However, Virgin Media have announced that the Grand X is available on a range of tariffs from £24 per month for a two-year contract, or on prepay for £189.99. That’s even cheaper than the discounted older and less capable Xperia Play. Incidentally, what is it with games phones and the letter X?
Backing up ZTE’s yoof credentials is its ongoing commercial relationship with East End rapper and ‘urban artist’ Professor Green.
It’s a good move on ZTE’s part – during last night’s formal presentation, the only time the bored bar staff made any noise was a loud gasp of excitement when a ZTE executive declared “to introduce the Grand X, here’s Professor Green” (followed by a sigh of disappointment with the realisation that his appearance was only on a pre-recorded video). Why they didn’t get him to play a set remains a mystery. Anyway, here’s what the maestro had to say in a statement:
“With gigs and shows all the time in different countries, I am constantly on the move, so anything that enables people to watch videos, listen to music and play games on their phone gets my vote.”
But Professor Green fans can catch a glimpse of their idol when he visits the ZTE Grand Xperience stand in the Westfield shopping centre in Stratford – right at by the entrance to the Olympic Park. ZTE is learning from Apple that the best way to get people to buy your products is to let them try them out first. The company is also launching a new consumer-focused website.
The Grand X runs on networks up to HSPA+, has wifi and DLNA wireless connectivity, plus a Micro SD compartment. There’s HD Voice support, HD video playback and capture via its 5MP camera, and comes with the note syncing Evernote cloud app.
The launch comes as ZTE attempts to distance itself from its image of being a low-cost phone manufacturer. Its recent profits warning – a massive one, with the warning that net profits might be down 80 per cent year-on-year – was blamed by Chinese analysts on its line of low-cost handsets, rather than its equally low-cost infrastructure business. Shares plummeted to hit a three-year low.
There are also concerns over a subsidies dispute between the European Union and China, with EU officials saying they would take action against companies – including ZTE, who deny the claim – that receive “illegal” subsidies that allow them to sell products at lower prices than otherwise possible. Beijing has said it would retaliate if the EU took action. Either way, it’s going to impact ZTE’s business in Europe.
Then there’s the apparent FBI probe of ZTE in the US. The Washington Post reported last week that US Federal investigators are probing ZTE and its Texas-based domestic subsidiary for allegedly selling banned US surveillance equipment to Iran. The report was based on an apparent FBI affidavit published on the Smoking Gun website.
According to the affidavit published online, federal agents interviewed Ashley Kyle Yablon, General Counsel of ZTE USA, in May this year. The document reports that around December 2011, Yablon was instructed to work with a ZTE export compliance attorney “to identify ways pursuant to US law that ZTE could sell phones containing US-manufactured components to ‘banned’ countries.”
So there’s a lot riding on the success of Grand X, if ZTE is to achieve its aim of breaking into the top three rankings of global handset manufacturers. It’s focusing on Android, but is also hedging its bets with Windows. Officials confirmed yesterday that there is a ZTE Windows Phone 8 device in development.
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