ZTE’s U.S. smartphone chief predicts growth in unlocked phones, reacts to iPhone 7

LAS VEGAS – The chief executive of ZTE’s smartphone business in the United States said he expects relatively moderate growth in the market for unlocked smartphones, largely due to wireless carriers’ continued dominance of the U.S. smartphone sales channel. He also offered a positive outlook on Apple’s latest iPhone, noting ZTE’s devices sport many of the same features as the iPhone 7, albeit at a lower price.

“U.S. is still a carrier driven market,” explained Lixin Cheng here last week in an interview with FierceWireless on the sidelines of the CTIA Super Mobility trade show. Cheng is SVP of ZTE Corp., president of ZTE North America Mobile Devices Business Unit, and chairman and CEO of ZTE USA.

Cheng said that ZTE estimates that overall shipments of unlocked phones comprise roughly 5 percent of all smartphone sales in the U.S. market, and that the company expects that number to grow to roughly 10 percent by 2020. He said ZTE’s sales of unlocked devices are largely in line with those figures, but declined to provide details. “The unlocked market is growing,” he said.

Cheng noted ZTE is currently selling an unlocked version of its new flagship Axon 7 Android smartphone in the United States through various retailers; the $400 gadget sports relatively high-end specs, including dual speakers and a dual camera.

Measuring the size of the unlocked phone market in the United States is not an exact science. For example, BayStreet Research said roughly 15 percent of smartphones are sold unlocked and not tied to a specific wireless carrier, while Strategy Analytics said that figure could be as high as 40 percent.

Nonetheless, companies like Huawei, ZTE and others continue to work to expand the unlocked phone market in an effort to expand their overall sales in the United States.

However, ZTE itself has been notably successful in working directly with U.S. wireless carriers as well to sell its smartphones; MetroPCS, AT&T and others sell ZTE phones. According to May numbers from Counterpoint Research, ZTE is the nation’s fourth-largest smartphone vendor with around 6.6 percent of the market. Samsung (28.8 percent), Apple (23 percent) and LG (17.1 percent) lead the sector.

Of course, all three of those vendors are working to expand their share, and have all released new phones in recent months to advance their positions. Samsung’s Galaxy S7 and Galaxy Note 7 are going up against LG’s new V20 and Apple’s new iPhone 7 (though Samsung’s Galaxy Note 7 is suffering from major concerns over exploding batteries).

So what does Cheng think of Apple’s latest entry in its iPhone lineup? “I’m very glad to see iPhone follow us,” he said, noting the new ZTE Axon 7 sports dual speakers and cameras like Apple’s latest iPhone 7 (indeed, Cheng noted last year's Axon model also offered dual cameras). “I’m very glad to see that our innovation has been validated by Apple.”

Cheng noted ZTE had also considered removing the standard 3.5 mm headphone jack in its phones, as Apple has done with the iPhone 7, but noted the company decided against the move because “we don’t want to create so much confusion for the consumer.”

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Article updated Sept. 15 with additional information about the dual cameras on the Axon.