ZTE handsets debut in North America

ZTE USA, the United States subsidiary to Chinese company ZTE, today announced that MetroPCS has signed an agreement to purchase ZTE’s CDMA PCS and AWS handsets. The agreement marks the company’s first handset customer in the United States.

ZTE delivers custom-made products and services to customers in more than 120 countries, but until this announcement, the U.S. was not one of them. Back in March at CTIA, ZTE unveiled its first handset targeted at the U.S. market, a CDMA EV-DO flip phone that featured Digit Wireless’ Fastap 26-button keyboard. The handset was specifically built for North America and had since between deployed by Canadian telco Telus.

Starting in January, however, MetroPCS’s 3.7 million U.S. subscribers will have access to new ZTE handsets, typically marketed as mid-range and low-cost 3G phones. While the company wouldn’t release specifics as to what features the devices would include, Lance Cornish, vice president of business development for ZTE, said they will be in line with what Metro’s consumers want, which typically includes features like flip phones, cameras, MP3 players, picture messaging, Web browsing and text messaging.

“This is the first USA partnership and first USA product that we are bringing into the market, designed for the market with American consumers in mind right from the outset,” he said. “We are working with an extremely good partner who is performing very well in terms of their market and their penetration and so forth. This is the first of a lot of other good news to come in the following year.”

The U.S. has always been on the company’s radar in terms of expansion plans. On the networking side of its business, ZTE announced in July that Sprint would purchase its WiMax PC cards and home networking gear for its national WiMax rollout. Although this is ZTE’s first handset carrier announcement, several more carrier announcements are in the works for early 2008, Cornish said.

“We are building a business here in the USA,” he said. “We are here to stay.”

Getting on the AWS spectrum was key to MetroPCS’s expansion plans, said Bill Ho, research director of wireless services for Current Analysis.

“The fact that ZTE comes to the table with infrastructure and handsets is something significant for a carrier,” Ho said in an email interview. “ZTE as a global operator with proven European experience needed to penetrate the U.S. market in a big way, and with MetroPCS using them as one of their AWS vendors, it bodes well for their future business, as that carrier has a substantial footprint to build out in ‘08 and ‘09.”

Peter Jarich, research director at Current Analysis, added that for ZTE, this is the execution of its strategy in the U.S.

“As with Europe, they hope to break into accounts with device sales, leveraging the channel to then sell their infrastructure,” he said in an email interview. “In the CDMA space, this works well because operators are often stuck with a limited supply of handsets, and ZTE adds in welcome diversity. The question now is whether or not it can actually execute on the second part and gain networks momentum at the operator.”