Cheap Chinese Phones Gaining In U.S.

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CHEIn most AT&T, Sprint, or T-Mobile stores, it takes a while to find the ZTE phones, buried in the back, past the latest from Apple and Samsung. But they?re there. In AT&T stores it?s the ZTE Maven, which has a screen, speakers, and a processor with capabilities somewhere between the iPhone 5 and 6. As Tony Greco, ZTE?s head of U.S. retail marketing, puts it, ?These were state-of-the-art features two years ago.? The Maven?s draw, really, is price. Without any subsidies from a wireless carrier, the phone costs just $60. And it?s not even one of the company?s cheaper models.

ZTE is quietly becoming a force in the U.S. by selling good enough phones at low prices?smaller prepaid smartphones for $30, basic phones with QWERTY keyboards for about the same, and so on. The Chinese company?s products are among the cheap phones of choice at three of the big four U.S. carriers. (Verizon doesn?t carry them.) ZTE claimed about 8 percent of America?s smartphone market in the second quarter of this year, says researcher IDC, up from 4.2 percent in the first quarter of 2014. That ranks the company fourth among smartphone makers overall, behind Apple, Samsung, and LG. ?We came from nowhere, and now we are a solid force,? says Lixin Cheng, head of ZTE?s U.S. operations.

In the U.S., the company was best known for years for making network routers and switches for mobile operators. Its phone sales are all the more surprising because it?s been frozen out of the more lucrative telecom networking market since 2012. That year, the House Intelligence Committee issued a report warning that China?s intelligence services could potentially use ZTE?s equipment, and those of rival Huawei Technologies, for spying. Huawei then dismissed the allegations as ?little more than an exercise in China bashing.?

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