ZTE Sticks with Direct-to-US Consumer Strategy for Nubia Line

ZTE said on Monday that it is the official smartphone for NBA team the New York Knicks. What's less clear is which phone ZTE is referring to.

Generally speaking, the sponsorship covers the idea of all ZTE smartphones. But when it came time for Lixin Cheng, the CEO of the Chinese company's US division, to hand over a Knicks-branded smartphone to Madison Square Garden CEO and President Tad Smith, he opted to go with the unlocked Nubia 5S Mini LTE.

Never heard of the Nubia? That's ZTE's flagship line of smartphones, where the telecommunications titan focuses most of its design and software resources. But in the US, the smartphone is sold directly to consumers through its own website or retailers such as Amazon.com. As a result, there is virtually no consumer awareness of the product.

ZTE will continue to stick with its strategy of selling direct to consumers, which allows the company to sell a device without any compromises, Cheng said in an interview.

"The strategy for Nubia is to push the innovation," he said. "Going through a carrier means limitations."

For smartphone manufacturers that lack the clout of Apple or Samsung, carriers ask for tweaks or adjustments to the products before they will agree to sell the device. Others will ask for an exclusivity agreement, or to add buttons or add software. Fellow Chinese smartphone manufacturer Huawei also opted to go directly to consumers on its website with its Ascend Mate 2 smartphone.

While the Nubia line offers compelling products, ZTE hopes to build awareness in the US through two approaches. The first is to continue building its relationship with the carriers, offering low-cost, but competitive smartphones such as the 5.7-inch ZMax for T-Mobile. The second is to invest in selective marketing opportunities such as Monday's announcement with the Knicks.

"The NBA is the right partner for ZTE," he said, noting the organizations share many of the same demographics.

The New York Knicks joins the Houston Rockets and Golden State Warriors as the NBA teams that count ZTE as their official smartphone. But New York in particular is a key market, given the amount of traffic that flows in and around Madison Square Garden, where the Knicks play. ZTE's logo will be up on large LED boards outside of MSG, and throughout the stadium.

"It will be very difficult to miss," Smith said in an interview alongside Cheng. He added 600 million people pass by Penn Station and MSG each year.

It was the success of the Rockets sponsorship that convinced ZTE to press forward with more deals. In a survey of smartphone consumers taken before the last NBA season, only 1 percent of respondents recognized ZTE. After last season, that number jumped to 16 percent, Cheng said.

New York is a strategic market for ZTE, and Cheng said the company would look at other markets in choosing where to invest in sponsorships next.

ZTE's strategy contrasts with the approach taken by Samsung or Apple, the two largest players in the smartphone business who blanket the airwaves and billboards with commercials. ZTE, which is the fourth-largest smartphone maker, largely by virtue of its strong presence in China, is opting to be more selective about its advertising.

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