ZTE aims to cut Huawei lead

China's second largest telecom equipment maker looking to its terminal and cloud computing businesses to achieve over 20 percent growth projection for 2011, local media reports.

Chinese telecoms equipment vendor ZTE has set its sights on narrowing the gap with market leader Huawei Technologies, looking to its terminal and cloud computing businesses to drive over 20 percent growth in revenue this year.

Local news agency China Daily reported Thursday that Huawei recently forecasted an increase of less than 10 percent in sales, from 2010's 185.2 billion yuan (US$28.5 billion) to 199 billion yuan (US$30.7 billion) this year. Comparatively, ZTE's revenue for 2010 was about a third of Huawei's at 70.26 billion yuan (US$10.8 billion), it added.

Citing ZTE's executive vice president Xie Daxiong, the news agency said the No. 2 telecom equipment manufacturer is expecting a strong boost from its terminal business, which includes handsets and data services.

Last month, the company announced that it hopes to become one of the world's top five Android smartphone makers this year. According to China Daily, ZTE expects to ship 12 million smartphones in 2011, one-tenth of the 120 million devices it projects to ship in total. In 2010, the company shipped 90 million handsets.

"ZTE wants to become one of the world's top three mobile phone vendors by 2015," Xie said in the report.

According to a report this week by ZDNet Asia's sister site CNET, ZTE will be one of three new hardware partners that will adopt Microsoft's Windows Phone 7 OS for its smartphones following Redmond's unveiling of its update codenamed Mango.

Huawei is also riding heavily on Google's mobile operating system (OS) to grow its mobile business. Last September, company executives told ZDNet Asia that it will be using Android to power its smartphones and tablets, and that the ecosystem will soon overtake Apple's iOS platform.

Fan Jiongyi, who heads up ZTE's terminal business, added in China Daily's report that overseas markets accounted for more than 60 percent of the company's terminal sales last year, while the local market contributed the remaining 40 percent. The company's flagship mobile phone, ZTE Blade, sold over one million units in Europe since its launch last year, and in some of the European markets, sales of the handset were surpassed only by Apple's iPhone 4, he revealed.

Besides its terminal business, the China company is also turning to cloud computing to boost its sales, the report stated. ZTE plans to become a leader in this arena by 2015 and has already committed 3,000 employees to work on cloud R&D projects.

"We hope the products and services related to cloud computing will exceed US$2 billion this year," said Wang Wei, ZTE's vice president, in a media statement. These offerings include data communication products, enterprise networks and servers and storage products for government networks, according to the company.