February 21, 2013, 8:08 AM — They are probably the biggest cellphone makers most people have never heard of. Despite ranking third and fourth in the global smartphone market in the fourth quarter, mention Huawei and ZTE to many Americans or Europeans and you're likely to be met with a blank stare.
But perhaps not for long.
Both companies have had considerable success selling phones in developing countries and now hope to replicate that in the more advanced U.S. and European markets. If they get their way, their phones will soon be competing directly with those from the likes of Samsung, Apple and HTC.
For consumers, their arrival could mean greater price competition and a wider selection of smartphones, but their success is far from guaranteed. Building a recognizable brand in the highly competitive U.S. and European markets is no trivial undertaking.
"It is a big uphill battle for them to move into the U.S.," said Chris Hazleton, an analyst with The 451 Group. "But they're coming from the largest mobile phone market in the world."
In the last three months of 2012, both companies saw their global market share more than double from a year earlier, though it's still relatively low. Huawei accounted for 5.3 percent of smartphones sold, while ZTE took 4.7 percent, according to data from Canalys.
Their rise to be among the top five is thanks partly to surging sales in China and in developing markets. They also do some business in the U.S., where the companies sell low-end handsets that are often sold under a carrier brand to cost-sensitive consumers.
"We are still new to this market, but we are also gaining momentum and growing fast," said Lixin Cheng, CEO of ZTE's U.S. division, in a recent interview.
ZTE started selling phones in the U.S. in 2008 and works closely with carriers to offer phones that fit with a certain niche. Today, that niche is often the low-end or prepaid market.
Huawei too sells phones under carrier brands in the U.S., and Richard Yu, CEO of the company's consumer business group, also sees the future in more profitable high-end phones that will carry its own brand.
"We are providing a lot of terminals to many carriers, and from them to the consumers, but people don't know Huawei," he said in an interview.
The lack of brand recognition is something of a frustration for executives from both companies. Huawei and ZTE are major suppliers of telecom equipment that runs cellular networks, but to users that's an invisible layer.
"Several billion people are using a service from Huawei, but they don't know it," said Yu. "I want to promote Huawei and our own brand."