China's ZTE: Apple losing edge with slow pace of iPhone releases

IDG News Service - Apple's practice of releasing a new iPhone once every year is dulling the company's competitive edge, according to Chinese handset maker ZTE, as rival smartphone vendors are bringing their own cutting-edge devices at a quicker pace to meet consumer demand.

"Right now society is improving fast. If every year you only come out with one phone, I think at this speed it's not very suitable for the market," said ZTE executive vice president He Shiyou in an interview with journalists on Wednesday.

While ZTE is three spots behind Apple as the world's fifth-largest smartphone vendor, according to research firm IDC, the Chinese company saw second-quarter smartphone shipments grow 300% year on year. Helping to fuel that growth was the China market, where ZTE narrowly beat Apple in market share by selling lower-end smartphone devices.

ZTE's He said he was impressed by Apple's new iPhone 5, but noted a lack of public "amazement" for the device that previous iPhone models were able to spark.

"The main reason is because in looking at the iPhone 5's hardware and functions, other handset vendors are already offering these features, or have phones with even better performance," he said. "This reflects that Apple's product release speed is rather slow."

Unlike Apple, ZTE releases multiple handsets every year, tailoring them for specific markets. This week, ZTE unveiled a new smartphone in China called the Grand Era U985 that the company claims is the thinnest quad-core handset in the world. ZTE also plans on releasing this month in Europe another handset called the Grand X IN, which will use an Intel mobile processor.

The majority of ZTE's phones are Android-based. But in this year's fourth quarter, the Chinese handset maker plans on launching a handset running the Mozilla-developed Firefox OS, in order to reduce its reliance on Google's mobile operating system.

The patent battles with Apple and Android handset makers is "one factor" driving ZTE to use the Firefox OS, he said. The company also wants to provide an improved smartphone user experience with Mozilla's mobile operating system.

Both ZTE and Mozilla have been developing the Firefox OS, which will be installed on to a new smartphone meant for developing markets outside of China. "It's a new operating system, so it has to go through a period of being accepted," He said.

ZTE has also released handsets with Microsoft's Windows Phone OS, and plans to start launching Windows Phone 8 devices at the end of this year or in the beginning of the next.

While ZTE has had success selling lower-end handsets in China, the company is putting greater emphasis on smartphone sales in developed markets like the U.S., Europe and Japan, where profit margins for products are higher, according to He.

Currently, more than 70% of ZTE's handset sales are in Europe, North America and China. This year, ZTE smartphones made up 60% of the company's total mobile phone sales, an increase from 30% a year ago.