There has been plenty of news floating around the web the past 24 hours in mobile, but one story caught my attention. Our news hound Alex Wagner reported that Nvidia is teaming up with ZTE to release their first Tegra 4-powered smartphone. Yes, ZTE. And, to my surprise, a report earlier this month recognized ZTE as the world's fourth largest smartphone manufacturer just behind Samsung, Nokia, and Apple. ZTE is beating their Chinese competitors Huawei, and Lenovo as well.
Pair that with the fact that China has surpassed the U.S. market as the largest smartphone market and you start to see how an Nvidia-ZTE partnership could be unsettling for the entire mobile industry.
Peter Farago, Vice President of Marketing at Flurry Analytics said in an interview with VentureBeat, "The U.S. is now No. 2 (in total smartphones) and will not recover." Flurry estimates the U.S. share in mobile will grow from 222 million to 230 million by the end of this month whereas China will grow from 221 million to 245 million.
And it looks as if China has the most to benefit from the partnership in two aspects. The first being ZTE is a Chinese brand and Nationalism is a big part of buying tendencies in China. The second notion of Nvidia and ZTE's partnership is the thought of ZTE selling a ton of cheap smartphones, which wouldn't be completely out of question judging by their recent handsets.
Then there's the push for American companies to sell. Since Nvidia is based out of Santa Clara, California, and designs their chips in the U.S., Nvidia has much to gain and little to lose from this partnership as compared to a partner like Apple whose eggs are all in one basket: the U.S. mobile market.
ZTE holds a sort of "home team advantage" in China. Over the past year, Samsung's market share (Korean) has dropped nearly 6.5%, with Apple's share (American) mimicking a 2.1% drop in total units shipped in China.
There is very little to underestimate in the pairing between Nvidia and ZTE if they manage to market an affordable device in the Chinese market. Though Nvidia's Tegra 4 SoC lacks integrated LTE on-board and is therefore seen as a disadvantage in the U.S. market, China's network preference for TD-SCDMA looks set to be a match made in heaven for the Chinese.
China's research director Nicole Peng said "a combination of a TD-SCDMA device and a cheaper model would open the flood-gates (in China)."
When the Chinese admit an abundance of anything, we ought to listen.
Yet, ZTE is not the only successful Chinese manufacturer. Most recently, we have seen Huawei enter the U.S. smartphone market with their Ascend P2 and Ascend Mate, both of which are gunning for the big dogs in mobile stateside.
The Ascend Mate is a Samsung Galaxy Note II competitor in size with a 6.1-inch HD Screen. The Ascend P2 has not officially been announced, but we can expect it to boast a 4.7-inch 720p panel and a sub-7 millimeter thickness.
This is where you say, "Chase, we don't care about Huawei or ZTE." To which I'd reply "Okay, but what if Apple or Samsung decided to have another go at the Chinese market with a cheaper alternative if the Nvidia and ZTE partnership goes well?"
First, let's outline what we know. It's clear that the Chinese mobile market is growing...and will continue to grow. Some estimate that a budget iPhone could completely decimate Apple's previous sales records. Apple might announce a budget iPhone this year.
Who is to say that Apple would not release a budget iPhone in the U.S. this year?
And if it lands stateside, it will definitely land in China, too, because China is the main driver behind an Apple-branded budget device.
And what if Samsung followed suit and decided to market their Galaxy S IV Mini at a brutally low price point for the Chinese market, too?
Look at Nvidia's less than stellar sales figures of the Tegra 3 SoC during 2012 and there is only one logical step after their escapade with ZTE if it goes well: an increased presence in the Chinese mobile market…at the detriment of every other market.
Though the Nvidia Tegra 4 is slated for a Q2 2013 release, we shouldn't write-off the potential for a shift away from a U.S.-focus to China if the Nvidia-ZTE partnership goes well.
China: I'll take 200 million plastic iPhone's, please.
Apple: Sure, let me put in an order requisition...with you.
What do you think Nvidia's choice of ZTE means to the rest of the mobile market? Is it coincidence that China just surpassed the U.S. as the world's largest smartphone market? Are you worried that this might be the last year the U.S. sees the latest flagship phones before the rest of the world? Let me know what you think about Nvidia's new partnership with ZTE in the comments below.