ZTE: Supplying the smartphone boom
Australia is on the verge of ‘peak smartphone’. Last year saw penetration rates reach 84 percent, with Deloitte estimating that Australian consumers interact with their smartphones 480 million times a day, up by around 10 percent on 2016.
Though Deloitte believes the market will plateau somewhat, it still expects the replacement side of the equation to perform well. If the 16 million smartphone users upgrade on average every three years, we can expect around five million in replacement sales annually. Deloitte thus concludes that the smartphone will remain attractive for the foreseeable future.
Riding, and to an extend driving this wave is ZTE. The global phone manufacturer, which has produced smartphones for the likes of Vodafone, Telstra and Optus in Australia since 2004, has spearheaded some of the country’s most notable development in this field.
Enter Daniel Zhao, Managing Director of ZTE Australia since May 2016. An experienced telecoms industry player with 13 years under his belt, Zhao is all too aware of the impressive work that he is tasked with continuing.
“Since coming to Australia, we’ve brought over 100 models to the market and sold more than 12 million devices,” he points out. “Over the years, ZTE Australia has been instrumental to the introduction of various key telecommunication devices for the Australian market.”
Such milestones include the first Telstra branded clam shell handset, the first device that was launched on Telstra’s NextG network; Telstra’s first country phone, which provides superior signal performance in Australian regional and rural areas; Telstra’s first waterproof and dust resistance ruggedised device; and Telstra’s first phone designed specifically for seniors.
Best of both?
“Whilst we have long-term partnerships with the leading mobile network providers, we have also started to bring our complete range of affordable smartphone products to consumers via our retail partners,” Zhao continues. “We’ve recently unveiled our flagship smartphones, the AXON 7 and AXON 7 Mini which are available exclusively at JB Hi-Fi.”
Indeed, ZTE has teamed up with some heavyweight industry players to deliver to AXON 7. This includes collaboration with Designworks, a subsidiary of BMW which helped inspired the phone’s sleek design. Dolby is also a key partner, this time on the audio front.
Zhao also emphasises the biometric set-up. “Another unique feature is the location of our fingerprint sensor,” he says. “Rather than resting solely on the front, we’ve placed it on the back where your finger naturally rests. This provides not only more space for a larger screen and speakers on the front, but also results in a more aesthetically pleasing handset.”
This begs the questions as to how ZTE balances its interests regarding its own phones versus those it makes for the likes of Vodafone, Telstra and Optus. Is there a conflict of interest? For Zhao, it is simply another exciting revenue stream and means to delivering its Australian ambitions.
“Our brand has built its reputation on manufacturing devices for telecommunication providers, including Telstra, Optus and Vodafone,” he explains. “As such, we’ve had long-term, successful partnerships and continue to do so. We remain committed to working with our valued partners to manufacture devices primarily for the pre-paid market, while also introducing a wide range of our own branded handsets to meet the consumer demand.
“Ultimately, our overarching goal is to provide affordable high-quality handsets to the Australian market. By continuing our partnerships and rolling out our own branded devices, we’re able to accomplish this in many ways.”
So what does Zhao see in the coming years for ZTE and the Australian smartphone market? While the dust may only just be settling on the rollout of 4G around the world, 5G has quickly made it onto our radars. For Zhao, this is an exciting development to follow and influence.
“As consumers are aware, the market is always changing so technology companies, like ZTE, must constantly evolve as well,” he says. “One of the big things for the smartphone and telecommunications market in Australia is the 5G network. We’ve announced the first 5G phone in the world and look forward to having 5G deployed in Australia.”
With 5G a case of watch this space, Zhao also comments on the ‘smartphone peak’ observation made by the likes of Deloitte. He is eager to emphasise, as Deloitte also does, the potential for further growth and diversification in the sector, in part driven by strengthening competition.
He concludes: “When we first came to Australia in 2004, we saw endless opportunities to grow our footprint. That outlook is still relevant for our growth strategy today. Australian consumers want the best and most advanced devices, and we want ZTE to be a top-of-mind technology provider by offering them our innovative, next-generation smartphones.
“In the next five years, we’d like to continue being a main player in the Australian phone market and ultimately growing our market share.”
Why Alibaba Cloud is doubling down in Southeast Asia
Alibaba has announced expansion of its cloud business within Southeast Asia, with the introduction of a digital upskilling programme for locals alongside acceleration of its data centre openings.
This doubling down of its cloud business in Southeast Asia comes as the company faces stiff competition at home in China from rivals including Pinduoduo Inc and Tencent and seeks to up its game in a region considered to be the fastest-growing in cloud adoption to compete with leading global cloud providers AWS, Google and Microsoft.
Alibaba Cloud, the cloud computing arm of Chinese e-commerce giant Alibaba and second biggest revenue driver after its core e-commerce business, finally turned profitable for the first time in the December 2020 following 11 years of operation, thanks largely to the pandemic which has spurred businesses and consumers to get online.
Southeast Asia growing demand for cloud
In 2020, there was a noticeable increase in interest towards cloud in SE Asia, with the population embracing digital transformation during the pandemic and SMEs across the region showing increased demand for cloud computing.
Such demand has led to the expectation that Southeast Asia is now the fastest-growing adopter of cloud computing with the cloud market expected to reach US$40.32bn in Southeast Asia by 2025 according to IDC.
And there are plenty of players vying for a slice of the cloud pie. While AWS, the cloud arm of Amazon, is the leading player in Southeast Asia (and across all of APAC apart from China), Microsoft and Google are the next two most dominant players in Southeast Asia with Alibaba coming in fourth.
“There is no doubt that during the past year we have seen the acceleration of digital transformation efforts across all industries,” explains Ahmed Mazhari, President, Microsoft Asia. “Asia now accounts for 60% of the world’s growth and is leading the global recovery with the digitalization of business models and economies. Cloud will continue to be a core foundation empowering the realization of Asia’s ambitions, enabling co-innovation across industries, government and community, to drive inclusive societal progress.”
Alibaba’s commitment to Southeast Asia
At its annual Alibaba Cloud Summit, the Chinese company announced Project AsiaForward, an initiative designed to upskill local developers, small-to-medium-sized companies and connect businesses with venture capital. Alibaba said it would set aside US$1bn over the next three years to develop digital skills in the region, with the aim of helping to develop 100,000 developers and to help grow 100,000 tech startups.
But that’s not all. The company, which recently opened its third data centre in Indonesia, serving customers with offerings across database, security, network, machine learning and data analytics services, also announced it would unveil its first data centre in the Philippines by the end of 2021.
Furthermore, that it would establish its first international innovation centre, located in Malaysia, offering a one-stop shop platform for Malaysian SMEs, startups and developers to innovate in emerging technologies.
“We are seeing a strong demand for cloud-native technologies in emerging verticals across the region, from e-commerce and logistics platforms to FinTech and online entertainment. As the leading cloud service provider and trusted partner in APAC, we are committed to bettering the region’s cloud ecosystem and enhancing its digital infrastructure,” says Jeff Zhang, President, Alibaba Cloud Intelligence.
What other cloud providers are pledging in the region
This pledge by Alibaba to upskill both individuals and businesses follows Microsoft’s announcement in April that it was planning to upskill Malaysia’s population and would invest US$1bn over the next five years to build a new data centre centre in Malaysia.
This is the latest in a long line of pledges to the region by the US tech giant, which is fast accelerating the growth of its cloud datacenter footprint in Asia, expanding form seven 11 markets, and recently adding three new markets across Asia – Malaysia, Indonesia and Taiwan. Back in February, it announced plans to establish its first datacenter region in Indonesia and to skill an additional 3 million Indonesians to achieve its goal of empowering over 24 million Indonesians by the end of 2021.
And recent research by IDC shows that Microsoft’s most recent datacenter expansions in Malaysia, Indonesia and Taiwan alone are set to generate more than US$21bn in new revenues and will create 100,000 new jobs in the next four years.
Also last month, Tencent announced it has launched internet data centres in Bangkok, Hong Kong, Tokyo to add to its second availability zone opened in Korea last year and plans to add an internet data center in Indonesia, and Google has also been pushing into the enterprise space in Southeast Asia for several years now.
Expanding data centers allows cloud providers to boost their capacity in certain countries or regions.