No-contract strategy attracts customers

China's ZTE Corp is getting the jump on its rivals in the no-contract mobile phone market by transforming itself into a smartphone maker that big US carriers can no longer take for granted.

ZTE's 85.7 percent surge in first-quarter sales compelled research firm Strategy Analytics to name it the fastest-growing US smartphone vendor of the past year. ITG Market Research ranked the Shenzhen-based maker of telecommunications gear the third-largest US smartphone maker, with 17 percent of the nation's prepaid handset market, trailing only South Korea's Samsung Electronics Co and California's Apple Inc.

"Our strategy's working," Lixin Cheng, CEO of ZTE USA, told online technology news outlet Engadget in a recent interview.

Notably, ZTE - the subject of a US Congressional investigation last year over concerns that its work with telecommunication companies constituted a threat to national security - is beating big-name rivals such as Sony, HTC and LG without any major smartphone releases in the United States.

But while its success in the pre-paid market has boosted its US brand awareness, ZTE still aims to market its more lucrative high-end phones to Americans, no small challenge in the fiercely competitive US marketplace.

Asked when ZTE would bring flagship phones like its Grand S or Grand Memo to the US, Cheng told Engadget, "We are working on that, and I think that very soon we will announce some good news." The Grand S has a 5-inch (12.7 cm) screen and 6.9mm thin body shell. The Grand Memo is a 5.7-inch smartphone/tablet hybrid.

Almost all of ZTE's 18 US-released phones have gone to the pre-paid, or pay-as-you-talk market - in which users can top up their balance at any time using a credit card, paying through an ATM, or buying a refill card, among other methods.

Prepaid phones - which may have a time limit such as 90 days from the last credit addition - are an alternative to mobile phone contracts, which involve a billing arrangement that can last anywhere from 30 days to 24 months.