ZTE Attempts To Double Marketshare

China’s ZTE Corp, the world’s seventh-largest smartphone maker, wants to nearly double its U.S. market share in the next three years by increasing spending on marketing.

ZTE, which trails nearby rival Huawei Technologies Co Ltd in selling both smartphones and telecoms equipment, wants more share of the fat profit margins promised by sales of high-end phones in the United States.

But the company needs to first work on its image. Its mainstay telecom equipment business was essentially shut out of the U.S. and other markets after government officials flagged security concerns about Chinese-made equipment.

ZTE targets a U.S. market share of 10 percent by 2017 from 6 percent in 2013, Lv Qianhao, global marketing director of mobile devices, told Reuters at a company event on Thursday.

That would place it a distant third behind Apple Inc with 41 percent and Samsung Electronics Co Ltd with 26 percent, according to September-November data from researcher comScore.

To that end, ZTE will increase its U.S. marketing budget by at least 120 percent this year from last, Lv said without elaborating. Like other Chinese handset makers, ZTE is grappling with low brand awareness in the world’s second-largest smartphone market and perceptions of inferior quality.

Samsung Electronics, which earns around two-thirds of its operating profit from its mobile division, spent $597 million on marketing in the United States in 2012, according to researcher AdAge.

Last year, ZTE signed a deal with the Houston Rockets basketball team and released a Rockets-branded phone.

“We want young U.S. consumers to participate in our marketing activities, so we will have more NBA (National Basketball Association) stores and channels that sell our products,” Lv said.

Globally, ZTE aims to ship around 60 million smartphones this year compared with about 40 million smartphones last year, said Senior Vice President Zhang Renjun.

The company sees much of that growth in developed markets – including Russia and China- which accounted for 68 percent of mobile device revenue last year compared with 35 percent in 2007, said Lv.

ZTE’s mobile device business sells feature phones as well as smartphones. It was the fifth-biggest mobile phone vendor in July-September, according to researcher Gartner, though it fell out of the top five smartphone sellers list in the same period.

ZTE expects to have swung to a profit for last year having booked its first-ever loss as a public company in 2012.

It based its turnaround on cutting costs, signing fewer low-margin contracts, and winning contracts to build fourth generation telecommunication networks.

The company expects global investment in 4G to reach $100 billion this year, Zhang said.

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Can Acer Go High-End?

Most popular for its low-cost laptops, Acer doesn’t really inspire thoughts of premium products. But building high-end hardware could be the Taiwanese vendor’s best chance as it looks for a way to rescue its struggling business.

With consumers flocking to tablets and smartphones, Acer’s once-thriving PC business has been left in the dust. Quarterly financial losses have become routine at the company and its PC shipments declined more sharply in the past year than at any other major vendor, according to IDC.

The grim situation forced CEO J.T. Wang to resign from his post last Tuesday. Acer will also cut 7 percent of its global workforce and has assembled an advisory committee to come up with a new strategy, the company announced.

Bright spots are hard to find. The Wintel model that propelled Acer for years and helped it become the second-largest PC vendor in 2009 has been falling apart amid the demand for mobile gadgets. And Windows 8 and Intel’s Ultrabook strategy have failed to resuscitate the market.

It hasn’t helped that Acer is so reliant on sales to consumers, said IDC analyst Bryan Ma. The entire PC industry has been hurt by tablets, but Dell and Hewlett-Packard have at least managed to find cover selling PCs to businesses, which are still buying them. And Lenovo has capitalized on its position in China, now the world’s largest PC market.

“Acer didn’t really have the commercial PC business to protect themselves. That’s why they were hit harder,” Ma said.

Acer — whether to its benefit or detriment — has instead gained a reputation for low-priced PCs. Even in tablets it has tried to undercut rivals — its Iconia W4, an 8-inch Windows 8.1 tablet, starts at US$329.99, while its Iconia B Android tablet goes for $129.99. The low prices have helped keep the company on consumers’ radar, but at the expense of profits.

One option for Acer is to build a brand as a higher-end PC player. It took a step in that direction last year with the Aspire S7, a Windows laptop with a slender, aluminum chassis that sells for $1,200 and up. That product and its successors have had some success for the company, with sales of 2,000 to 3,000 units per month, said James Wang, an analyst with research firm Canalys.

“I think Acer has started to learn they are able to sell some expensive products,” he said.

Selling higher-end PCs could help stop the bleeding in Acer’s finances, but with the overall PC market still shrinking it’s unlikely to help it expand in any meaningful way. “You can’t really expect vendors in desktops and notebooks to find growth,” Wang said. “You win in the market by not falling in shipments.”

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Will Google’s Project Shield Work?

Google has opened Project Shield, its service for small websites that don’t have the forces to repel denial of service attacks that might come their way.

Google introduced the service on Google+, saying that it is aimed at websites that might otherwise be at risk of online disruption.

“Project Shield, [is] an initiative that enables people to use Google’s technology to better protect websites that might otherwise have been taken offline by “distributed denial of service” (DDoS) attacks. We’re currently inviting webmasters serving independent news, human rights, and elections-related content to apply to join our next round of trusted testers,” it said.

“Over the last year, Project Shield has been successfully used by a number of trusted testers, including Balatarin, a Persian-language social and political blog, and Aymta , a website providing early-warning of scud missiles to people in Syria. Project Shield was also used to protect the election monitoring service in Kenya, which was the first time their site stayed up throughout an election cycle.”

Interested websites should visit the Google Project Shield page and request an invitation to the experience. They should not try to do the same at Nvidia’s website, as they will probably just come away with a handheld games console. This will not offer much assistance against DDoS attacks.

According to a video shared by Google last night, Project Shield works by combining the firm’s DDoS mitigation technologies and Page Speed Service (PSS).

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MediaTek’s Octa-Core Processor Tested

MediaTek raised quite a few eyebrows earlier this year when it announced it would build the world’s first proper ARM octa-core, not a big.LITTLE design. The MT6592 has now popped up on a Chinese site, with the first Antutu results.

It scored 25,496, which places it behind the 1.7GHz Snapdragon in the HTC One, but it’s still a lot faster than the Nexus 4’s Qualcomm APQ8064, although throttling may have something to do with that. The score seems too high, but not long after the results emerged, a number of mobile sites started talking about disappointing results, claiming that MediaTek’s octa-core was somehow supposed to end up on a par with Samsung’s latest Exynos 5 big.LITTLE chip and the Qualcomm 800.

This of course is utter rubbish and FUD of the highest order.

The 28nm MT6592 is indeed an octa-core, but it has eight A7 cores, not a combo of A15 and A7 cores. The A7 is about one fifth of the die area of an A15 and according to ARM it consumes one quarter to one fifth of the power, making such comparisons asinine. In other words, MediaTek’s octa-core should end up a lot smaller and cheaper than a quad A15, maybe even a quad A12. That is why we find the 25,496 result hard to believe – it should be less, not more. For example, the Tegra 4 on Shield hits about 36,000, yet it’s a much bigger chip, on a device with more RAM.

The benchmarked chip ran at 1.7GHz, but MediaTek said the MT6592 should have no trouble hitting 2GHz, which could make it faster than a Snapdragon 600. What’s more, the tested device featured 1GB of RAM, 720p display and a Mali-450 GPU, so it is clearly not high-end.

However, the big problem for MediaTek’s curious new SoC is the sheer number of cores. Most apps simply can’t put them to good use and unless MediaTek has a clever trick up its sleeve, the chip might not be nearly as fast in real world applications. It does look promising in benchmarks, though.

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Is Lenovo Eyeing Blackberry?

Lenovo reportedly has joined the list of possible Blackberry buyers, with the firm reportedly having approached the struggling Canadian phone maker.

The Wall Street Journal reported that Lenovo, despite previously denying that it was mulling a Blackberry buy (paywalled), has been given the thumbs up to cast an eye over the Canadian company’s books before making it a possible offer.

If reports are to be believed, Lenovo has joined a list of possible buyers that includes Intel, Cisco, SAP, Google, Samsung and LG.

Specific details of Lenovo’s possible acquisition are yet to be revealed, but as a newcomer to the smartphone market Lenovo recently admitted that it is selling more smartphones than tablets and PCs in China, despite being one of the only PC makers to continue showing sales growth.

However, Lenovo’s smartphone portfolio is yet to appear the UK, and the firm hasn’t seen much success outside China. However, picking up Blackberry could help Lenovo enter the global smartphone market, and the firm could be looking to take over from Blackberry as a phone maker focused on business professionals.

Lenovo might have a hard time closing a buyout deal for Blackberry, though. Rumours about a takeover have already led to speculation that such a buyout would struggle to get approval from the US and Canada, due to the company’s Chinese ownership and the fact that Blackberry does business with sensitive parts of both governments.

Blackberry didn’t comment on a possible Lenovo buyout, but instead put out its usual vague statement. A company spokesperson said, “The special committee, with the assistance of Blackberry’s independent financial and legal advisors, is conducting a robust and thorough review of strategic alternatives.”

Lenovo declined to comment on the report.

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HTC Cutting US Jobs

In another sign of trouble at HTC, the Taiwan-based mobile device maker began downsizing its U.S. operations on Friday, eliminating an undisclosed number of staff.

The move is meant to “streamline and optimize” the company’s U.S. organization “after several years of aggressive growth,” HTC said in a Monday email. A company spokeswoman declined to specify how many employees would be affected.

“However, to achieve our long-term goals as a business and return maximum value to our shareholders, this is a necessary step to drive ongoing innovation,” the company said.

HTC has been facing a difficult year on weak earnings that have sent its stock price tumbling. In the second quarter, its net profit plummeted 83 percent year-over-year, despite strong reviews for its flagship smartphone, the HTC One.

The weak financials are major change from only a couple years ago when HTC was riding high selling Android smartphones in the U.S. But starting in late 2011, the company’s net profit has sagged on increased competition from Samsung and Apple.

To recover, HTC has focused on building up its “One” smartphone brand. In addition, the company has expanded its China presence, and in August launched a new marketing campaign that’s enlisted Hollywood actor Robert Downey Jr.

While the company has largely focused selling high-end handsets, in July HTC said it was planning on selling more mid-tier and entry level phones to regain market share. The new phones will launch at end of the third quarter or early fourth quarter.

But the company’s troubles go beyond issues with smartphone sales and marketing. In September, Taiwanese authorities arrested three HTC employees for allegedly stealing company secrets. One of the employees arrested was Thomas Chien, HTC’s vice president of product design.

HTC has declined to offer further details on the case.

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HTC Exec Leaks Trade Secrets

Three HTC Corp design executives were arrested on suspicion of illegally sharing trade secrets, sending the Taiwanese smartphone maker’s shares tumbling as its troubles deepened amid a wave of senior staff departures and disappointing sales.

Taipei prosecutors confirmed that HTC vice president of product design Thomas Chien, research and development director Wu Chien-Hung and senior manager of design and innovation Justin Huang were arrested on Friday.

Chien and Chien-Hung remain in custody, while Huang was released on bail, prosecutors office spokesman Mou Hsin Huang said.

The executives were also accused of making false commission fee claims totaling around T$10 million ($334,200). No further details about the allegations were immediately available.

The arrests came in response to a complaint filed by HTC last month accusing the executives of leaking trade secrets.

HTC declined to comment except to say the investigation had no impact on its operations. Chien and Chien-Hung could not be reached and Huang was not immediately available to comment.

Media reports citing the police said the executives were planning to use stolen new interface technology to set up a new mobile design company aiming at Chinese vendors.

Rocked by internal feuding and executive exits, and positioned at the high end of a smartphone market that is close to saturation, HTC has seen its market share slump to below 5 percent from around a quarter five years ago.

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FTC Warns Google And FB

The Federal Trade Commission (FTC) has promised that her organisation will come down hard on companies that do not meet requirements for handling personal data.

FTC Chairwoman Edith Ramirez gave a keynote speech at the Technology Policy Institute at the Aspen Forum. She said that the FTC has a responsibility to protect consumers and prevent them from falling victim to unfair commercial practices.

“In the FTC’s actions against Google, Facebook, Myspace and others, we alleged that each of these companies deceived consumers by breaching commitments to keep their data confidential. That isn’t okay, and it is the FTC’s responsibility to make sure that companies live up to their commitments,” she said.

“All told, the FTC has brought over 40 data security cases under our unfairness and deception authority, many against very large data companies, including Lexisnexis, Choicepoint and Twitter, for failing to provide reasonable security safeguards.”

Ramirez spoke about the importance of consumer privacy, saying that there is too much “shrouding” of what happens in that area. She said that under her leadership the FTC will not be afraid of suing companies when it sees fit.

“A recurring theme I have emphasized – and one that runs through the agency’s privacy work – is the need to move commercial data practices into the sunlight. For too long, the way personal information is collected and used has been at best an enigma enshrouded in considerable smog. We need to clear the air,” she said.

Ramirez compared the work of the FTC to the work carried out by lifeguards, saying that it too has to be vigilant.

“Lifeguards have to be mindful not just of the people swimming, surfing, and playing in the sand. They also have to be alert to approaching storms, tidal patterns, and shifts in the ocean’s current. With consumer privacy, the FTC is doing just that – we are alert to the risks but confident that those risks can be managed,” she added.

“The FTC recognizes that the effective use of big data has the potential to unleash a new wave of productivity and growth. Like the lifeguard at the beach, though, the FTC will remain vigilant to ensure that while innovation pushes forward, consumer privacy is not engulfed by that wave.”

It’s all just lip service, of course. Companies might be nominally bound by US privacy laws in online commerce, and that might be overseen by the FTC, but the US National Security Agency (NSA) collects all internet traffic anyway, and makes data available to other US government agencies and even some private companies.

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Chinese Hackers Go After Dissidents

The “Comment Crew,” a group of China-based hackers whose outing earlier this year in major media outlets caused a conflict with the U.S., have resumed their attacks against dissidents.

FireEye, a security vendor that specializes in trying to stop sophisticated attacks, has noticed attackers using a fresh set of tools and evasion techniques against some of its newer clients, which it can’t name. But Rob Rachwald, director of market research for FireEye, said in an interview Monday that those clients include an organization in Taiwan and others involved in dissident activity.

The Comment Crew was known for many years by security analysts, but its attacks on The New York Times, described in an extensive report in February from vendor Mandiant, thrust them into an uncomfortable spotlight, causing tense relations between the U.S. and China.

Rachwald said it is difficult to determine if the organizations being targeted now were targeted by the Comment Crew previously, but FireEye said last month that the group didn’t appear to be hitting organizations they had compromised before.

Organizations opposing Chinese government policies have frequently been targeted by hackers in what are believed to be politically motivated surveillance operations.

The Comment Crew laid low for about four months following the report, but emerging clues indicate they haven’t gone away and in fact have undertaken a major re-engineering effort to continue spying. The media attention “didn’t stop them, but it clearly did something to dramatically alter their operations,” Rachwald said in an interview.

“If you look at it from a chronological perspective, this malware hasn’t been touched for about 18 months or so,” he said. “Suddenly, they took it off the market and started overhauling it fairly dramatically.”

FireEye researchers Ned Moran and Nart Villeneuve described the new techniques on Monday on FireEye’s blog.

Two malware samples, called Aumlib and Ixeshe, had been used by the Comment Crew but not updated since 2011. Both malware programs have now been altered to change the appearance of their network traffic, Rachwald said.

Many vendors use intrusion detection systems to spot how malware sends data back to an attacker, which helps determine if a network has been compromised. Altering the method and format for how the data is sent can trick those systems into thinking everything is fine.

In another improvement, encryption is now employed to mask certain components of the programs’ networking communication, Rachwald said. The malware programs themselves, which are designed to steal data and log keystrokes, are basically the same.

Mandiant’s report traced the hacking activity to a specific Chinese military unit called “61398.” The company alleged that it waged a seven-year hacking spree that compromised 141 organizations.

Rachwald said it is strongly believed the Comment Crew is behind the new attacks given its previous use of Aumlib and Ixeshe. But the group has also re-engineered its attack infrastructure so much over the last few months that it is difficult to say for sure.

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Are Russian Hackers Exploiting Android?

Russian mobile malware factories are working with thousands of affiliates to exploit Android users, a security company has claimed.

According to Lookout Mobile Security the system is so efficient that almost a third of all mobile malware is made by just 10 organisations operating out of Russia. These “malware HQs” are pumping out nasty toll fraud apps, largely aimed at Android users, which force the user to call premium rate numbers the report said.

Thousands of affiliate marketers are also profiting from the scheme and helping spread the malware by setting up websites designed to trick users into downloading seemingly legitimate apps. Affiliates can make up to $12,000 a month and are heavy users of Twitter.

The report’s release at the DEF CON 21 conference in Las Vegas indicated that Lookout Mobile Security are working with the spooks to bring the crooks down. The malware HQs had gone to great lengths to obfuscate and encrypt their code to make detection tricky, but their advertising was pretty brazen.

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