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Apple iPhone, Samsung Galaxy challenged by TCL with 'Iron Man'

A new iPhone 5 is displayed at an

A new iPhone 5 is displayed at an Apple Store on in San Francisco. (Sept. 22, 2012) Photo Credit: Getty Images

To take on Apple Inc. and Samsung Electronics Co. in the global smartphone market, China's TCL Corp. is enlisting a strong ally: the movie character 'Iron Man.'

In a product-placement deal for Paramount Pictures Corp.'s third "Iron Man 3" movie, Robert Downey Jr.'s character, Tony Stark, will battle his latest nemesis, Mandarin, using TCL products. Some real-world features, such as handheld devices interacting with televisions, will be replicated on-screen.

TCL, which also makes camcorders and rice cookers, is doing whatever it can to move upmarket, a familiar path taken in previous decades by Japanese and South Korean electronics and car companies. Along with its Chinese competitors ZTE Corp., Huawei Technologies Co. and Lenovo Group Ltd., TCL is seeking to expand sales and brand credibility by convincing overseas consumers that their smartphones are just as advanced and appealing as those offered by market leaders.

"I think they are good enough for a certain segment of the market," Andy Hargreaves, an analyst at Pacific Crest Securities Llc in Portland, Ore., said in an interview. "It's a pricing game, if they can come in with a lower price, they can probably gain share."

More than 1.2 billion smartphones will be sold this year, according to Gartner Inc., surpassing record sales of 821 million units in 2012. Consumers and businesses are increasingly opting for versatile and powerful handheld devices over personal computers, the Stamford, Conn.-based researcher said.


Founded in 1981, TCL, based in Huizhou, China, is a seller of appliances, telecommunications devices and home electronics. Apart from its own brand, the company, which employs 60,000, manufactures Thomson TVs and Alcatel mobile phones, according to its website.

"I believe our new generation of products are as good as those from Samsung and Apple," TCL co-founder and chairman Tomson Li said in an interview at the International Consumer Electronics Show in Las Vegas last week. "This 'Iron Man' cooperation is very useful for us to promote the TCL brand in the global market, including the U.S. and China."

To support the marketing effort, Li sealed a deal last week to rename Grauman's Chinese Theater in Los Angeles as TCL Chinese Theater, buying naming rights for the cultural landmark along the Hollywood Walk of Fame.

Even so, movie magic and impressive technical specifications may not be enough to persuade buyers and retailers to take a risk against more established names, according to Stephen Baker, an analyst at NPD Group Inc.

"They don't have a track record," Baker said. "Consumers don't know who they are, but also distribution channels don't know who they are, or don't trust them. If that's what they think it takes to get trust and sales, then there's a misreading of the electronics business in general."


Lenovo, the world's second-largest PC vendor, is another company trying to expand its global footprint with smartphones. While it's the only Chinese enterprise to rank among the world's top technology brands, the Beijing-based company still trails Apple, Samsung and Sony, according to research firm Strategy Analytics.

Chief executive Yang Yuanqing is betting that Lenovo's computing credentials will convince consumers to cross over to its mobile devices.

"We call our strategy a PC-plus strategy. When a phone becomes a smartphone, the voice conversation is not a key use," Yang said at CES. "Surfing the Internet and checking email becomes the key application, so that's similar to a PC."


Lenovo plans to increase its marketing budget this year with a focus on consumer devices such as its K900 smartphone and Yoga touch-screen laptop, Yang said. The Horizon Table PC, another product unveiled at CES, features a 27-inch touch-screen panel that enables multiple users to play games.

"We don't have a strong brand," Yang said. "Particularly with smartphones, you need to expand into the telecom channels, you need to spend money." He said he expects Lenovo's handsets to break even "soon" as they are introduced in markets outside of China, including Russia and Vietnam.

For ZTE and Huawei, the world's No. 4 and No. 6 mobile- handset vendors, moving from low-end feature phones to high-end smartphones depends on persuading consumers and wireless carriers that their devices are just as good, reliable and functional as their more famous competitors.

"ZTE is one of the best in terms of quality," ZTE's U.S. unit chief, Cheng Lixin, said during CES. He estimates ZTE is ranked fifth with 5 percent of the U.S. market. "Our return rate at AT&T is below 1 percent."

More than 63 percent of ZTE's sales come from Asia, including 46 percent from China, according 2011 data compiled by Bloomberg.

During CES, Huawei's product demonstrations included consumer marketing officer Richard Yu pouring water on the Shenzhen, China-based company's latest handset before dropping it on the ground to prove its hardiness. Another device with what was billed as the world's largest smartphone display, at 6.1 inches, may help Huawei gain attention as it plans to become more competitive in the high-end market, Bloomberg Industries analyst John Butler wrote in a report.

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