BEIJING -- You’re advised to keep a certain distance when Techfaith’s president Tony Kong demonstrates his company’s inventions. His right arm carves arc through the air as he puts his company’s latest product, a cellphone which can be used as a Nintendo Wii-style games controller, through its paces.
“This is our most innovative design yet,” he says, before taking a swing with the phone, which doubles a virtual racquet for a computer tennis game. On a screen opposite, the ball lands just outside of court.
Techfaith established its reputation in the early 2000s helping multinationals like NEC and Toshiba to manufacture cellphones. But it was never just another Chinese firm churning out products at a low cost. Techfaith’s in-house team of engineers came up with designs for phone components themselves, making incremental improvements on previous designs to produce faster and cheaper cellphones. The firm was successful enough to expand its design team from to 20 to nearly 3,000 in just six years. With help from Lehman Brothers, the firm listed on NASDAQ with a $141 million IPO in 2005.
But the 2008 financial crisis changed everything for the firm. “When Toshiba and NEC’s sales collapsed in 2008 we nearly went bust,” Tan said. So the company had a rethink, and now has a smaller team of just 700 engineers who design original cellphones from scratch. “We’ve completely changed our business model,” Tan said.
A range of “rugged” phones, led by a yellow and black phone named "Jungle" was Techfaith's first attempt at a completely original cellphone. As the name suggests, the Jungle phone is built to withstand extreme conditions. A promotional video (opposite) shows the phone being slowly run over by a truck, submerged under two meters of water and being used to hammer nails into wood. “Every unit of the phone is tested underwater for 20 minutes before it can leave the factory,” Tan said.
Chinese police units are already using a version of the phone, Kong said, and the company sold a version of the phone to a US distributor. Techfaith’s newest prototype can happily be used at a depth of twenty meters underwater, Kong said. “We designed that model so we could apply for a world record.”
Techfaith hopes the rugged phone will stand out enough to enable the firm’s new brand, named Techface, to compete directly with the company’s former partners. “Before we were being controlled by [our partners],” Tan said. “We couldn’t determine our own price point because we didn’t have our own brand,” he said.
Videogame controller phones are also part of the Techface brand building plan. Computer games are hugely popular in China, but sales of games consoles like Microsoft’s Xbox or the Nintendo Wii are banned by the government, creating demand for alternative gaming systems. By making phones which double as wii-style controllers, and which come bundled with a suite of compatible PC games, Techfaith hopes to carve out a new niche in the cellphone market. The firm shipped over 100,000 of its phones in China this year, and launched an Android app which allows any Bluetooth-enabled Android phone to be used as a videogame controller, Kong said.
The firm took its app and phones The US’ biggest hi-tech trade show CET this year. “I think people were surprised that a Chinese firm could come up with products which are this original,” Kong said.
Presence at CET shows that Techfaith hopes to increase its sales in the US and Europe, but the company’s main market is still China, with South East Asia and South America close behind. “It’s easier for us to compete in developing markets, where price is more important,” Tan said. Though sales to developing countries are up, Techfaith’s new brand-building approach is more risky. “Now that we design the whole phone, all the risks are on us,” Tan said. “We have to be very careful.” That advice also applies to where you swing your phone.
Photos: Tom Hancock.