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How ZTE became the focal point of US/China relations

Here in the States, ZTE has been content with a kind of quiet success. The Chinese smartphone maker has landed in the top five quarter after quarter (sometimes breaking the top three, according to some analysts), behind household names like Apple, Samsung and LG. Suddenly, however, the company is on everyone’s lips, from cable news to the president’s Twitter account.
It’s the kind of publicity money can’t buy — but it’s happening for one of the worst reasons imaginable. ZTE suddenly finds itself in the eye of a looming trade war between superpowers. Iranian sanctions were violated, fines levied and seven-year international bans were instated.
It’s like a story ripped from the pages of some Cold War thriller, though instead of Jason Bourne, it’s that one budget smartphone company that you’ve maybe heard of, who maybe makes that weird Android phone with two screens.
So, how did we get here?
ZTE began U.S. operations in 1998, a little over a decade after forming in Shenzhen (and a year after going public in China) as Zhongxing Semiconductor Co., Ltd. The change of name to Zhongxing Telecommunications Equipment reflects the newfound focus for the company, which employees around 75,000 and operates in 160 countries.
While ZTE has flirted with premium and sometimes bizarre devices, in the smartphone world, the company is primarily known for its budget hardware. It’s no coincidence that the company was tapped by google to be the first to run Android Oreo Go Edition (nee Android Go). The manufacturer has found particular success in the developing world, while making significant gains in the U.S. by releasing dozens of low-cost devices targeted at prepaid users.
In recent years, however, the company has come under increased scrutiny on two fronts. First, there’s the issue of the company’s perceived ties to the Chinese government. It’s the same thing that’s tripped up fellow Chinese handset manufacturer Huawei in its pursuit of the U.S. market.
In Huawei’s case, multiple warnings from top U.S. security agencies has severely hobbled any chance of making significant headway in this country. The company kicked off the year with the one-two punch of having AT&T pull out of a deal last minute, only to have Best Buy stop restocking its product on store shelves. ZTE, on the other hand, has run into less headwind there.
In February, top officials at the FBI, CIA and NSA all warned against buying product from both companies over remote surveillance concerns and later ending their sale at military bases. But after making significant inroads through non-contract carriers like Boost, Cricket and Metro PCS, the warnings appear to have had little impact on the company.
The same, however, can’t be said of a seven-year ban.
In 2016, the U.S. Commerce Department found the company guilty of violating U.S. sanctions. The department disclosed internal documents from the company naming “ongoing projects in all five major embargoed countries — Iran, Sudan, North Korea, Syria and Cuba.” That’s a big issue when selling a product that contains, by some estimates, a quarter of components created by U.S. companies — not to mention all of the Google software.
The following year, the company pleaded guilt and agreed to a $1.19 billion fine, along with the stipulation that it would punish senior management for the transgression. Last month, however, the DOC said ZTE failed to live up to the latter part of the deal, issuing an even steeper fine as a result.
“ZTE misled the Department of Commerce,” the department said in a statement to TechCrunch at the time. “Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored.”
The new punishment bans U.S. component manufacturers from selling to ZTE for seven years. A few days later, the company told TechCrunch that the export ban would “severely impact” its chances of survival. And then, last week, the company ceased major operating activities.
“As a result of the Denial Order, the major operating activities of the company have ceased,” it wrote in an exchange filing. “As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject in compliance with laws and regulations.”
In the meantime, the company was reportedly meeting with companies like Google in hopes of figuring out a workaround, while China was said to be meeting with U.S. officials to discuss the steep ban. For some, the ZTE ban was seen as a political move amidst a potential trade war, and a major roadblock toward negotiations.

President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
— Donald J. Trump (@realDonaldTrump) May 13, 2018

That leads us to Sunday, when Trump tweeted, “President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!”
Job loss in China seems like an odd motivator for any U.S. president, let along Trump, but things make significantly more sense when you consider the sheer size of a company like ZTE. If a U.S. trade ban caused the company to fold, it’s easy to see how that could severely impact already tenuous relations between the two countries.
“The Chinese have suggested that ZTE was a show-stopper,” international studies expert Scott Kennedy succinctly told NPR, “if you kill this company, we’re not going to be able to cooperate with you on anything.”

The Washington Post and CNN have typically written false stories about our trade negotiations with China. Nothing has happened with ZTE except as it pertains to the larger trade deal. Our country has been losing hundreds of billions of dollars a year with China…
— Donald J. Trump (@realDonaldTrump) May 16, 2018

And that brings us to this morning — and other Trump tweet. “The Washington Post and CNN have typically written false stories about our trade negotiations with China,” Trump writes. “Nothing has happened with ZTE except as it pertains to the larger trade deal. Our country has been losing hundreds of billions of dollars a year with China[…]…haven’t even started yet! The U.S. has very little to give, because it has given so much over the years. China has much to give!”
Those tweets, it should be noted, were most likely posted in reaction to bipartisan concern about Trump’s focus. “#China intends to dominate the key industries of the 21st Century not through out innovating us, but by stealing our intellectual property & exploiting our open economy while keeping their own closed,” Marco Rubio tweeted earlier this week. “Why are we helping them achieve this by making a terrible deal on ZTE?”
So things are weird. And it’s 2018, so expect that it will only get weirder from here.

How ZTE became the focal point of US/China relations

Personalized News App Zite Comes To Android

Top Stories page

Zite, the newsreading startup acquired last year by CNN, is launching its Android app today.

Co-founder Mike Klaas demonstrated the app for me earlier this week. The interface and features should be pretty familiar to anyone using the previous versions. You enter your Facebook or Twitter information, then Zite brings up a stream of stories that are likely to interest you. You can improve the app’s understanding of your tastes by hitting the thumbs up or down button for each article. And you can import your account if you’ve already set one up on a different device. (Klaas says there’s a fair amount of overlap between iPhone and iPad users, but he’s not sure whether that’ll be the same with Android — “The question is, what tablet do Android users use?”)

The new app integrates with Android’s sharing features, making it possible to hit one button and share via pretty much any method or social network you want.

For a relatively small company, Zite has been moving pretty quickly onto new devices. It launched on the iPad, then released its iPhone app in December of last year. Flipboard, on the other hand, has a larger team (Klaas says Zite runs as a largely independent unit inside CNN and currently has 11.5 full-time employees) and is currently available only for the iPad and iPhone.

Klaas says that one of Zite’s advantages is that “although we try to have a really good, clean UI, that’s not the value proposition.” Instead, Zite’s focus is on searching far and wide across the Web for news stories, and delivering genuinely personalized content — technology that carries over onto any platform.

You can download the Android app here.


Personalized News App Zite Comes To Android

Scribd Has 100M Users And A Mobile App It Needs To Rethink (After Yahoo Walked Away From A Deal)

Float screen shot (scribd)

Started originally as a ridesharing service, then pivoting to become a document uploading and reading service, Scribd now has 100 million registered users, with 90 million monthly active users. That makes it probably the biggest effort of its kind, but leveraging that size hasn’t always been easy.

Scribd, TechCrunch has learned, is at a crossroads in mobile — a crossroads that almost saw the company sell its iOS mobile news aggregation app, Float, to Yahoo.

When Float launched in July 2011, it was off to a good start: 150 partners at signup, including biggies like the AP; with that number eventually growing to 200. It has also regularly made the top-15 rankings for reading and news apps on the App Store, and in the last three months has seen the number of active engaged users of the app go up 30 percent month over month.

And then there is that Yahoo approach: According to our sources, Yahoo approached Scribd with an offer of between $2 million – $8 million for the mobile app, among interest from a “few other companies.” (Those discussions did not progress and Yahoo apparently walked away in February; more on that below.)

But all that demand still didn’t stack up against bigger issues: formidable and buzzy competitors; and how much the app was actually used — which (even with the growth) is not enough to drive the business model Scribd had wanted to attach to it: advertising plus all-you-can-read subscriptions — the “Netflix of reading” as Jason K. wrote at the time of launch.

The story is a kind of cautionary tale about what it takes to make an app a hit, and just how crowded the market really is for new apps.

“When we originally launched Float, Scribd wanted it to be Instapaper and Read It Later and Readability: all of those things and more,” a person close to the company told me. “But in the fall we had a zillion more competitors on top of all of them.” Also not helping things: Flipboard upgrading and expanding to the iPhone, Zite getting re-infused when it got bought by CNN, and Pulse continuing its partnerships and content expansion.

Now, with no one else knocking on the door, Scribd is rethinking Float, folding the effort back into the main Scribd operation. Already, most the staff that had been assigned to work on the app have been redeployed back to the main company. A spokesperson says that there haven’t been any layoffs, though: there were 40 full-time before Float, and there are as many now.

Scribd is also getting ready to release a new version of the app, with Float’s branding sinking (ahem) in favor of Scribd’s own name. (And, unless Scribd always wondered if Float would eventually spin off anyway, that was probably what they should have done in the first place.)

No firm date has yet been set for the relaunch, TechCrunch understands.

There have been some developments at the company that hint at what Scribd plans to do next in mobile: it has apparently now converted everything to be HTML5-friendly, a project it had started in 2010. That opens the door to the company creating an app that lets users access all of Scribd, not just a selection of sources, and across a range of screens.

And after last raising a Series C round of $13 million in January 2011, the company is “very close to breakeven” on its main business. That potentially gives it the flexibility to focus a bit more on what happens in mobile, but in a way that is an extension of what it already does on the web, rather than as a separate venture.

The coda to this story: why would Yahoo want to buy Float? The likely reason was to complement the more visually-led reading app that it has created with Livestand, and to continue its attempt to make itself relevant in the new mobile world.

On one side, the idea of buying a reading app makes complete sense for Yahoo, still a popular destination for news, to think about better ways of delivering that to mobile users — especially since it has cleared the decks of 10 apps, including its news app, that weren’t working so well for the company.

On the other side, it points to some curious thinking that doesn’t seem to be in line with CEO Scott Thompson’s emphasis on focusing on harnessing the talent it already had in house.


Scribd Has 100M Users And A Mobile App It Needs To Rethink (After Yahoo Walked Away From A Deal)

Four Mistakes Publishers Make When Bringing Content to Tablets

new york times ipad

Editor’s note: Mitch Lazar is the CEO of news reader startup Taptu. He was the founder or co-founder of CNN.com, CNN Mobile, and Cartoon Network Mobile.

Many revolutions have been televised, but the publishing revolution has already become digitized, and now, mobilized.

There’s no doubt that the second half of 2011 was a difficult period for newspaper and magazine publishers. An Audit Bureau of Circulations report revealed that single-copy sales of consumer magazines dropped by nearly 10 percent in a year, while the five magazines with the highest newsstand sales all reported sharp declines as well. Most importantly, the fall in sales has hit revenues, making it more important than ever for publishing businesses to rapidly modernize their trade.

As readers move toward tablets and mobile phones, there’s no question that these new reading devices will dictate the success and failure of the media industry. Successful publishers will be able to reincarnate their digital content onto these gadgets. So why are so many publishers stumbling in their mobile strategy? From over committing to a multitude of mobile platforms, to underwhelming app experiences, we’re seeing a lot of mistakes that should not be repeated:

1. Trying and failing to reinvent the wheel.

Many big and small publishers have top-notch tech teams and significant resources, but often fall into the trap of believing that only the teams inside their own building can create the best platforms and experiences. Not true.

Partnerships are the prime way big and small media companies can succeed in building their audiences in the new media world. Small startups are creating amazing technology that can help publishers grow their distribution plans. By tapping into these talented, focused teams, the publishing world can quickly distribute content in a compelling and engaging way using tomorrow’s trends, not yesterday’s opportunities.

Don’t reinvent the wheel, because by the time you do, a new wheel will already be in motion.

2. Getting left out of the mix.

If you think about it, listening to music on the radio or going clubbing exposes you to great new tunes you may not have discovered. Thanks to DJs, and discovery services, we all find new music we love and want to share. This curation and sharing experience has now come to the world of digital publishing. Modern social news aggregators are essentially content DJs that deliver awesome content to consumers through a fun and easy experience, whether that be via flicking, tapping or flipping a device screen. Publishers that are getting this right are experiencing booms in their digital readership solely due to the fact that new discovery tools and networks like Facebook and Twitter turn on new readers to great recommended content.

News needs distribution. In the old days, publishers put their newspapers under the door of every hotel room, at the front door of many homes or at the street corner. Today success is determined by how well publishers join and participate in social media and the news revolution. Discovery services like news readers can help.

Sadly, some publishers have avoided these discovery tools. They’ve wanted their content to only live in their controlled spaces, or have channels that include only their sourced and created content. But consumers are demanding more. Through news readers, they are browsing and uncovering new content and sources they never knew existed by taking advantage of search technologies that create serendipity for discovery, sharing and recommendations.

News reader users are building streams of curated topics across genres and receiving a plethora of content from editors across publications. Take the Super Bowl, for example. In days gone by, you had to hunt and peck your way through each editorial version of ESPN, CNNSI or Yahoo Sports. Now, you can DJ your own news mix to see what sports editors and the social crowd are saying about every aspect of the Super Bowl, making the user experience engaging, time saving, and far and away supreme to traditional news searches. When users like what they see, they share stories with their friends, families and followers—proving themselves a key ingredient for successful distribution. In the end, news readers and other discovery services drive more people back to media destinations where the cash register rings.

3. Ignoring brand potential.

Big branded publishers have an amazing treasure trove of content at their fingertips from many different brands or labels. They create enormous amounts of content every day. In fact, some of the largest media companies have several amazing newspapers or magazines in their stable, but many have not ventured into mixing and mashing content from their various publications into a new and exciting branded experience.

In this fast changing digital landscape, the time is ripe to test the waters for launching new aggregated services. The cost is not great and the upside can be very rewarding. It puts a spin on traditional distribution, and focusing on one deep vertical with existing brands lets publishers try new distribution strategies without cannibalizing their existing audiences and revenue.

Take Glo from MSN, for example. In collaboration with Hachette Filipacci Media and BermanBraun, they built a top lifestyle destination for women with a brilliant mix of aggregated media from across their stables of content. Using existing content from their print worlds, they created a new avenue for digital audiences to consume their great content, while taking advantage of an opportunity to build a new business at a relatively low cost.

4. Searching in the wrong places.

Distribution and discovery of publisher content used to take place primarily in traditional search engines like Google, Yahoo!, and Bing with traditional investments in search engine optimization (SEO) techniques that led users seeking one particular query to discover content from another related outlet. Content tagged a certain way shows higher up in the algorithmic search results, prompting users to click on it and publishers to receive the benefit of picking up greater share of audiences when SEO is done right. It’s a type of free advertising publishers and media owners have used in their distribution plans. However, news readers like Taptu, Flipboard, Pulse and Zite are demonstrating the modern form of SEO, where users discover and share stories that have the perfect context and relevance to each user.

While reading a stream of content, people are exposed to related stories or served up other similar stories from a variety of publishers, leading users to share, tweet or follow links back to large media and publishers. So, for example, if a user searches ‘NFL mock draft 2012,’ they will instantly find a variety of new sources that have become experts on the topic like Walter Football. Walter who? Yes, Walter Football. Welcome to the new world of mobile search.

In speaking with more than 100 digital publishers across the world, the consistent thing we hear is, “We know mobile is critical, but going mobile is easier said than done.” Hopefully the publishing industry can learn from what I see every day and take simple, cost-effective steps towards winning in mobile without letting history repeat itself.


Four Mistakes Publishers Make When Bringing Content to Tablets

U.S. Government & Military To Get Secret-Worthy Android Phones

hardware

The amount of stuff we trust to fly in and out of our smartphones is astounding. Just look at what happened when a couple of reporters got access to an unwitting (and rather unlucky) Apple employee’s iMessages alone — within days, they learned more about him than most people know about their closest friends.

Now, imagine all the stuff that could fly in and out of a government official’s phone, or that of a highly-ranked member of the military. Forget saucy texts and booty pictures — we’re talking about state secrets, here.

Looking to keep their secrets underwraps while on the go, the U.S government is working on a build of Android custom-tailored to meet their security requirements.

Word of the project comes from CNN, who notes that U.S. officials/soldiers aren’t currently allowed to send any classified data over their smartphones. If they need to transmit anything that might sink ships (so to speak), they currently need to find a secured (generally meaning hardwired) line hooked to an approved device.

Here’s the gist of the project:

  • A limited number of soldiers will get the phones first, then federal agencies, then possibly contractors
  • The U.S. won’t be building their own hardware — that’d be too expensive. Instead, they’ll be buying commercially available devices and reflashing them.
  • They hoped to be able to offer iOS devices, but it’s not going to happen. CNN notes that federal officials met with Apple to request that they share their source — as you’d probably guess, Apple wasn’t too cool with that idea.
  • Surprisingly, users of the handsets will be able to install new applications, though the handsets will put a specific emphasis on exactly what information the application can access and what it’s currently sending. Seems unlikely that they’d give these things full Android Market access, though — that’d be rather silly.
  • The project is being funded by DARPA, with the NSA evaluating it as they go (while working on a version of their own, curiously.)

Most of the project’s details are still underwraps, but this is all still rather interesting. What hardware might they use? If DARPA makes any substantial security improvements to Android’s kernel, might that work make it back to the official branch? Might this work eventually be monetized (remember, Siri was born as a DARPA project) and offered to enterprises looking for a locked-down version of Android — and what does that mean for RIM/BlackBerry?


U.S. Government & Military To Get Secret-Worthy Android Phones