Yota banks on design, pricing to ring in profit

The YotaPhone, Russian President Vladimir Putin's 2014 gift to President Xi Jinping, is entering the Chinese smartphone market with a one-of-a-kind design, an unexpected price and a surprising business partner.

With its second-generation device, Yota Devices is hoping to alter the landscape of the world's largest smartphone market with its unique dual-screen design, said Vlad Martynov, founder and CEO of the Moscow-based smartphone vendor.

"We view this as a game changer," Martynov said at a launch event on Wednesday at the Russian embassy in Beijing.

He said he hoped the dual-screen design and other cutting-edge functions, including wireless charging and near-field communication technology, will attract tech-savvy buyers making the model a market leader in innovation.

The YotaPhone 2 is also installed with a Kindle-like, always-on electronic paper display on its back so users can read books, short messages or browse photos.

Yet the device is still priced very much in line with peers, selling at 4,888 yuan ($789), just 400 yuan cheaper than the iPhone 6.

Song Xiaodong, CEO of Yota's local sales partner JieLan Ltd, said the price will include telephone charges, and unlimited access to online books and videos provided by local partners.

"We are providing an all-around service to buyers, so the device is not expensive at all," Song said.

Yota also unveiled a surprising partnership at the event.

Lenovo Group Ltd, the world's No 1 personal computer maker and also a smartphone maker, will help it with after-sales services, such as device repair.

Song did not go into details of the deal, but said the Chinese company's vast national outlet network, especially in smaller cities, will be a vital resource for Yota.

The executives refused to give any sales targets, but Song said he expected one or two smartphone users out of 10 to be using the device by 2016.

Wang Jingwen, a Shanghai-based analyst with Canalys China, said vendors are currently working hard to introduce new ways of competing with each other.

"The marketing is becoming more mature. There is hardly a chance for anyone to enjoy rapid growth in China like Xiaomi Corp did several years ago," Wang said, adding the Yota will be considered a niche product, focused on its screen features and long battery life.

Yota is entering China as the country's smartphone market saw its first quarterly decline in sales in six years.

Kitty Fok, director of research firm IDC China, said the 90+ percent handset penetration rate and wide range of product options available indicate a mature market similar to the United States and Europe, adding emerging players are set to find competition even harder.

On the same day as Yota revealed its China strategy, Guangdong-based niche player OPPO Electronics Corp also introduced its latest flagship handset, targeting younger buyers.

The Chinese company has set a much-lower price tag for its devices than Yota, and pledged to expand overseas too.

Sky Li, OPPO vice-president and managing director of international development, said: "We have tried to understand the different needs that global customers might have. We rely on localization to develop new products, listening to people's local needs and preferences."

Emma Gonzalez contributed to this story.