ZTE is learning crowdfunding requires a crowd

Almost halfway through its campaign and the company has raised less than 10 percent of its $500,000 goal.

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Daniel Cooper
January 23rd, 2017
ZTE is learning crowdfunding requires a crowd

A few days ago, ZTE's Jeff Yee posted a mea culpa on a company forum, explaining that his team had made a mistake. He was referring to Hawkeye, the culmination of the CSX project to design a smartphone with suggestions from the community. It was much-hyped, but the phone that emerged at the end was something of a lame duck. With mid-range specs and a key feature (self-adhesion) missing, the device has earned less than $35,000 on a Kickstarter goal of $500,000 half-way through its campaign.

Back in August, ZTE launched CSX (Crowd Sourced X), a project whereby users suggested products that the company could build. Aside from a few rules around originality and realism, people could let their imaginations run (kinda) riot in dreaming up concepts. Around 400 ideas were sent in, which would eventually be narrowed down to five for a final showdown vote.

You'd be forgiven for thinking that ZTE was trying to rig the vote, since three of the final five options were pretty easy picks for a smartphone company. The shortlist included a stock Android phone and smart covers similar to Alcatel's magic flip as well as an eye-tracking, self-adhesive phone. The latter device was designed to be stuck to a wall and used hands-free -- for reading books in the bath or while cooking. At no point was there any serious discussion about how much the device would cost, or that ZTE was thinking about a $199 pre-order price for Kickstarter backers.

The winner was Hawkeye, the self-adhesive, eye-tracking smartphone as designed by Team One Technology. The original pitch outlined a device with a Snapdragon 823 paired with 4, or more likely 6GB RAM and either 64GB or 128GB of storage. A belated announcement of Hawkeye's spec list came with a whole heap of disappointment, paired with a Snapdragon 625, 3GB RAM and 32GB storage.

Not to mention the fact that while the device was pitched as a self-adhesive, eye-tracking smartphone, you won't be able to stick it to anything unless you use the additional case. This made the phone about as unique as the hundreds of third-party self-adhesive phone cases you can buy online. It's not as if eye-tracking phones are anything new either, since several Samsung devices have offered some form of the feature for years.

At the time of writing, only 182 people had chosen to open their wallets and back the project, which has more than 90 comments. Many of those missives are from annoyed fans claiming that ZTE has "stripped off everything great about this phone" and built a "cheap and generic" device. Others are annoyed that the phone will only use a Snapdragon 625, rather than anything higher-end.

"ZTE didn't seem to mention [during voting] that the phone would ship at a fixed price of $199 to Kickstarter backers."

In his apology, Yee explains that the company wanted CSX to "reach the masses around the world," justifying the middling specs and low price. That $199 fee is fixed, and ZTE was initially unwilling to tweak the spec list since it'll eat in to its already slender profits. Now, however, Yee has said that one change will be made -- the choice of which is being left to a public vote. Users can pick between a faster chip, bigger battery or stock Android, with little room for other changes.

It's easy to be cynical and think that ZTE built a smartphone and then orchestrated a crowdfunding campaign to promote it. What's more likely, however, is that the company was happy to ride a hype train that garnered so much interest from its customers. Now that the commercial realities of building the device have become apparent, ZTE has been forced to fight fires.

Hopefully CSX will serve as a reminder to established companies that crowdsourcing isn't a shortcut to get customers invested in your products. With that emotional and financial investment comes a feeling of ownership, and when you fail to explain what's going on, or simply remain quiet, people are going to get angry.

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