BEIJING - ZTE Corp, China's second-largest maker of phone equipment, sees "big potential" in offering computer services to mobile-phone companies, President Shi Lirong said on Thursday.

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A worker cleans up in front of a ZTE Corp ad for smartphones and tablets outside one of the company's media events in Beijing. Selling computer services will give ZTE a new source of revenue. [Photo?/ Agencies]

ZTE has signed up the nation's two largest carriers, China Mobile Ltd and China Unicom (Hong Kong) Ltd, for a "virtual office" and has 8 million users for its unified communication system, Shi said in a speech at the GSMA Mobile Asia Congress in Hong Kong.

Cloud computing will account for one-third of the Shenzhen-based company's sales within three to five years, it estimated in May, as Chairman Hou Weigui diversifies the business beyond phone network equipment.

Selling computer services gives ZTE a new source of revenue from its existing network equipment customers who seek ways to generate more sales from the "pipes" that carry phone calls and data, Shi said.

"There is still very big potential for both operators and vendors," Shi said.

ZTE rose 5.1 percent to HK$23.65 ($3.05), the highest level since Aug 2, in Hong Kong. The benchmark Hang Seng Index fell 0.8 percent.

The company introduced its first cloud computing operating system in Beijing on May 18 and expects sales to exceed $2 billion this year, ZTE said at the time.

"ZTE is very experienced in carrier networks, and they want to use that to enter the enterprise market," Michael Li, an analyst with Mirae Asset Securities in Hong Kong, said on Thursday.

"They have an opportunity but it's going to be hard, because they face a lot of entrenched players."

ZTE's move puts it in competition with its larger domestic rival, Huawei Technologies Co, as well as global players such as Cisco Systems Inc, Li said. ZTE has "a long way to go" to be globally competitive in enterprise computing, he said.

ZTE's Shi said the company is "just starting" by selling such services to its existing customers, including China Mobile and China Unicom.

In the first phase of the China Mobile project, 1,500 users were supported. The second phase will add 15,000, Shi said.

Revenue from the China Mobile project is relatively small at about 30 million yuan currently, Li estimates.

Carriers will expand the program because it yields savings on hardware, software and power consumption, Shi said.

"This is a good solution for big enterprises because it's easy for them to centralize management," Shi said. "Thousands of users can share the same storage and computing power."

ZTE is also looking to generate computing-services sales in the areas of transportation, energy, finance, education and government, Shi said on Thursday.

The company has sold a system to the city of Chong-qing that can monitor traffic flows and track violations and annual inspection records, he said.

Sales of such systems will increase in the next three years, Shi said.

Bloomberg News