Huawei Technologies has launched cloud-computing smartphones to capitalise on its 64 per cent sale rise in its devices unit.
China's Huawei, the world's No. 2 network equipment maker, is known for its low-cost mobile phones and is hoping that the cloud-computing devices will help it replicate its telecom success in the smartphone market.
Huawei and Chinese rival ZTE have traditionally concentrated on the network equipment business and are now hoping to compete with the likes of Nokia, Apple and Samsung in the mobile device market.
"Cellphones have been a cash cow for Huawei over the past few years, but I don't think it can replace its main business in network equipment," said Jane Wang, a Beijing-based analyst at UK research firm Ovum.
"In a way, we saw cellphones as a key compliment to its business because it allows then to work more closely with telecom operators."
Huawei launched its cloud-computing "Vision" smartphones in Beijing, with the new 9.9-mm, 121-g phone running on Google's Android 2.3 operating system and Qualcomm's Snapdragon chip.
Cloud computing refers to data and software stored on computer servers rather than individual PCs and accessed over the Internet.
Cloud computing smartphones will allow users to download applications without needing much storage space on their devices.
Global sales from Huawei's devices division, which sells consumer products such as smartphones, mobile phones, tablets and wireless cards, grew 64 per cent to $4.2 billion in the first half of the year from a year ago.
Shipments of which cellphones form the majority, jumped nearly 40 per cent to 72 million units, Huawei said.
Huawei has grown rapidly since its founding in 1987 and employs more than 110,000 people.
It reported revenue of $28 billion last year and aims to boost revenue to $100 billion in the next 10 years.
However its U.S. expansion plans in the network equipment sector have hit roadblocks on suspicions the company maintains links with China's military.
Ren Zhengfei, Huawei's low-profile founder who started the company with just 21,000 yuan ($3,200), served in the People's Liberation Army until 1983.
Huawei has been selling its cellphones in markets from Australia to Kenya, but China, home to more than 900 million mobile phone subscribers, is emerging as the goldmine for global companies.
Apple, the maker of the iPhone and iPad, said last month it was merely "scratching the surface" in China and is set to exponentially grow its business as the country's No.1 and No.3 telecom operators compete for deals to sell iPhones.
China's Alibaba Group has launched its first self-developed mobile operating system and smartphone running on its cloud computing-based operating system.
"Obviously you have to retrieve the data from the web. On that, the U.S. is much easier to do this," said Alvin Kwock, an analyst at JPMorgan in Hong Kong.
"In emerging markets like China, it will probably be still some time away."
Smartphones still account for a fraction of China's mobile phone market.
"We are striving to become one of the top three global brands for mobile phones by 2015," Huawei Device CEO Wan Biao said.
Huawei's device unit contributed about 17 per cent to total revenue and in July executives said the firm aimed to ship 20 million smartphones this year, higher than a previous target of 12 million-15 million units.
In June, Huawei unveiled its MediaPad, a 7-inch Android-based tablet computer in Singapore, and is also developing a 10-inch device to be launched this year.