Nubia launches NaviX Ultra 'Doubao phone' with tighter AI compliance, market demand weakens

Overview

ZTE's sub-brand Nubia has launched the NaviX Ultra, touted as the "world's first AI agent smartphone," featuring native AI experiences powered by ByteDance's Doubao assistant. Priced at ¥5,999 (¥5,499 after national subsidies), the device is positioned as a flagship, costing over ¥2,000 more than its predecessor, the Nubia M153—the original "Doubao phone."

However, market enthusiasm for the NaviX Ultra appears tepid compared to the explosive demand for the first-generation model.

Market Performance: Contrasting Fortunes

NaviX Ultra (Second Generation)

• Nubia claimed "sales exceeded ¥100 million in one second" after launch
• Secondary market prices remain near or below retail price, suggesting ample supply
• Major e-commerce platforms like JD.com have maintained stock availability
• Market response contrasts sharply with the first-generation model

Nubia M153 (First Generation)

• Originally priced at ¥3,499, but secondary market premiums reached tens of thousands of yuan
• The model's popularity briefly drove ZTE's A-share stock to its daily trading limit, with single-day turnover exceeding ¥14.6 billion
• Only a limited batch of engineering prototypes was released in late 2024

Strategic Shift

At its annual results conference in March, ZTE confirmed plans to:

• Strengthen the Nubia brand
• Advance an "AI phone + gaming phone" innovation strategy for differentiated competition
• Deepen collaboration with ByteDance on next-generation AI phone development as part of its "AI for All" strategy

The Second-Gen Model: A Compromised Successor?

Hardware and AI Features

The NaviX Ultra features a dedicated AI button with fingerprint recognition on the side, supporting single-click, double-click, and long-press for different AI functions. The fingerprint sensor can also activate a personalized Doubao assistant.

App Compatibility Issues

While the device offers deep integration with ByteDance apps (Douyin, Feishu), enabling AI to handle tasks like price comparison, video likes, comments, and document scheduling, third-party apps present challenges:

• Alipay, WeChat, Meituan, Didi, Xiaohongshu and other commonly used apps have reported varying degrees of access restrictions
• The AI's ability to perform cross-app tasks is limited by app-level permissions

Protocol Changes

The NaviX Ultra introduces new protocols to standardize AI access:

• MCP (Model Context Protocol) and A2A (AI Agent-to-Agent) protocols for app-initiated AI capability calls
• SAEP (Screen Automation Operation Statement) protocol, which gives apps a 30-day window to allow or deny specific AI operations (e.g., posting, deleting, check-ins)
• By default, only system apps, ZTE apps, ByteDance apps, and explicitly approved third-party apps are open to AI operations

This more conservative approach places control in the hands of third-party developers, but currently limits the device's AI functionality largely to the ByteDance ecosystem.

Nubia's Market Position: A Struggle for Relevance

Sales Volume and Supply Chain Challenges

• The NaviX Ultra's total production run is estimated at 200,000 units, with an initial batch of under 100,000
• This compares to the M153's initial batch of approximately 30,000 units
• For context, China's domestic smartphone market shipped over 69 million units in Q1 2025 alone

Declining Market Share

• By 2018, ZTE's (including Nubia) domestic market share had fallen to 0.75%
• Competitors like Sony, Sharp, and Meizu have since become "relics of the era" in China

Cost Disadvantages

• Due to limited shipment volumes, Nubia faces weaker bargaining power with key suppliers like Qualcomm and Sony
• Components such as screens, batteries, and image sensors reportedly cost 8%–15% more than for leading brands

R&D Constraints

• From 2018 to 2021, Nubia's R&D spending as a percentage of revenue dropped from 8.2% to 4.5%
• This contraction has further eroded the brand's competitiveness

Background: Nubia's Role Within ZTE

Founded in 2012, Nubia was positioned as ZTE's premium smartphone brand. Co-founder Ni Fei serves as ZTE's terminal CEO and Nubia's chairman. In recent years, Nubia has largely disappeared from mainstream smartphone discussions, with domestic market share consistently below 1%. It has functioned primarily as a "technology testbed" for ZTE's consumer terminal strategy—a role that paved the way for its deep integration with ByteDance's Doubao.

ZTE's Broader Transformation Strategy

Business Restructuring

According to sources cited by Huxiu, ZTE has completed a new round of adjustments:

• Nubia brand will fully take over Doubao phone business in China
• ZTE brand will focus on customized models for telecom operators
• International markets will be served by the Nubia brand
• Red Magic gaming phones will be integrated under the Nubia brand

"AI + Gaming" Focus

ZTE plans to pursue differentiated competition through:

• AI-native phones developed in partnership with ByteDance
• Dual-brand synergy between Nubia and Red Magic
• A product matrix covering professional e-sports and lifestyle entertainment
• Targeting global youth demographics to rebuild brand recognition

Consumer Business Performance

ZTE's consumer business reported revenue of ¥18.629 billion in the first half of 2026, up 8.09% year-on-year, with gross margin improving to 18.35% (up 0.57 percentage points), driven primarily by higher margins in home terminal products.

Key growth areas include:

• Home terminals: FTTR, home routers, and cameras maintain leading market share in the operator segment; smart home screens have become the No.1 brand in the operator market
• Cloud PCs: Targeting enterprise and government clients for secure, efficient cloud-based office solutions; maintaining No.1 shipment volume in the operator market
• International: Wi-Fi 7 products shipping to customers in Europe, Asia, and Latin America

Mobile phone business: Beyond handsets, ZTE is focusing on key countries and major telecom operator markets, expanding channel penetration and public market development, with B2C business becoming a new revenue growth engine.