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HUAWEI is so big in China, it's now competing with itself and losing (Update)
Update, July 27 2018 (10:45AM EST): Honor shipments are exceeding Huawei shipments in China, according to tracking firm Canalys. But is this a cause for concern on HUAWEI’s part? Can we expect cannibalization to be a challenge for the Chinese manufacturer, as the sub-brand eats into the main brand’s share?
Canalys analyst Mo Jia tells Android Authority that HONOR devices with the flagship Kirin 970 chip are cheaper than similarly equipped HUAWEI phones. However, Jia says the main brand is using “other innovations” to justify the higher pricing, such as the P20 Pro‘s triple camera setup.
“…we still think there is certain level of cannibalisation in markets where HONOR and HUAWEI are both strong, but it doesn’t seem to affect HUAWEI’s overall business at this stage, as no matter which brand the consumers choose, it’s within HUAWEI’s CBG [consumer business group – ed],” Jia explains.
Read: 10 more Chinese smartphone brands you should be watching
Could the HONOR brand become the lead brand, getting more resources and marketing dollars? The analyst doesn’t think so, saying HONOR aims for the cheaper, volume-shifting sector while HUAWEI’s brands are focused on the premium bracket. Nevertheless, Jia says the sub-brand will be a “key driver” for the company to increase shipments and hit its targets.
The analyst also clarifies that HONOR accounted for 15 percent of smartphone shipments in China for the quarter — one percent ahead of Xiaomi. This further illustrates just how well HUAWEI is doing at large in the market.
Original article, July 26 2018 (12:34PM EST): Huawei has gone from strength to strength when it comes to smartphone shipments, and nowhere is this more apparent than in the ultra-competitive Chinese market.
According to a Q2 2018 report by tracking firm Canalys, HUAWEI has the highest market share for a mobile brand in China since Q2 2011, at 27 percent. The Chinese manufacturer also broke the record for the most units shipped in a quarter (28.5 million units).
The biggest news, however, might be that its Honor sub-brand now accounts for more devices shipped than HUAWEI itself. The tracking firm notes that HONOR now accounts for 55 percent of HUAWEI shipments, compared to just 33 percent a year ago.
Canalys analyst Mo Jia says the sub-brand has found success in the $500+ price bracket, while also stealing market share in the low-cost tier from Xiaomi and others. In fact, Canalys senior director Nicole Peng tweeted that HONOR is overtaking Xiaomi for shipments in the market.
The high level of autonomy that HONOR business unit enjoys within HUAWEI CBG is in a way giving the brand a lot of energy to fight for its survival. Now ‘Honor’ brand has finally surpassed ‘Huawei’ brand in China, with unit shipments already overtaking Xiaomi. https://t.co/arN1xsFXeT— Nicole Peng (@N_Peng) July 25, 2018
Jia says HONOR’s increased success presents a dilemma for HUAWEI’s main brands – the P, Mate, and Nova series. The analyst says these brands “risk losing resources to HONOR” as HUAWEI shoots for 200 million smartphones sold in 2018. Does that mean we could see the sub-brand lead the charge with innovative features first or the lion’s share of marketing dollars? That remains to be seen.
HUAWEI is really HONOR roll
HONOR has its roots as an online-only brand, delivering phones with similar specifications to HUAWEI’s main brands. For example, the HONOR 10 shares plenty in common with the HUAWEI P20, such as the chipset, battery, and front-facing camera. Then there’s the HONOR 9 Lite, which shares the same screen, chipset, battery, and rear dual-camera setup as the HUAWEI P Smart.
The sub-brand has also gained a reputation for cheaper prices compared to the main HUAWEI phones. For instance, the standard P20 is priced at 649 euros, while the HONOR 10 comes in at 399 euros. The P20 offers Leica lenses, optical image stabilization, and 128GB of storage, but does that account for the 250 euro difference? The HONOR 10 also has a headphone jack, for what it’s worth.
What about the rest of the market?
OPPO (21 percent market share), vivo (21 percent) and Xiaomi (14 percent) round out the top four in China, according to Canalys. vivo saw a ton of year-on-year growth, while OPPO saw just three percent growth and Xiaomi remained virtually unchanged. Overall shipments were down eight percent across the board, from 113 million units a year ago to 104 million in this quarter.
The big surprise, however, is that shipments from other brands were down a whopping 51 percent. It serves as more proof that the Chinese market is consolidating, as the top four continue to streak ahead.
What do you make of the HUAWEI sub-brand? Is the internal rivalry good for the industry? Let us know in the comments section below.