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Now that we take Huawei seriously, what's next for the Chinese giant?
It’s well past time that Huawei was on your radar. It’s one of the most exciting manufacturers in the Android space today. This year’s well-received highlights so far include the classy Huawei Watch, and the excellent Nexus 6P. Its partnership with Google could be the springboard it needs to crack the US market. If it can continue on its current trajectory, then Samsung and Apple will have to look over their shoulders.
Huawei grabbed an 8.7% share of the worldwide smartphone market in Q2 of this year, up from 6.7% in 2014, and 4.3% in 2013, according to IDC. In its homeland, Huawei has just wrestled the throne from Xiaomi, becoming the top smartphone vendor in China in Q3, according to Canalys. It appears to be riding the crest of a wave. Can it reach new heights, will it maintain its course, or is there danger of a wipeout?
Moving on up
The smartphone market has grown much more competitive in the last couple of years. The impact of falling prices and powerful new players undercutting the old order, can be plainly seen in Samsung’s decline, and the struggle of once-powerful players like Sony, HTC, and Motorola. How has Huawei so consistently managed to swim against the tide, with growing sales in all regions of the world?
It has adopted a shifting strategy, using its growing popularity to climb the ladder from budget, to mid-range, and now up to premium. Huawei’s main line has been branded as Ascend for years, but it dropped the name when it released the impressive Huawei P8. This marks a strategy shift that CEO, Richard Yu, spoke about at the start of the year when he told Bloomberg, “We are giving up the low end of the market. Many vendors are suffering. Only two vendors have had a good life: Apple and Samsung.”
Ten months after making that statement you could make a pretty strong argument that Huawei is selling the best Android Wear smartwatch on the market, and the best Android smartphone. The Huawei Watch and the Nexus 6P are premium devices in terms of design, specs, and features, but they significantly undercut Apple and Samsung on price.
Just because Huawei is reaching for the top, doesn’t mean it’s ignoring the rest of the market. The Honor brand is Huawei’s answer to Xiaomi. It has been selling feature-packed smartphones through direct e-commerce channels, targeting a younger audience, and it’s being run separately from the core company. It has expanded into more than 70 countries already, and offers impressive specs at mid-range prices.
Conquering the States
Huawei is selling smartphones across the globe. It dominates China, it has been doing great in the Middle East, Latin America, and Africa. Sales have been soaring in Europe after a major marketing campaign. Huawei sells phones everywhere, from Japan to Jamaica, but the next major target is the US.
You’d be forgiven for thinking that it will be an uphill struggle, especially after a U.S. congressional committee suggested Huawei was a security threat because of alleged ties to the Chinese government, back in 2012. But that claim looks rather ridiculous in light of Snowden’s revelations about the NSA hacking into Huawei, as reported by the New York Times.
Smartphone sales stateside started out gently last summer with the Ascend Mate 2, sold unlocked and direct from Huawei’s online store (it also offered the cheap SnapTo). The uninspiring P8 Lite followed in June this year. But Huawei is done sticking its budget toe in the water.
There’s little doubt that the Nexus 6P will be Huawei’s biggest selling smartphone, so far, in the US market. Being formally introduced to many Americans by Google can only be a boost for Huawei’s fortunes. We’ve looked at the potential depths of Google and Huawei’s relationship before, in terms of wireless networking and Google’s desire to re-enter the Chinese market. Which brings us neatly to an important point about Huawei.
A tech giant
We aren’t talking about a small company here, and Huawei certainly isn’t reliant on the smartphone market. It first made the Fortune 500 back in 2010. It rose to prominence making equipment for the telecommunications industry. Huawei’s routers and switches power many of our networks.
A brief scan of recent tech news is revealing. Huawei just demoed the world’s first 1 Gbps mobile network with Hong Kong Telecom, which it called 4.5G. It’s also a major player in enterprise storage, where a partnership with Micron will bring flash storage to European data centers, as reported by The Register. This is a company with reach.
Returning to smartphones, Huawei is well-positioned, in part, because it can manufacture and use its own chipset, courtesy of the HiSilicon division. This enables the kind of integration you see at Samsung, and it could lead to the licensing and sale of Huawei’s Kirin processors to other manufacturers in future. There’s a very broad base here, enabling Huawei to tackle the smartphone market from a position of strength.
The Nexus 6P is an important phone for Huawei, but we’ve never seen Galaxy S and iPhone levels of sales from a Nexus phone and it probably won’t change that. Huawei’s next big release is going to be the Huawei Mate 8, set to be unveiled at the end of the month. It’s expected to have the HiSilicon Kirin 950 SoC, which may feature an octa-core design and Cat 10 LTE support, for fast performance and lightning download speeds. We also expect a premium design, possible Force Touch support (first shown in the Mate S), and a top notch camera.
There’s a chance that the Huawei Mate 8 will be the most advanced smartphone on the market for the next few months, at least. Beyond the specs, it’s going to be interesting to see what Huawei plans in terms of release. Will it be available worldwide? Could it be the first Huawei flagship to sell in the US?
Samsung and Apple have been untouchable for a long time (in tech industry terms), but Huawei does seem to be breaking away from the rest of the pack. If it keeps making the right moves, this could be a serious, sustained challenge to the dominance of the top two.