Huawei aims to become tier one smartphone supplier

Huawei is riding the BYOD wave, as it vies to turn itself into a credible competitor to Apple and Samsung in the smartphones space

Chinese telecoms company Huawei is riding the bring your own device (BYOD) wave as it seeks to become a credible competitor to Apple and Samsung in the smartphone market.

In a wide-ranging interview, Shao Yang, vice-president of the company’s consumer marketing business, said business consumers would form a major part of its strategy to become a serious player in smartphones.

“Huawei has a really big potential in the business market,” he said.

The company is developing technology - rivalling Samsung’s Knox software – that will allow companies to segregate corporate data from employees' personal data on mobile phones and tablets.

And it is developing high-specification smartphones for business users that feature large screens, fingerprint recognition and single-touch turn on, Shao revealed.

Huawei's said its smartphone shipments have grown from three million in 2010 to a predicted 80 million plus this year.

The company, which owns 6.9% of the global mobile market, is moving away from being a pure business technology provider to become a combined business and consumer product supplier.

Huawei’s strengths in 4G and telecoms infrastructure give it a natural edge over competitors, such as HTC, Research in Motion, LG and Sony, Shao claimed.

“We believe technology is very important. First, hardware – and Samsung is best at this part. Second is software – and Apple is best. Third is telecommunication, connecting to the network – and Huawei is best at that,” he said.

The company, which employs 150,000 people worldwide, is spending over 12% of its $40bn (US) revenues a year on research and development.

It is focusing on improvements to hardware, including more advanced screens, batteries and cameras, and advances in software to make smartphones more intelligent. The company also designs its own chipsets.

Huawei's third element of research aims to provide its phones and tablets with an “emotional” quality that Shao hopes will make the experience of using a mobile device a less isolating one.

“We want to go back to family. Because recently we find that even people who are in a family don’t talk to each other. They stay with their own phone even when they are having dinner,” he said. 

Windows

In a potential blow for Microsoft, Shao revealed that Huawei has suspended its development of Windows phones and is now focusing its efforts on Google’s Android operating system

Windows phones have not sold well compared with Android and Apple smartphones. 

“The biggest problem with Windows is that a lot of things are predefined, leaving no space for the supplier. So if we look at the supplier market, each Android phone is quite different. They have their own potential. Windows phones are quite similar,” he said. 

Target market is overseas, not China

Huawei sells more than 52% off its mobile equipment in China, but Shao is candid enough to admit that the home market is not Huawei’s real strength. 

Huawei mobile device shipments (units)

2010 – three million

2011- 20 million

2012 – 32 million

2013 – 52 million

2014 -80 million (target)

“We are not good at the Chinese market. So if you look at the Chinese market, we are number five,” he said.  

The bulk of the demand for smartphones in China is for $60 or $70 phones, not the higher-end phones with a price tag of $150 plus that Huawei wants to be known for.  

“We think the potential is outside of China, ” he said.  

Europe and UK

In Europe Shao identifies France and the UK among the most challenging and important markets for the company.  

The French market is brand conscious, so it can be more difficult for lesser known suppliers to make an impact.  

“The French market is an operator-dominant market. They use the good brands to compete with each other. For them the brand is most important,” he said.  

The UK, meanwhile, is highly competitive, which means manufacturers need to spend heavily on advertising to promote their products if they want to get ahead.  

“For Huawei, we are not such a rich company, so it is hard for us to invest, to make the advertising,” said Shao.  

That means choosing the right overseas business partners with the resources to promote Huawei’s phones is essential.   

In the UK, Huawei has teamed up with EE, which has taken what Shao describes as an :"aggressive” approach to rolling out the latest 4G mobile phone technology.

US market

Huawei’s trade with America has become politicised following US concerns over potential security risks posed by deploying Chinese-made telecoms infrastructure.  

But sales of mobiles are increasing and the company has moved from supplying phones under other operators' brands to selling Huawei-branded phones, said Shao.  

“The US market has always been very positive. It is about 5% to 8% of our shipment,” he said.  

Sceptics

For those questioning whether Huawei can make it into the top tier of smartphone manufacturers, Shao says the company has made similar transitions in the past.  

“I joined the company in 1988. At that time we wanted to be number one in wireless,” he said.  

Huawei was up against seven competitors, each with more advanced technology. “We hit a lot of difficulty,” said Shao. “Now we are number one in wireless.”  

Huawei’s secret, claims Shao, is its willingness to listen to its customers, and to put their needs first. “The customer is more important than Huawei,” he said.

This is something that companies such as Apple are not so good at, he suggests. “Apple doesn’t listen to its customers very well,."

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