In the firecely competitive smartphone market where veteran players like LG, Motorola, and HTC are struggling to eek out a profit and remain relevant, Huawei has managed to surpass them all, not only in terms of market share but also profit.
The Chinese OEM has been rapidly gaining market share in Europe and China, and it has its sight set of becoming the world’s largest smartphone maker by 2021. The heroic rise of Huawei, especially in Europe, is evident from how rapidly it has gained marketshare in Finland — the home of Nokia.
In just the last 18 months, Huawei’s marketshare in the country went from being almost negligible to surpassing that of both Apple and Samsung to become the market leader. In 2015, Huawei shipped 108 million phones, while in 2016 it jumped by 30 percent to 140 million — another prime example of its skyrocketing growth.
No wonder Huawei has not set its sight on becoming the largest smartphone player globally by 2021, and the company’s consumer head, Richard Yu, sees the company surpass Apple in terms of market share by 2018.
One of the key reasons behind Huawei’s terrific growth in Europe is the side deals it has managed to sign with operators. Since the Chinese company also builds and supplies networking equipments, it offers network operators hefty discounts on its smartphones which are then heavily pushed by carriers to consumers because of their higher profit margins.
Huawei offers carriers vouchers worth a percentage of their spending on network equipment, which they can use either for network services or smartphones from Huawei, Jeronimo has confirmed with at least one European wireless operator. “If you don’t buy the Huawei network, you pay a certain price,” Jeronimo says. “If you do buy a Huawei network, then you get a better price.” If a carrier uses the discount on Huawei phones, the savings can be several percentage points of the total cost, or millions of dollars. “In the end it’s a very strong incentive for carriers to buy Huawei devices,” Jeronimo says.
However, despite its prolific growth, Huawei has struggled to capture the US market where it only has 0.4% of market share. The company has made repeated attempts to enter the US market with a bang, but has failed miserably all the time. One key reason behind this is that Huawei’s networking equipment is banned in the United States which means the OEM cannot strike up side deals with US operators on selling its smartphones. This has put Huawei at a disadvantage in US, one of the world’s largest smartphone markets and among the most profitable ones since majority of the phones costing upwards of $500 are sold here.
While side deals have helped Huawei to push its devices to consumers, there is no denying the fact that the company’s handsets can stand on their own against the very best from Samsung and Apple. Huawei released a phone with 3D Touch-like functionality a month before Apple launched the iPhone 6s. Similarly, the company’s 2016 flagship, the P9, released with a dual-camera setup months before the release of the iPhone 7.
What do you think about Huawei’s smartphones? Are you considering trading your iPhone for a Huawei phone down the line?[Via Fortune]