Company / division: Huawei
Huawei Smartphone Reportedly Coming to AT&T (Aug 4, 2017)
I’ve had a few items recently about Huawei, including an item earlier this week about global smartphone market share, and you’ll hopefully have sensed that I think it’s a fascinating company to watch. But one of the other consistent themes about Huawei is that it’s been successful in much of the world with one big exception: the US, where the major carriers haven’t sold its phones. Fellow Chinese smartphone maker ZTE has been more successful in getting its phones ranged by US wireless carriers, especially in the prepaid space, but Huawei has been absent. And it’s worth noting that when it comes to the postpaid market that dominates the US, there are really just three big brands: Apple, Samsung, and LG, in that order. Every other vendor has under 5% of the total US smartphone installed base, with Motorola and HTC rounding out the top five. With all that as context, the fact that The Information is reporting Huawei is working with AT&T for a launch, possibly built around its next flagship, is kind of a big deal. Given the flagship focus, this almost certainly means it’s coming to AT&T’s postpaid service, which is arguably an even bigger deal, and follows on from earlier reporting that AT&T was certifying Huawei’s chipset. Between this and the availability of the Motorola Z2 Force on all four major carriers, we’re potentially entering the first real phase of expansion in the US smartphone lineups offered by major carriers in quite some time, following a period of simplification and focus. That’s yet another sign of both maturing smartphone markets and a maturing wireless market in the US, which is going to force carriers to get creative in how they attract and retain customers.
via The Information
New smartphone shipment and market share numbers are out for Q2 from various analyst firms, and they all show the same broad pattern: somewhere between a modest decline and modest growth year on year for the market as a whole, modest growth for Apple and Samsung, and strong performances by three Chinese vendors, with Huawei making significant gains in the number three spot. IDC, Strategy Analytics, and Canalys among others differed slightly on the exact shipment numbers, while Strategy Analytics seems to find another 20 million or so shipments somewhere compared with the others. The top four spots have now remained unchanged for over a year, with the exception of Q4 last year, when Apple briefly pipped Samsung for the number one spot, though this quarter Xiaomi’s resurgence squeezed Vivo barely out of the top five. Huawei got within a few million of Apple’s sales total for the first time off the back of pretty strong growth, but Xiaomi had by far the fastest growth (which you already know if you’ve read two earlier pieces on Huawei and Xiaomi). The broader picture has Chinese vendors dominating the top ten, though these firms only report the top five in their public releases: by my count, Chinese vendors take seven of the top ten spots, with Apple, Samsung, and LG the only exceptions. And those Chinese vendors rely enormously on the Chinese market for their sales, while several have no presence in the US at all, meaning that the smartphone market is increasingly fragmented globally, with different players taking the lead in different parts of the world.
via Android Police
Apple Drops to Fifth Place in China Smartphone Market in Q2 (Jul 26, 2017)
Counterpoint Says Apple has 80% Share of Premium Smartphones in China Despite Overall Fall (May 4, 2017)
Counterpoint, which I’ve referenced previously here as a solid source on smartphone market share and so on, especially in Asian markets, has an update on Q1 smartphone performance in China. The headline is that Apple, Xiaomi, and especially Samsung saw their shipments drop significantly year on year, while local companies Oppo, Vivo, and Huawei did better, in a market that grew just 4% year on year. The Apple drop is worth noting because China performance has been a major talking point on its recent earnings calls (including this week) and there are lots of explanations flying around about why it’s struggling there. I linked to this piece a while back, and Ben Thompson had an interesting piece this week on Stratechery about the role WeChat plays in China and how that impacts Apple. But it’s worth noting the details on the premium market in China in this Counterpoint post. It argues that Apple’s performance in China (as elsewhere) is highly cyclical, but that it consistently takes 80% of the $600+ market. In other words, Apple’s share remains very strong in the segment where it competes, but much of the activity in China is at lower levels where Apple doesn’t compete. In that sense, there’s nothing new here, and the growth of the sub-premium segments is to be expected in a maturing market that’s reaching lower income tiers of the population. But if the premium segment is actually shrinking in real terms rather than just relative terms, that’s more problematic because it would indicate consumers who could afford iPhones are nonetheless choosing to buy the cheaper alternatives. So far, I’ve seen little evidence of that, but it’s worth watching future numbers from Counterpoint and elsewhere to see if that pattern starts to emerge. For now, I’m still more inclined to read what’s happening in China as part of a cycle which is already starting to correct and should do so more meaningfully later this year.
Huawei to Create Cloud Business Unit, US Remains a Secondary Focus – Mobile World Live (Apr 11, 2017)
Huawei is holding its annual analyst summit in China this week, at which it offers an update on the different parts of its business. Two notable items are mentioned in this summary of the first day presentation by the CEO. Firstly, the company is creating a cloud business unit, which will sit alongside existing carrier, consumer (device), and enterprise business units. That’s a sign of the growing commitment of the company to the cloud, but also of the close ties between network equipment (and the telecoms operators who deploy it) and the cloud services which run over it. Separating cloud in this way is a public signal to operators that Huawei wants to provide more than just the guts of cloud services and wants to establish more of a partnership relationship, something which may be challenging, especially given its home base of China, which has already created issues in the US and elsewhere for its network business. Secondly, the CEO stated that (partly for the reasons I just mentioned) the US isn’t a focus for the network business, and even for the devices business it’s not a major focus, as Huawei continues to struggle to break into the mainstream here with its smartphones. Lastly, though there was strong growth in parts of Huawei’s business, the CEO didn’t address the lack of margin expansion, something which was reported on previously and was likely due to aggressive growth of the smartphone business at the expense of margins in 2016.
After Google Phone Fizzles, Huawei Turns to AT&T for U.S. Expansion — The Information (Mar 21, 2017)
Based on the headline, I thought this was about Huawei finally being able to sell phones through AT&T’s postpaid business, because that’s the holy grail for Chinese manufacturers, and remains stubbornly unavailable to them at AT&T or any other major US wireless carrier. Where the Chinese vendors have had some success is in the prepaid business, and AT&T currently carries several ZTE phones on its GoPhone prepaid brand, as well as one Huawei phone in a partnership with Walmart. However, what’s actually happening here is that AT&T is certifying Huawei’s own chipset for use on its network, which is really just a possible first step to getting more Huawei phones onto AT&T store shelves. Huawei’s lack of brand awareness in the US continues to be its single biggest challenge – something that hasn’t really changed over the years. I remember having conversations about this with Huawei executives at CES at least six years ago. Until that changes, there’s very little incentive for AT&T to give over shelf space reserved for familiar brands consumers recognize to a relative unknown like Huawei.
via The Information
I linked to reviews of Android Wear 2.0 and the LG watches that launched at the same time a few weeks ago, and those were pretty negative. Now, here we have another entry from a major Android vendor and it seems to be at least as bad as LG’s. At this point, it feels like some Android vendors have given up on the platform entirely, while others seem to have given up trying to make a smartwatch competitive with the Apple Watch but are still putting what they do have out into the market. None of this is going to help Android Wear or smartwatches in general. I’ve said before that I think it will take a Pixel-style first party entry from Google to give this platform the boost it needs, because for now Android Wear continues to be more or less irrelevant in the smartwatch and broader wearable market. Even if Google does get into this market directly, however, it continues to be far smaller and narrower than many people originally thought, and it’s currently dominated by Apple.
via Android Central
Americans Don’t Care About Nokia (or Huawei) – PCMag (Mar 7, 2017)
This is good from Sascha Segan, explaining why “Nokia” (really HMD Global) and its new 3310 are irrelevant in the US, but also in some ways more interestingly why Huawei (and other Chinese manufacturers) have long struggled here. With Nokia/HMD, it’s a long-standing lack of investment in the unique requirements of the US market including CDMA networking technology, whereas with Huawei it’s a more complex geopolitical issue involving Huawei’s networking gear. It’s easy to dismiss the US government’s objections to Huawei equipment in networks covering US network traffic as scaremongering or protectionism, but in a previous job I heard from very reliable sources about Chinese gear (not Huawei’s) in telecoms networks which had backdoors installed – these concerns can’t just be dismissed out of hand. But even beyond that, there are significant other reasons why the Chinese brands don’t succeed here, including notably the fact that those brands simply aren’t known, and in many cases the companies aren’t doing enough to change that. The one place where some of the Chinese brands do reasonably well in the US wireless market is the prepaid segment, were several have made a decent business. But that’s much less brand- and much more price-sensitive than the much larger postpaid market.
Huawei Watch 2 and Watch 2 Classic officially unveiled at MWC 2017 – AndroidAuthority (Feb 27, 2017)
These two watches are somewhat reminiscent of the LG smartwatches that debuted with Android Wear 2.0 a few weeks back – there are again two, with somewhat different form factors, but this time the feature set is more consistent across them, as is the price. That price, though, is fairly steep – in line with the low end of Apple’s Watch price range, which continues to be a tough place to be when your watches look very much like the smartwatches they are rather than nice pieces of smart jewelry. Huawei definitely has the scale to do some interesting things in watches if it chooses to, but I can’t see these new models selling in very large numbers at these prices.
Huawei Sold More Phones but at Less Profit — The Information (Feb 10, 2017)
Huawei was the number three smartphone maker I said was one of several missing from that recent analysis of who captured the profits in the global market, and it does actually make a decent profit (relatively speaking) on its hardware. According to the Information, the relevant business unit made $2 billion in profit in 2016, or a margin of 7.7%, which may not sound like a lot but given that almost all consumer electronics businesses generate low single digit or negative margins, it’s not bad. It was down from 11% in 2015, but Huawei invested enormously in marketing in 2016 and saw 30% smartphone growth as a result. It can probably ramp down that spending in 2017 while still seeing decent growth, which should help it get closer to its $4 billion profit goal for the year. Huawei continues to be a very interesting company to watch in the smartphone market, and is one of only a handful of companies which have managed to drive a decent profit from making Android smartphones.
via The Information
I cited some Counterpoint data on India the other day, and in that context said that they do a good job with these non-Western markets – these numbers are solid, although it’s interesting to see these results for China come out before Apple and several other companies have reported their results for the fourth quarter. Unlike India, China is a major contributor to Apple’s overall results, and there’s usually lots of commentary about the rate of growth there, so it’ll be interesting to compere these numbers with what Apple releases next week. In the meantime, there’s lot of interesting stuff here – over the full year, Xiaomi and Apple fared poorly out of the major vendors, though Apple’s Q4 sales held up a lot better than in Q1-Q3. Lenovo’s year in China was a disaster, and it will be very grateful once again that it has Motorola in the rest of the world to buoy things up a bit. The big story is Oppo and Vivo, which have broken into the top rankings globally off the back of a strong showing in China, but Huawei also did very well. It’s also interesting to look at the data in here on individual models, where the two iPhone 6s variants both score in the top 10, and two Oppo phones are in the top 5, including the number 1 slot. The whole post is well worth a read if you’re interested in the Chinese market.
Can Huawei Catch Apple and Samsung? – Fortune (Jan 25, 2017)
This piece somewhat acts as if Huawei came out of nowhere into the number 3 spot behind Samsung and Apple in the global smartphone market, and while it’s risen rapidly to the top in individual markets, its global rise has been happening for much longer. It’s been the number three for the last six quarters (likely seven once Q4 2016 is reported on), and has been in the top ten since at least 2011. It may well have crept up on US observers, many of whom don’t tend to focus on emerging markets as much as the US and Western Europe, but this story has been underway for quite some time. Huawei is the big global success story among the ranks of Chinese smartphone vendors, most of whom have done well in China and some emerging markets but less well elsewhere. But Huawei still hasn’t cracked the US, where the carriers I’ve spoken to seem to be reluctant to put a relatively unknown Chinese brand on shelves next to premium products from Apple and Samsung. I don’t think Huawei needs to succeed in the US to be successful, and perhaps not even to catch Apple in raw market share terms, but it’s obviously never going to match Apple in terms of profits.
Google expressed its displeasure to Huawei re allowing Amazon’s Alexa to be built into its U.S. flagship phone – Amir Efrati (Jan 17, 2017)
Amir is a reporter with The Information, and has done sterling work lately on Alphabet and Google. This little scoop was only released in a tweet rather than expanded on in an article, but it raises a couple of important issues that affect both Amazon and Google. Firstly, Amazon needs to get Alexa onto smartphones if it’s to achieve ubiquity for users, and Android is really the only option for integration. Secondly, Google will put increasing pressure on its OEMs not to install assistants that compete with the Google Assistant, but it hasn’t yet made that assistant broadly available for OEMs to use, while Alexa is freely available. There’s a three-way conflict brewing here between the two giants and Google’s OEM partners, and it probably won’t be pretty for any of them.
I’ve been saying for months now that where Alexa really needs to make progress is in phones, because unless an assistant is with you all the time, it’s not truly useful. Well, here’s the first phone with Alexa, and it’s an Android one, as you’d expect, though the announcement here feels a little half baked. The news leaked due to a prematurely unfurled banner at CES, and even now it’s out there some of the details are unclear. But this is a blow to Google and yet another CES win for Amazon.