Huawei Technologies Co Ltd, the world's sixth biggest maker of mobile
phones, is looking to its smartphones to outpace global growth rates and
drive a consumer gadgets business that will rival its flagship telecoms
gear in revenue.
The Shenzhen based company founded 25 years ago by
former People's Liberation Army soldier Ren Zhengfei is currently
number-two globally in communication networks, a business that last year
brought in close to three-quarters of total revenue.
change as Huawei plans to carve out a global brand in smartphones,
taking the fight to Samsung Electronics Co Ltd and Apple Inc,
particularly in China, expected this year to become the world's biggest
In the fiercely contested smartphone arena,
Huawei expects to ramp up its Android focused product range with
Microsoft Windows 8 phones and tablet PCs, and possibly also so called
phablets phone/tablets. It is also considering developing its own
smartphone operating system to distance itself from Android, which has
been the focus of legal disputes between Apple and other major handset
"Whatever consumers like, we'll develop," Wan Biao, CEO of
Huawei Device, said in an interview on Monday at the company's
headquarters. "We're also devoting resources into coming up with a phone
operating system based on our current platform in case other companies
won't let us use their system one day."
Huawei has grown its
consumer devices business which sells mobiles, tablet PCs and dongles
aggressively. Its mobiles have picked up market share, though at the
expense of profitability prompting the company to shift towards higher
end products such as its Vision and Ascend models.
investing actively for the next 1-2 years, so it will be a big challenge
to achieve high profitability," Wan said. In July, Huawei posted a 22
percent drop in first half operating profit, citing the "significant
challenge" of a weak global economy and tighter spending by telecoms
Huawei expects consumer device revenue to grow steadily
at around 30 percent next year, though sales from smartphones will grow
faster, at around 40 percent. The company has said it expects the
business to grow revenue by around a third this year to $9 billion, and
could reach $30 billion in five years, matching the telecoms equipment
business as a revenue driver.
maintain that smartphone branding is a major challenge for Huawei, which
for years produced so called white boxes for telecom carriers to sell
as theirs. "The phones really look cool, feature wise. From the
end-users' perspective, it's still a branding thing," said Ajay Sunder,
an analyst at Frost and Sullivan.
"Traditionally, Huawei and
(local rival) ZTE Corp have been selling to the lower-end of the market.
It was a price game for them. So moving up the value chain to command a
premium for the phones and the brand that definitely seems to be a
"The best way for them will be to have a separate branding for their mobile phones than to use the Huawei brand," Sunder added.
also plans to launch smartphones using the Windows 8 operating system
later this year or early next year, though it gave no specific timeframe
for its Win 8 tablets and phablets.
Sunder reckons it will be
tough for companies to compete in an operating system market dominated
by Apple, Google and Microsoft, as software developers will be less keen
to write applications for a small user base. "It's a chicken and egg
situation," he said.
Huawei has said previously it aims to ship
more than 100 million mobile phones this year, including 60 million
smartphones. It's sticking to that forecast even though sales this year
are below target prompting broker Jefferies in July to predict
smartphone sales of 35-40 million.
"It will be very challenging, but that target remains intact," said Wan, who joined Huawei 16 years ago.
Huawei's growth will still outpace the industry. UK research firm Ovum
on Monday forecast global smartphone shipments of 1.7 billion in 2017,
up from 450 million last year, implying an average annual growth of more
than 20 percent.
In a recent media interview, Huawei's deputy
chairman Hu Houkun said the company aimed to be the global No.3
smartphone vendor, with 15 percent market share by 2015, up from around 5
While Huawei has made strides with its
consumer products, its telecoms equipment business has hit roadblocks in
the United States and, more recently, in Australia, over security
issues political obstacles the company has decried as unsubstantiated
"allegations based on allegations.
Europe, however, looks to be a
brighter spot, and Huawei this month outlined plans to invest $2 billion
to expand its operations in Britain, creating about 700 new jobs over
Copyright Thomson Reuters 2012