Earlier this month, Chinese Company Huawei dropped a couple of new smartphones into the Australian market, but who is this Company and why are brands like HTC, Nokia and Blackberry concerned, especially as many consumers have never heard of them other than when they got dumped out of bidding for NBN contracts?Despite the Company being reluctant to grant reviewers access to their new phones and that few carriers sell Huawei branded phones in Australia, there is an expectation that this brand could strip market share away from Motorola (who has done very little this year in the smartphone market), Sony, Nokia and LG, who are set to relaunch their smartphone range in Australia.
While Apple and Samsung are carving up the top end of the smartphone market, Huawei is trying to take share in the budget end of the market with new smartphones that have a lot of the features akin to top end phones but are significantly cheaper.
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Huawei has already passed Nokia in markets like the USA and are now looking to grow share in Australia.
After it was founded in 1987 by civil engineer Ren Zhengfei, Huawei quickly became China’s high-tech success story by selling telecom gear to phone companies.
In Australia Huawei became the centre of attention recently when the Australian Federal Labor Government black banned them from supplying gear to the NBN network. The Labor politicians said it was not in the best interests of Australian security to let a Chinese Company have access to backend network equipment.
Unlike Nokia, Apple and Blackberry, the Company has not invested in building their own Operating System, instead delivering new phones wrapped around the Android OS.
And unlike Samsung, HTC, or Motorola, it didn’t try to differentiate Google’s mobile software with its own tweaks. “Huawei just slapped Android on some hardware and shipped it,” says ABI Research analyst Michael Morgan.
BusinessWeek said recently that the Chinese Company expects to triple its smartphone sales to 60 million units, in part by taking a bigger chunk of the U.S. market. Until now, its sold handsets costing less than $200 to carriers such as Vodafone and 3 that offer pay-as-you-go plans, mostly to lower-income consumers.
“We essentially are making the market for affordable smartphones,” says William Plummer a VP at Huawei.
In Australia PR executives have not explained why carriers like Telstra are not ranging their products when carriers like AT&T in the USA and BT in the UK are ranging Huawei smartphones.
Not trusted by the Federal Government, Telstra is not saying why they have never ranged the Chinese Company’s phones.
The Chinese Company’s $23 billion-a-year telecom equipment business grew only 3.5 percent globally in 2011. In Australia the Company is rolling out new LTE 4G networks.
Huawei’s growth rate may make it a plausible challenger to Samsung in smartphone sales, says Asymco’s Dediu.
He told BusinessWeek the Korean giant has prospered largely because of vertical integration; it makes many of the chips and screens that go into its devices. Yet he doubts Samsung has built up enough brand loyalty to withstand a much cheaper alternative. “Let’s not forget that Samsung itself was No. 4 or 5 just a few years ago,” says Dediu. “Samsung ought to be looking over its shoulder.”
As smartphones evolve from novelty technology into just another gadget, Huawei will be well positioned to benefit. “Their devices don’t have to have jet packs to do 90 percent of what most people need,” says Morgan of ABI Research. “The market is coming to them.”
