People 'n' Issues

Huawei aims to dominate

August 8th, 2016
Huawei continues to retain resilience in a crowded and competitive global economic environment, aiming to become the top global smartphone vendor in five years’ time. 
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ABI Research finds its successive Year-on-Year rises in smartphone shipments particularly impressive, as the company managed to achieve its high ranking without effectively breaking out of its home market. To become a global electronics brand, the company will need to gain a strong foothold in the U.S. and western European markets, but runs the risk of falling victim to the same plights as its larger competitors.

“Ranking by volume as third largest global smartphone vendor, Huawei is attempting to expand its reach by creating its own chipsets and mobile operating system based on Android,” says David McQueen, Research Director at ABI Research. “It may succeed with chipsets, but many other competitors tried similar OS development tactics in the past to no avail. It will be tough for Huawei to achieve this goal, even with improved global brand strength and volume gains.”

ABI Research finds Huawei currently strikes an appropriate balance between supplying cost-effective devices to low-end markets and setting high standards for its creativity, fashion, and innovation in its high-end market product lines. This, with the ongoing collapse of shipments from brands including Blackberry, HTC, Sony, and Microsoft Lumia, fuels its current momentum.

And the creation of its own chipsets for a number of its smartphone models may help it continue its upward trajectory. In doing this, Huawei can avoid the need to rely on chipsets from IC suppliers, such as Qualcomm, and control its costs. It will also be able to power key smartphone models in its portfolio.

Yet, while the idea to create its own mobile OS is a noble one, Huawei is not the only, or first, Android phone maker to explore creating its own operating system. Many, including Samsung, previously tried to develop competing OS platforms and all failed miserably in their attempts. But Huawei does not necessarily need to fall victim to the same blunder if it can provide a viable ecosystem that does not only focus on volume sales but also encapsulates other business models based around revenue share agreements and partnerships, while offering a range of devices to allow for customer modifications.

“Huawei probably believes that it reached critical mass in terms of its volume sales and so now has the wherewithal to create its own ecosystem,” concludes McQueen. “But there will need to be a big improvement in its global reach if this aspiration is to be successful. And history, if nothing else, tells us how difficult it is to create a new ecosystem irrespective of size and brand strength.”

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