Huawei: A Giant the Western World Should Look Out For
The smartphone landscape is drastically changing its focus. What was once a North-America-centric monopoly of high-specification phones is now merely an afterimage of the past. The meat of the game is elsewhere now; emerging markets looking for good bang-for-buck are what OEMs are increasingly aiming towards, and in this new game the old players must adapt-or-die. Xiaomi has grown at one of the most notable rates in the industry, leading it to become the world’s most valuable start-up; and its expansion is marked and ominous.
We called it The Tech Giant the Western world never sees for many good reasons, but even if this company is at the leading pack of the business revolution, they still are not the only ones that are growing thanks to the paradigm shift.
The gap between flagships and middle-range devices is shortening, and the gap between middle-range and low-range phones is too. With manufacturers opting for cheap-but-good phones like the Moto E 2015 or simply slashing their prices to stay competitive, it is clear that people want more for less, and those who don’t offer it are increasingly left out. Sony’s emphasis on flagship releases indicated by their 6-month release cycle, for example, failed them to the point where they had to change strategies in light of their company-wide decline that ran parallel to their struggle. At the same time, Samsung dramatically cut the number of devices they were producing for 2015, and is reportedly focusing their energy on a few line-ups, mainly the Ax and their newest Galaxy S6 and S6 Edge.
But the real competitors here are those who were already providing good phones for cheap prices, and these happen to be the Eastern-based companies like Chinese Xiaomi. Huawei is another Chinese company that offers very good products, often sporting good build-quality and decent performance on separate fronts. Their Ascend Mate 7, for example, was a staple of battery life for Android and it topped the charts and benchmarks in this regard, as did their Mate2 which also featured even better battery life and great value – just $300 for the best battery life in the market in a 6.1 inch phablet… it didn’t see the best treatment with software updates, but it is now back on track as well.
What does Huawei do?
Something worthy of note is that Huawei isn’t just a smartphone provider, but also one of the biggest Telecom infrastructure suppliers out there. This is important to note because, very much like the Korean tech conglomerate of Samsung, it allows them to dump more resources into in-house Research & Development. HiSilicion is a semiconductor manufacturer fully owned by Huawei, and many of their chips are present in their phones. Their KIRIN line of SoCs is particularly interesting, with their upcoming KIRIN 930 64-bit SoC featuring a big.LITTLE array of 8 cores clocked at 2.0 GHz, very much like Qualcomm’s Snapdragon 810. What’s more interesting, however, is that it has smaller process size at 16nm instead of 20nm. It also boasts a Mali-T628 GPU MP4, a variant similar to the one GPU in the Galaxy Alpha which was known to be a benchmark record holder. In this regard, they seemingly can hold their own. Huawei’s processors, very much like Exynos’, are coming of age – something one would naturally expect considering Huawei is a R&D-heavy company, with 46% of their employees allocated on that front.
But that’s not enough for Huawei. They have a clear emphasis on growing and expanding, and they aim to bring down 100 million sales – that’s a lot, isn’t it? Consider this: their latest Financial Performance Report shows that Huawei has sold 75 million in 2014, and that resulted in a 45% growth from the year prior – culminating in 30% sales revenue increase over the year-to-year, for a staggering $12.2 billion. That sounds like a company that can grow, and their strategy for 2015 is focusing on flagship devices and midrangers, with an aim of 100 million sales. How are they going to do that, you ask?
Expansion. Huawei is reportedly planning a big push to sell its products in the United States, one of the most important markets for flagships, the devices they want to focus on for the year. This is surprising because U.S. legislators branded it a national security threat, but much like with Lenovo and other controversial companies, that doesn’t seem to affect their plans much. Their 2015 U.S. plans will include traditional advertising and online promotion, so you can expect Huawei to stop being as invisible to the general public as other Chinese giants. Once again, their flagship philosophy shows when Huawei’s U.S. spokesman Bill Plummer comments on their change of approach. Huawei wants to shake off the “cheap tech” prejudice that plagues Chinese companies. It already touted its Honor 6 Plus at Times Square, so who knows how far they’ll carry their advertising.
Then there’s the fact that they introduced us to what looks to be one of the best smartwatches in the market, the amazing-looking Huawei Watch. This phone brings premium to a whole new level in the wearables segment, and its unveiling is already causing a lot of buzz all over the internet. It turns out that Huawei’s emphasis on flagship quality is so high that it speaks for itself – and makes people do their marketing for them. This new product is one of the things that they truly need to shake off the “cheap” vibe, and it is evident they have succeeded… perhaps at the cost of quite a steep price.
For their U.S. penetration, Huawei will opt for stock Android as the software for their phones. This makes a lot of sense if they want to shrug off the bad reputation they had, as software spyware wouldn’t be present in a pure Google OS. Richard Yu, CEO of Huawei’s consumer division, put it very bluntly: “”In the US we have to do some compromise to avoid any concern, no excuse! If you have a problem you can check with Google. [American customers] trust Google so they can trust Huawei”. For those of you who are worried about adopting a Huawei phone in the United States, this might ease your paranoia a little bit – but remember that backdoors can be found in hardware too. Regardless, it is clear that Huawei is trying to re-brand itself as a worthy competitor to Samsung and Apple.
More Google? On a Chinese phone?!
But there’s more to this plan: a very recent report said that Google was considering a Chinese OEM for a Nexus device. Then we had more details that claimed that what would be inside the next Chinese Nexus might not be a typical Qualcomm chipset, but rather something else that was undisclosed. The same source revealed that there would be two Nexus devices and that one would be for LG, and it is speculated that the Chinese variant would be a cheaper variant. Now, as we’ve seen, Huawei has been developing what looks to be a competitive SoC (we’ll cover this chip in-depth soon) and is known for affordability, so they would fill right into these conditions.
Yet another follow-up report, however, had Kevin Yang from iSuppli, a leading market research firm, confirm that the next Nexus would indeed be one made by Huawei. Now this would have certain implications: first of all, Huawei has been known to speak against 4K resolution in phones due to its battery compromises. This would suggest that a Nexus by Huawei wouldn’t sport it, but at the same time 4K was expected to arrive this year, something Qualcomm itself touted as a capability offered by their products coming this year. So, in this sense, we don’t know exactly how flagship this flagship can be. Nonetheless, a Nexus phone is just what Huawei could use to maximize their incursion. It’s a stock Android phone, that is a flagship, popular in the U.S. with a strong online following, and has had a reputation of being affordable – these are all the things that we saw Huawei wanted.
At the same time, the Nexus program has been known to give various OEMs a chance to shine. One time I read a user call it an “all-stars” line-up where big OEMs show off what they can do with Google. I don’t think that is the case, but Huawei being a Western underdog (if you consider practically nonexistent as underdog) this could really open their chances up and empower their arrival into the U.S. More over, if they do decide to use HiSilicon’s chipset, Qualcomm would see another nail in the coffin of their U.S. flagship monopoly. Now that Samsung and others can effectively circumvent the previously-required Qualcomm LTE patents for the U.S., we see chips like the Exynos 7420 becoming NA-ready and not just an international option. These chips also support Cat 6 LTE which future-proofs them against the same nasty situation of the past. And finally, Qualcomm is supposedly under fire for their Snapdragon 810 performance. With their new core re-designs not hitting the market until 2016 with the Snapdragon 820, it is likely that Google wouldn’t opt for them for their Q3-Q4 release if these issues carry on – hence the rumors behind them looking for another SoC.
Watch out, West
So rounding up: Huawei is planning a very meticulous breach into the NA mobile party. Their flagship-centric approach is perfect for the job, but a more affordable Nexus can pave the way to consumer trust. At the same time, an affordable Nexus variant falls in line with Google’s vision of affordable phones for emerging markets, so it could potentially benefit Huawei’s expansion on other territories as well. What’s more important, I think, is the fact that Huawei is just another growing player: Xiaomi, Meizu (expect a report similar to this one on them very soon), Oppo, and others have been gaining traction and notability. If these and others enter the U.S. market in close succession, the game would change dramatically. The monopoly Samsung and Apple once battled is now an open war between many ambitious OEMs. Qualcomm’s dominance is also at stake due to many of these phones simply not carrying their chipsets inside, like Meizu’s Exynos guts, Huawei’s in-house, and the vast array of Mediatek.
The smartphone industry could be expecting some major revolutions, partially attributed to the fluctuation towards emerging markets and affordability. But at the same time, these invisible giants and their business strategies could be the sparks that ignite the process. Many have underestimated them, especially consumers: we now hear news about the amazing build quality and design feats of many Chinese phones, like the button-less 7X. While we still hold a lot of flak to companies like Xiaomi, and we still are very concerned about the security compromises these companies are notorious for, the way the ecosystem is changing is rather fascinating from an analytical point of view. Hopefully the phones that come out of it are equally fascinating… and without backdoors.
What do you think about Huawei? Do you think they have what it takes to play in the U.S.? Let us know below!