Early next year, Huawei will work with AT & T to sell the flagship Mate 10 handset in the United States. This will be the first time a mainstream carrier in the United States will sell Huawei's flagship handset. The Information Web site this week, revealing the company to open up the US market, challenge the plan behind Apple and Samsung.
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In the process of Huawei's rapid rise, the U.S. market is likely to no longer be a safe haven for Apple and Samsung. Early next year, Huawei will cooperate with AT & T to launch the flagship mobile phone. By then, the Chinese technology giant will target Apple's home.
This is the result of Huawei's many-year work over the past year. These include confidentiality negotiations with AT & amp; T, technology adjustments based on U.S. standards, and quiet market research. However, Huawei will still face obstacles in attracting U.S. consumers because these consumers are not familiar with the Huawei brand.
According to sources, Huawei plans to launch a Mate 10 smart phone with AT & T early next February. This will be the first time a mainstream carrier in the United States sells Huawei's flagship handset. The Information first reported in August that AT & T had initially agreed to sell a Huawei handset in the United States in the first half of 2018.
Yu Chengdong, head of Huawei's terminal business, said in a recent interview: "Next year, more and more people will see that the best smartphones come not from Apple and Samsung, but from Huawei. & rdquo;
Huawei's humble low-end handset supplier has grown into the world's third-largest maker of smartphones in the past five years, challenging the "duopoly" of Apple and Samsung in many parts of Europe and the Middle East. Under the leadership of Yu Chengdong, Huawei's transformation has made it a market force that can not be ignored, although it is not too early for the company to participate in the U.S. market.
Yu Chengdong said that because most consumers in the United States do not understand Huawei, the company plans to invest 100 million U.S. dollars next year to promote its brands and products in the United States. According to Kantar Media, such an investment will make Huawei the third-largest smartphone vendor in the United States. Although still a big gap between Samsung and Apple, but Huawei will lead other LG manufacturers. Yu Chengdong revealed that next year Americans will see Huawei mobile phones in television commercials.
Improve brand awareness is not easy. Google introduced the Pixel smartphone by the end of 2016 and started a mass marketing campaign. However, Pixel still has not caused much impact on Apple and Samsung.
A Huawei employee engaged in overseas marketing said: "For Americans, even our name is hard to pronounce. & rdquo;
Secret market research
The United States is the largest mobile phone market in the world with more than $ 500 and the market is becoming more and more important to Huawei because the company hopes to promote the sales of high-end mobile phones with high profit margins. In the past year, Huawei has been secretly preparing for expansion in the United States. Some Huawei employees in the United States disguised themselves as ordinary shoppers and went to carrier stores and Best Buy and Wal-Mart to understand the habits of American consumers. TheInformation reported in March that Huawei is trying to get AT & T certification for its own mobile chips, which are prerequisites for selling products through AT & T.
Despite its low profile in the US market, Huawei is already one of the most successful companies in globalization in China with overseas revenue accounting for about 60% of total revenue. Worldwide, Huawei employs about 180,000 people. Last year, its revenue rose 32% to about $ 75 billion. Huawei is not listed. The company said its shares are wholly owned by Chinese executives and employees.
In China, Huawei is known for its courageous culture shaped by its founder Ren Zhengfei. Ren Zhengfei was founded in 1987 Huawei. He said his workforce is a wolverine that can defeat the lion. Huawei's new employee training usually lasts a week, including early morning jogging, as well as panel discussions on Ren Zhengfei's article. Many Chinese employees signed a "struggles agreement", voluntary overtime and give up paid leave.
At Huawei, Yu Chengdong is considered to be developing its smartphone business into a new growth engine for the company. In the first half of this year, revenue from consumer electronics businesses in charge of Yu Chengdong grew 36% YoY while Huawei's total revenue grew only 15% YoY. According to IDC, in the third quarter, Huawei's share of the global smartphone market was 11%, second only to Apple's 13% and Samsung's 22%.
Falling profit margins
Huawei's smart phone business is currently profitable, but on how to improve profit margins, Yu Chengdong also faces greater pressure within the company. Sources familiar with Huawei's financial position said in February that the operating profit margin of Huawei's consumer electronics business dropped from over 11% in 2015 to 7.7% in 2016. Sources said earlier this year Ren Zhengfei said internally that Yu Chengdong's department needs to achieve a higher profit margin and that growth should not come at the expense of profitability.
In addition to mobile phones, Huawei is also one of the world's leading telecom equipment suppliers providing routers and antennas. Last year, Huawei equipment business accounted for more than half of total revenue. However, since the U.S. Congress released a report in 2012 on the issue of national security, Huawei's telecommunications equipment has been banned from selling in the United States. However, the report at the time did not prohibit Huawei from selling mobile phones and other consumer electronic products in the United States.
It is not yet clear whether US consumers will not buy Huawei handsets for privacy and security reasons. It is worth noting that another Chinese company, ZTE, has become a major player in the US low-end handset market. Yu Chengdong denied in an interview that national security will pose a challenge to Huawei's smart phone business in the United States. He said: "This is not a problem, this is the consumer's choice. & rdquo;
While planning Huawei's business in the United States, Yu Chengdong also encountered some problems in China. On Wednesday, Huawei said that the head of consumer electronics sales in China is being investigated by the police for alleged corruption.
Over the years, Huawei has been focusing on other markets such as Europe and has placed the U.S. market at a secondary place. In the United States, most consumers buy mobile phones through their carriers, and so far Huawei has sold a small number of unlocked phones in the United States, mainly through retailers such as Amazon and Best Buy. Huawei's market share in the United States is less than 1%.
However, Yu Chengdong and other executives are aware that if Huawei wants to challenge Apple and Samsung in the lucrative high-end market, it must enter the U.S. market. And "If you want to do business in the United States, then you have to work with operators. & rdquo;
Since hosting charge of Huawei's consumer electronics department in 2012, Yu Chengdong led Huawei out of the price war of China's low-cost handset makers. Yu Chengdong recalled that five years ago, a top Chinese telecom operator had told him that Chinese consumers would never spend 2,000 yuan on Huawei handsets. The executive believes that Huawei should adhere to push the price of less than 1,000 yuan low-end models. However, this proposal was rejected by Yu Chengdong.
In the past few years, Yu Chengdong's consumer electronics department invested billions of dollars for research and development, enhance the functionality of the flagship model, thereby raising prices. Huawei Haas, the semiconductor subsidiary of Huawei, introduced a chip that integrates artificial intelligence functions earlier this year. Last year, Huawei and Leica camera manufacturers in Germany, trying to upgrade mobile phone camera.
Digital product reviewers said that Huawei's high-end mobile phone hardware configuration enough to compete with Apple's latest iPhone X. However, based on the Android system, Huawei's mobile phone software was mixed. According to sources, Yu Chengdong has internally said that Huawei's software team made some adjustments to the interface design is "stupid". In his opinion, these adjustments lacked consistency and did not highlight important functions.
In an interview, Yu Chengdong acknowledged that sometimes the software design problems, but he said the situation will be "getting better". Huawei has set up teams in the United States and Europe to study user needs. In these regions, users are accustomed to Google's app stores and many services that are not available in China. He said that after gaining experience, Huawei handsets in the United States will better integrate Google assistants and other services.
"For high-end phones, we are targeting Apple, not Samsung. "An employee of Huawei Mobile R & D said.
Analysis of Apple mobile phone antenna
Earlier this year, at an in-house meeting, the manager in charge of Huawei's China smartphone research and development team urged engineers to study the iPhone in more detail. He compared Apple's smartphone antenna with Huawei's antenna, saying the iPhone's antenna size is smaller but better performance. An engineer who attended the meeting said: "Huawei is not an apple, but you can learn a lot from Apple. & rdquo;
A week after the iPhone X began shipping, Huawei's cell phone antenna engineers thoroughly analyzed Apple's latest handsets and tested its performance in specific rooms.
Huawei is moving up the value chain and has achieved good results. According to market research firm Canalys, last year, high-end flagship models accounted for about 34% of Huawei's global smartphone shipments, up from 6% in 2012. In the same period, Huawei's share in the global high-end mobile phone market of over US $ 500 surged from 0.1% to 8% while the average selling price of Huawei handsets increased from US $ 183 to US $ 321.
In China, Huawei's flagship mobile phone Mate 10, released in October, is selling for nearly $ 700. It is not yet clear how much the phone will cost in the United States after AT & T is up and running.
Huawei's success in the U.S. market is likely to determine the company's end in the high-end smartphone market. Yu Chengdong said his ultimate goal is not only to surpass Apple and Samsung in terms of sales and market share, but also to be closer to Apple in revenue and profitability.
Yu Chengdong said: "This is a challenge, but we have the ability to do it. Recalling the past, five or six years ago, if I say that Huawei will become the top three smart phone market, people will laugh at me and say I am whimsical. & rdquo;