Huawei Aims for 200M Handset Shipments in 2018

Huawei’s smartphone shipment target will be 200 million units in 2018, according to a source familiar with the company’s internal planning.

Last week, Richard Yu, Huawei’s consumer business CEO, announced 2017 performance achievements during his 2018 New Year speech. Smartphone sales revenue was about 236 billion yuan, or 30 percent, year on year in 2017. Huawei and Honor shipped 153 million smartphone units last year.

“Once Huawei enters a field, it’s going to be the king. That’s what we’re pursuing,” Yu said.

Huawei’s consumer business set a 2018 target of 200 million units worldwide at its recent business meeting. Huawei officials declined to comment on it.

Compared with 139 million units in 2016, last year’s growth was modest, about 14 million. It was the slowest growth rate in Huawei’s smartphone market in nearly three years. The main reason is that Ren Zhengfei, founder of Huawei, said the company should control its size and improve its profits in 2017.

Tencent learned from Huawei that it achieved its profit target for the consumer business in 2017. Among them, the middle and high-end models accounted for a higher proportion, which has driven the overall growth. The exact number are not yet known.

According to data from Huawei, Huawei’s three top-end mobile phones exceeded 10 million units in 2017: these include the P9 series, the Mate9 series and the P10 series. Honor has become the top China’s Internet mobile phone brand in terms of cumulative sales and cumulative sales volume. The Mate10 series is the most current model.

In addition to the increased share of middle-end and high-end products, Huawei has given up some of its unprofitable low-end devices, especially in the Indian market. Xiaomi, another Chinese mobile phone maker, was able to revive the Indian market this year.

In the third quarter of 2017, Xiaomi sold 9.2 million phones in India, making it the largest smartphone company in India, with its share surging to 23.5 percent, Xiaomi said.

It’s worth noting that Xiaomi‘s sales were primarily from the Redmi series, and among those phones priced less than 1,000 yuan. When Xiaomi was first established, it quickly conquered the Chinese market with its low-priced phones. India is now Xiaomi‘s largest overseas market.

This year, Huawei may shift its attitude toward the low-end market. Its target has increased to about 200 million units from 153 million units in 2017. The huge gap of 40 million devices needs to be filled by the low-end market.

“More than 90 percent of the world is poor,” Ren said, “The market needs low-end mobile phones. Don’t look down on them. Huawei also needs to make low-end handsets.”

According to the planning for Huawei’s consumer business, 2018 will be the year to take the Huawei and Honor brands global. While stabilizing its position in the Chinese and European markets, Huawei will enter the US, Japan and emerging markets.

The Year to Surpass Apple

For now, Samsung remains the dominant smartphone maker, followed by Apple. Tencent learned from supply chain channels that, in 2017, Samsung, Apple’s smartphone shipments were 300 million and 200 million respectively. Affected by poor sales of the iPhone 8, the volume of iPhones may have a slight decline.

Huawei’s 200 million target may leave Apple under the greatest pressure. Huawei is entering the US market, challenging Apple’s home position.

According to foreign media, the dominance of the iPhone has discomforted multiple US operators. Some operators want to introduce other high-end mobile phone brands to counterweigh Apple, and at the same time to raise their competitiveness with other operators. Huawei is the only option.

Despite its low visibility in the US market, Huawei is already one of China’s most successful companies in globalization. Huawei has taken actions to open up the US market. Some major sales staff and executives are rumored to be heading to work in the US after Spring Festival.

According to The Information, most consumers in the US hardly know about Huawei. The company plans to spend $100 million in 2018 on marketing in the US to promote its brands and products. Americans will see Huawei’s phones in TV ads during 2018, Yu said.

Such a move would make Huawei the third-largest smartphone vendor in US marketing spending, according to Kantar Media. While there is still a large gap with Samsung and Apple, Huawei is way ahead of other manufacturers like LG.

Huawei officials have not confirmed the $100 million investment.

According to the source, it is difficult to enter the US market – especially the operator market. Even if the company successfully enters the market, the sales volume will not be large because there is a lot of resistance, including user recognition, the influence of the brands, markets, channels and other unforeseen factors.

Industry analysts said Huawei is re-opening the low-end market to ensure scale, and expanding into the US and other high-end markets to gain more profits.

According to Huawei’s style and investment, the smartphone market will be more competitive this year. The market will be in the hands of a fewer brands, which also means that the speed of reshuffling will be faster than ever before. For Huawei, it will be crucial to reach its target of 200 million targets, or to surpass Apple.

As Richard Yu put it, from 2014 to 2015, Huawei fought for survival and made it; from 2016 to 2017, Huawei fought to grow, and it has achieved its intended target. “I firmly believe that in 2018, Huawei will continue its rise,” Yu said.

This article by Guo Xiaodong originally appeared in Deep web and was translated by Pandaily.