The Investor SA

20 March, 2015

Werne van der Merwe

 

-Huawei takes telecoms market by storm-

 

In Huawei's twenty seven years of existence, the company has diversified from a sales agent, to another self-made company, to an OEM (Original Equipment Manufacturer) powerhouse.

 

Founded in 1988 by Mr. Ren Zhengfei, the company's current CEO, with a start-up capital of only three thousand to four thousand US Dollars. In the company's early years, Huawei was initially a sales agent to a company in Hong Kong, for whom they provided PBX (Public Branch Exchange) switches. After-sales services and installation was also provided. Wireless networks, access networks and switches were areas to which Huawei have diversified over the years. On July 29th 2014, the market for smartphones worldwide grew by 23.1 %.

 

Despite challengesendured by Samsung and to less extend, Apple, the market boosted Huawei's and most of the other smartphone's vendors. The challenges endured by Samsung and Apple were to some extend, due to Huawei's rise to China's second largest smartphone maker. More than $40 billion of their annual revenue comes from a wide range of telecom gear and products. Huawei chose to focus on 4G handsets like the P7,

to encourage consumers, especially the Chinese consumers, to upgrade from 3G to 4G. The company still focuses on broadening its global

reach, and with its volumes of Y-series low-cost handsets that are fueling growth in regions outside China. Huawei,after being branded as a national security threat, are planning a major campaign to win over U.S consumers, through rolling out new smartphones and wearable devices, backed by their marketing campaign.

 

Huawei, in their marketing campaign to win over the U.S consumers, plan to unveil several of their smartphones and wearable devices, including the 'Honor' phone, which is largely youth orientated. Huawei has changed their approach to marketing, as they try to shed of the myth of it being a purveyor of cheap technology products, as most Chinese companies are. They plan to market their brand through traditional ways of advertising. They have signed sponsorships with the London football club 'Arsenal', as well as cricket teams in India, Rugby clubs in Australia, and the Johannesburg based rugby club 'The Lions'. Other advertising campaigns see them mastering online promotions and advertisements on major billboards, such as the 'Honor 6' billboard in New York's Time Square.

 

The main catalyst is continuing to emerge in markets supported by local vendors, for they improve the growth percentage of the smartphone

market yearly. A wide range of Chines OEM's (Original Equipment Manufacturer's) are amongst the top vendors currently in the market. Huawei

was by far the most impressive, almost doubling it's shipments from last year, closely followed by a strong performing 'Lenovo'.

 

Here are some of the headlines of other smartphone vendors:

 

SAMSUNG: Despite it being heavily criticized , SAMSUNG's Galaxy S5 shipped millions of units, while the S4 and S3 still had volumes that remained strong, for it was a more affordable alternative. Despite of that being said, SAMSUNG still lost 7% of its entire market share.

 

Apple: Enjoyed continued success BRIC (Countries of Brazi, Russia, India and China ) markets. This is good because they are establishing a footprint in emerging markets. With that being said and done, Apple still experienced a seasonal low. Even lower than the years before

 

Lenovo: Had increasing success from their A788T, as well as the 3G A388T models, despite enormous pressure from local brands in China, Whilst they were waiting for the Motorola acquisition approval, they still gained traction in international markets, especially the BRIC countries and other emerging markets. Even though large volumes were picked up, still less than 5 % of Lenovo's shipments are registered outside of China

 

 

LG: Their volumes were largely driven by models such as the 'L 70' and the entire 'L' series that performed in the United States, as well as the general markets.