The mobile phone market might look like a crowded place to consumers as a pack of manufacturers clamour for their attention, but that is not frightening off new players from attempting to join the party.
Huawei and fellow Chinese manufacturer ZTE are the latest companies looking to move into the smartphone market. Both have vowed to replicate the recent success of HTC and move beyond manufacturing white label products to become a successful brand in their own right.
And Huawei may just have stolen a march on ZTE with the recent appointment of mobile industry veteran Mark Mitchinson as EVP for the UK.
Mitchinson brings a wealth of experience to the job after 23 years working in the mobile phone industry. He helped anchor Nokia as the number one brand in the UK and most notably established Samsung as a major tier one manufacturer in his 10-year stint with the company. After some time off in 2010 and a few months with Carphone Warehouse looking after its b2b distribution side, he joined Huawei in May.
After two and a half months in the job, Mobile found him in relaxed and ebullient mood when we spoke to him last week, exuding confidence that Huawei could become a household name with British and Irish consumers.
‘Look at how the manufacturer names have changed in the mobile market,’ he says. ‘NEC was dominant in the early days, then Panasonic came along, then Sharp came in, Toshiba had a little go, Technophone came in and got bought by Nokia, which in turn became the number one brand. But the thing is, if you map it out over the last 20 years it has always changed dramatically. There is always room for new entrants and that’s what drives us at Huawei.
‘I like building businesses and that is what I do best – that’s what gets me up in the morning,’ he adds. ‘It just so happens that most of that has been for mobile phone manufacturers. That’s where my success over the last 23 years has been. I’m looking for a hat-trick now. First it was Nokia, then Samsung, so the next one is Huawei.’
Mitchinson is cagey about the finer points of Huawei’s strategy going forward, but says the cornerstone of its vision is to first build on the brand’s existing relationship with its operator customers. This has largely come from supplying network infrastructure, dongles and more recently white label handset products.
‘Our strategy is not to move away from white label products for operators,’ says Mitchinson. ‘We have customers there who have given us a lot of business over the last few years, so we will be loyal to them. But of course we want to leverage that into own-brand devices and that will be part of our drive going forward.
‘We’ve been supporting operators on the infrastructure side and we’ve pretty much owned the dongle space over the last few years. Operators see the products and services Huawei has already produced, so it is a natural progression to build on that by moving into handsets,’ he says.
Huawei’s chief marketing officer Victor Xu is working with Mitchinson to build the growth strategy for the UK. ‘Huawei has a very clear vision. It is my job to build a strategy around that vision and make sure we reach where we want to get to. We are still developing that,’ says Mitchinson, ‘but I am supporting him [Xu] with my local expertise and knowledge of what is right for our particular market.’
While he won’t be drawn further on the strategy, Mitchinson is happy to confirm that own branded devices, starting with the Huawei Blaze, will be hitting the UK this year, although at what level and at what price point is still to be decided. However, he indicates where he thinks Huawei can find its position in the smartphone market.
‘We are not saying we are coming in to dominate the upper tier of the market. But if you look at the customer base of many operators, some 50% to 60% of them are still 2G feature phone users, so that is where the opportunity is for us. We are still negotiating with our customers,’ says Mitchinson, ‘but you will see a little bit of activity around brand and next year we will start to build something more substantial in terms of marketing.’
Many Asian companies have a reputation for micro-management and Huawei has not escaped that tag, according to industry commentators. It’s not a management method that is likely to appeal to Mitchinson, who likes to be left in charge to get on with it. And it seems that is the case here.
‘What’s great for me, and I have the autonomy to do it, is I have the opportunity to potentially set the blueprint for the rest of Europe,’ he says. ‘We are coming from a very strong place and there is an appetite among our customers to work with us in a collaborative way.’
Collaborative working with partners is one of the foundation stones of Huawei’s strategy to take on the tier one manufacturers, according to Mitchinson. ‘You have to partner with the right companies who are prepared to invest,’ he says. ‘That’s important. It is not just about providing products at certain prices with a certain functionality. Anyone can do that, but it won’t get you to tier one status as a manufacturer.’
The real opportunity to break into the mobile phone market for Huawei lies in the affordability of its devices, which will attract those 2G feature phone customers to upgrade to a smartphone. ‘That doesn’t mean cheap,’ he says. ‘Affordability means that in recessionary times you have to look at what is cost-effective. Most important from a customer perspective is how they use those devices. We have got to get them to come back to Huawei. It’s about how you maintain the customer relationship.’
This is where Mitchinson believes he can make a difference. ‘I have a good knowledge of that. I’ve been working with customers for the last 20 years; they share information that is vital. It is not about going out there and creating a massive above-the-line campaign, because I don’t think that will resonate. I don’t think it will mean anything to anyone. What is important is to collaborate right now. I’m not saying we wouldn’t do above-the-line campaigns in the future, but it is not something that is my primary focus now.’
Instead, the company will seek to capitalise on the fact that it is already in fifth place globally in terms of market share for Android devices. ‘The Android OS is very successful and growing at a fast rate,’ he points out. ‘We have an opportunity to leverage that now, although that does not mean we won’t work with other OSes going forward. Android plays to our strengths because we have exceptional quality products at affordable prices and in the marketplace that is absolutely vital.’
He also believes that the ‘entertainment’ angle of smartphones has been advertised to death by tier one manufacturers and that a new focus is needed that reflects changes in the way customers are using their smartphones. ‘It’s about how can you be more productive and more cost-effective around the use of these devices,’ he argues.
However, Huawei does not intend to ignore either the consumer or the business channel. The company’s UK and Ireland distribution strategy is still evolving, but Huawei has signed a European framework agreement with 20:20 and is working with Data Select as well. Neither agreement is exclusive and Mitchinson isn&r