9/15/2010 11:26:00 AM
Analysis: Huawei attacks the UK market
Chinese telecoms giant Huawei ramped up its aggressive drive into the smartphone market last week with the launch of the first low cost Android 2.2 smartphone.
Huawei may be a relative newcomer to the mobile phone industry but it is wasting no time in establishing itself as a serious contender. Over the past year, it has evolved from a supplier of cheap operator branded devices to a player with clear ambitions to develop its own brand and move up the value chain.
Globally, Huawei Device’s contract sales have risen from £0.39bn in 2004 to £3.25bn in 2009, while global shipments have risen in the same period from six million units to 90 million units in 2009, with an estimated 130 million units shipped by the end of this year.
With revenues running at £390m in the UK, Huawei is still a bit player in the UK smartphone arena, but the company makes no secret of its ambitions to become a major force here.
Huawei’s Western Europe VP Tim Watkins warns: ‘Huawei is a company to watch. We are becoming a very disruptive force in the market.’
Huawei is also keeping up the pressure, with plans to launch ‘around half a dozen devices’ over the next few months, says Watkins. These will range from simple QWERTY devices to larger Android smartphones and the H7 tablet device.
Huawei has wasted no time in forging strong ties with Google and is firmly wedded to the Android platform. Watkins says: ‘ Our strategy is to have a very close working relationship with Google.’
Launching the IDEOS as the first Android smartphone at an affordable price is clearly a coup for Huawei.
Nicola Philbin, UK and Ireland director of terminals, who has overseen its launch in the UK, tells Mobile: ‘This is the first pre-installed Google handset at that price point. We have worked with Google to bring an affordable Android smartphone to the mass market.’
The launch of the IDEOS is also a significant milestone for Huawei. Philbin explains: ‘This device is Huawei’s first step into the OEM environment with Google and it is a very strong proposition.’
Its lack of an overlay is something Google was keen to promote, says Philbin.
‘Google’s preference is to have a Google UI rather than a skin on top because it is much easier to upgrade, so IDEOS users will be able to upgrade over the air to Gingerbread before the end of Q4.’
Watkins believes rivals will soon follow suit. ‘I feel others will follow our lead in providing unskinned smartphones because as Android marches on, that upgrade strategy will become more and more critical,’ he argues.
Philbin adds: ‘Google are trying to influence all manufacturers to have unskinned Android devices so this is one of the key benefits we have over our rivals.’
Watkins believes the company’s willingness to launch an unskinned phone along with its global reach and massive R&D capability clinched the deal with Google.
‘Google was very keen to get a pure Google, pure Android device out there and they liked Huawei for its high level of innovation and because it can move extremely quickly.’
Huawei has 45,000 R&D engineers in China. ‘We get the cream of the graduate crop in this field every year from a pool of four million students so the standard is very, very high,’ says Watkins.
Huawei’s evolution is often compared to HTC. However, unlike HTC, it has no plans to launch a major brand campaign. Instead, says Watkins, the company will for now rely on operators and distributor Data Select to raise its profile.
Philbin argues comparisons with HTC are short sighted. ‘While HTC focuses on manufacturing handsets, we are a much bigger operation offering infrastructure, application and managed services as well as our devices business, which means we can offer operators much more in the form of a true end-to-end solution.’ Rivals will ignore the rise of Huawei at their peril.
What the analysts say
Analyst at Canalys
As consumers become more aware of its presence, Huawei could become a very disruptive force. Android is gathering momentum, with people increasingly asking specifically for Android devices. This negates the importance of handset vendors, to an extent, with operators increasingly bringing in cheaper Android sets such as the IDEOS.
Senior analyst at CCS Insight
Only a fool would underestimate the determination of the Chinese. Huawei is taking a more long-term view of the market, unlike most established players. It is not about the next quarter but the next few years. This is a company we are watching very closely. It is also being used by network operators to push existing manufacturers very hard. They have taken a very aggressive stance on pricing to get ranged and now this is putting other manufacturers under pressure.
Analyst at Strategy Analytics
Huawei’s launch of an Android 2.2 smartphone is a good way for the company to win operator mindshare. Huawei has realised that although it can create volume in Africa and Asia, profits lie in Europe in particular. Its strength in the dongle market, holding almost a 60% share, also gives them a strong starting point.
The new IDEOS handset
The IDEOS is an Android 2.2 smartphone that Huawei co-developed with Google. It comes with Google branding and is aimed at the low to mid market. The device will be available for between £99 and £127 in various colours from mid-October.
The IDEOS has download speeds of more than 7.2Mbps and 3G and Wi-Fi dual network support. It comes without an overlay, allowing Android to update automatically.
The device also doubles as a Wi-Fi router for up to eight devices at a time, and features voice dialing, voice navigation, and the ability to run applications from the SD card.
Huawei has yet to reveal which operators will stock the device.