Chinese smartphone, tablet and telecommunication equipment manufacturer, Huawei, are going from strength to strength at the moment. In China, Huawei are locked in a battle with Xiaomi for consumer mindshare and of course devices sales. However, whereas Xiaomi consider themselves to be an Internet company and offer a range of online services, Huawei sell physical devices in different markets across the world together with telecommunications equipment – this being the networking components used in towers, base stations and similar. Huawei are able to successfully sell their smartphones and tablets around the world because the business have acquired a portfolio of patents necessary for licensing purposes around the world, giving them something of a headstart over Xiaomi. Huawei, of course, need to make hay whilst the sun shines as Xiaomi are working on their own patent portfolio.
Huawei have an increased mindshare as there are rumors circulating the Internet that they are to manufacturer one of the next Nexus devices, due out later in 2015. Currently, the rumors point towards Huawei building a new Nexus 5 (perhaps called the Nexus 5 2015 Edition with a nod towards the Samsung Galaxy Note tablet), but we believe it will be some time before we are able to substantiate these rumors. We have seen the launch of a number of well-made, solidly performing Huawei smartphones and tablets over the last twelve months and it should be a great experience for Huawei if they were to manufacture a Nexus device. In the networking services division, the company still faces some headway as some operators have a policy of not using Huawei networking equipment because of security fears. Here the prime example is Sprint, where their refusal to engage with Huawei's networking division may be contributing to delays in their network densification plans.
Back to Huawei, the business has just announced revenues for the first half of 2015 and they are some 30% higher than last year, reporting CNY175.9 billion, the equivalent to a little over $28 billion in US terms. The operating margin is at 18%, which is supported by growth in the three core business markets, these being telecom networks, equipment and services, enterprise business and consumer business. Huawei's Consumer Business Group Chief Executive Officer, Richard Yi, reported that the company is now selling over 10 million smartphones a month since May 2015 and should reach its goal of shipping over 100 million smartphones in 2015 before the year is out.