To many people, there are smartphones and there is the Apple iPhone. Apple’s marketing appears to project a reality-distorting field over technology that has consumers believing that Apple technology is cutting edge and that the latest iteration is somehow radically improved from the previous generation. The Apple iPhone is a very expensive product and many, many people will pay a lot of money for the device, much to the chagrin of many other smartphone manufacturers around the world attempting to compete in the premium-priced end of the smartphone market. Sales of the iPhone typically increase the average selling price of smartphones in a given market and for the right manufacturer, as the average selling price rises, so they are able to benefit from this. One beneficiary is Huawei, which over the last year has switched from a producer of mostly lower into more expensive devices. According to Canalys, a research firm, Huawei has increased year-on-year smartphone shipments by 81% in China during the third quarter, accelerating past arch rival Xiaomi to become the number one manufacturer.
Elsewhere, Huawei have introduced the more expensive Google Nexus device, the Nexus 6P (“P” being “Premium”), which will achieve two things. One is that Huawei will sell a number of Nexus devices, but more importantly it will raise their profile for smartphone customers. Huawei are currently on something of a charm offensive with a beautiful Android Wear smartwatch, a number of tablets and smartphones and of course the Nexus 6P. Huawei are also much more than just a device manufacturer – they have a successful network communications business and own HiSilicon, the semiconductor business. The business has been able to extend its reach outside of the Asian markets.
At this time, the iPhone remains untouchable, but other Android manufacturers are vulnerable to Huawei’s process. This means Samsung, HTC, LG, Motorola to name but a few well known brands in the developed market, as well as Xiaomi and Lenovo in the domestic (Chinese) market. Away from China, Samsung is the leader and has the most to lose from an up-and-coming Android device manufacturer. Apple and Samsung have traditionally traded market share depending on what new products have been launched, but is is possible that some customers will switch from Apple to Huawei and perhaps back to Apple at some point in the future, cutting Samsung out of the loop. Samsung has a broad portfolio of devices and respectable exposure to the Chinese market, but against the battle between Huawei and Xiaomi, it has much to lose. Especially as the Huawei / Xiaomi battle looks set to spill out over the rest of the world. Xiaomi has ambitions to sell into the European and North American markets, which Huawei has already managed.
There are other similarities between Samsung and Huawei: both have the option to use their own chipsets in their devices with the Samsung Exynos and the HiSilicon Kirin chipsets. Both have partnered with Google to release Nexus devices (although Samsung have released three Nexus devices to Huawei’s one). And now both are competing with the iPhone, but the young upstart in the industry may yet teach Samsung a trick or two.