Huawei gearing up for premium push

Analysts claim launch of P9 smartphone could help close the gap on Apple and Samsung

Huawei could soon be hot on the heels of Samsung and Apple, standing out as the biggest threat to the duo’s dominance.

This is according to a number of leading analysts that attended the launch of its P9 smartphone, which took place in front of 800 people at Battersea Evolution in London on April 6.

The flagship device, which will go on sale at all major mobile retailers and operators early next month, is notable for its 12 megapixel dual rear cameras and its partnership with the German optics specialists and camera manufacturer Leica.

Huawei Consumer Business Group CEO Richard Yu said: “Huawei gives P9 users the best smartphone photography experience by leveraging the unrivalled capabilities of Leica, the leader in the world of imaging for more than 100 years.

“Consumers around the world use their smartphones to take billions of pictures each year, making photography critical to user experience.

“P9 users can now capture images with unmatched clarity, richness and authenticity, with a masterfully designed and powerful smartphone that looks and feels
incredible.”

In 2015, Huawei became only the fourth manufacturer in history to ship over 100 million smartphones in a year (preceded by Nokia, Samsung and Apple).

According to IDC, shipments were up by almost half compared to 2015 at 106.6 million units, with market share up from 5.7 per cent to 7.4 per cent to comfortably cement its position as the third biggest smartphone manufacturer behind Apple and Samsung.

In the final three months of last year, it was again the third biggest vendor, accounting for 8.1 per cent of the global smartphone market – up from 6.3 per cent a year earlier. Shipments rose from 23.6 million to 32.4 million units.

According to figures from analyst Kantar Worldpanel ComTech, Huawei accounted for 2.7 per cent of all smartphone sales in the UK during Q1 – up from 1.6 per cent a year ago. It was the seventh biggest smartphone maker in the three month period behind Apple, Samsung, Sony, Motorola, Microsoft and LG.

Serious competition

Analysts were impressed with the P9, praising its design and continued drive to establishing itself in the premium end of the market alongside Samsung and Apple.

IDC research director for European mobile devices Francisco Jeronimo said: “Huawei is trying to differentiate from the Chinese vendors and move away from the perception their phones are cheap and low quality. This isn’t the case anymore and it is clear what Huawei is standing for – premium products to compete with Samsung and Apple.

“They are taking the next steps to seriously compete at the high end. It will take a while to grow market share here but they have grown this significantly
recently.

“They have come a long way from the portfolio they once had and are now the third biggest smartphone player in the world, which is remarkable.

“If Huawei performs and executes its strategy and product roadmap, they will be very close to Samsung in terms of market share over the next couple of years.”

Stepping up

Gartner research director Roberta Cozza was equally enthusiastic about Huawei’s long-term prospects, claiming they have made a step forward in penetrating the premium market and heading into 2017 they will have Apple and Samsung in their sights.

However, she is a little less sure about the impact the collaboration with Leica will have, and criticised Yu for comparing the P9 to the iPhone 6s and Samsung Galaxy S7 smartphones during the launch.

Cozza claims Huawei needs to step up to the “next level” and even though the P9 is slightly cheaper than rivals, competition in the premium segment is only going to increase.

“I’m not sure how much the Leica brand appeals to the general user because it is one that is well-known to photography enthusiasts. The work they have done is important, from R&D to engineering with Leica, but I’m not sure the premium buyer will understand that.

“They made a lot of comparisons with the iPhone 6s. I was looking for a little more around the user case. They need to stand apart, not compare themselves to others and really step up to the next level to maintain this sustained growth that we have seen in the past year.

“The premium end is not getting any easier for anyone, even though Huawei has a price advantage compared to the others.”

uSwitch.com mobile analyst Rob Kerr went as far as to say that Apple is now fully aware that Huawei is behind it, and that the P9 could attract some of the younger customers the Californian tech giant may be targeting with the iPhone SE.

While Apple’s shipments last year grew by a fifth to a record 231.5 million smartphones, Huawei’s grew at more than double the rate – 44.3 per cent.

Killer features

Kerr labelled the deal with Leica a “smart move” because a good camera is still a major selling point in a smartphone and also adds much-needed brand recognition to Huawei.

“Huawei has managed to raise Apple’s hackles. The launch of the iPhone SE could be read as the tech giant’s attempt to claw back some of the younger users it lured away.

“Therefore, stalwart mobile makers are not going to like the launch of the flagship P9. Compared to the iPhone 6s it’s slimmer, and boasts a bigger display with better colour saturation, so it could well prove to be a large thorn in the iPhone’s side. But it’s the battery capacity – almost twice the size of the 6s – that is the real killer.

“Partnering with Leica is a smart move. Not only is a decent camera a major selling point for smartphones, it adds brand power to a phone maker that is not yet a household name in the UK.”

Brand awareness

Despite the positive first impressions of the P9 and the forward direction it is likely to push the manufacturer in, brand awareness remains a major sticking point for Huawei.

Leica CEO Oliver Kaltner on stage at the launch of the Huawei P9

Analysts claim the partnership with Leica and seeing its branding next to the camera lens will help that, as long as it is conveyed correctly to customers not familiar with the brand.

Huawei has also drafted in Hollywood actors Henry Cavill and Scarlett Johansson to front its global marketing campaign, a move which they believe should help the manufacturer resonate more with end users.

“They need to work on their brand awareness,” said Jeronimo. “The partnership with Leica and endorsement from major celebrities will achieve that and help them sell more devices.

“Consumers care about the quality of their pictures. Everyone claims to have the best camera, but if you have a stamp from Leica it will help the Huawei brand be better known.”

CCS Insight analyst for smart devices and pricing Jasdeep Badyal agrees, but claims the challenge for Huawei is greater than just simple brand awareness, with the need to stand out among its competitors being the overriding factor.

However, he feels the February launch of the Matebook, a 2-in-1 tablet/laptop hybrid, could help achieve that.

Superman actor Henry Cavill made a surprise appearance at the launch of the P(

Big ambitions

Badyal reckons Huawei launching the P9 immediately in several countries where the brand isn’t recognised, primarily Europe and North America, is a telling factor in its long-term strategy.

“They need to go beyond an improved camera, attractive design and bigger battery. The MateBook could play a major role, with the P9 launch coming soon after. Doing that will enable them to command a bigger share to compete with the likes of Samsung in the premium end.

“Huawei also considers the P9 as its most important launch. They are launching immediately in several countries, including key markets where the brand isn’t recognised, such as Europe and North America, and that is a major play for any Chinese manufacturer.

“It is telling the device is launching immediately in the UK, and shows it has really big ambitions to increase its market share here.”

Effective marketing

Cozza is less optimistic about Huawei’s ability to successfully raise its brand awareness, claiming it can learn a lot from the likes of Apple over how to market a specific feature on a smartphone.

She feels they need to provide more examples of users cases, something they will have to adopt quickly in their marketing if they are going to be successful.

“In some aspects when they compare themselves to Apple the device specifications might be better, but what they are failing to understand is the message has to be around the user experience.

“If a device has a dual camera, you can be sure that Apple will market it in a certain way. Huawei isn’t there yet but they need to build on it.”

“Major breakthrough”

One milestone it has achieved and one the analysts agree will hold it in good stead is all four of the UK’s major mobile operators are selling the P9 from launch for the first time.

Carphone Warehouse is also stocking it, something they believe shows the operators and retailers now believe in the potential of Huawei’s products; they’re more willing to invest in it and provide it with more shop space.

Badyal labelled this a “major breakthrough” for Huawei while Orr claimed it will help it transition from a challenger to a household name, making it a “force to be reckoned with”.

IDC’s Jeronimo claimed Huawei will look to target Samsung customers as opposed to Apple’s, who are more loyal to the brand.

“Not only will it be looking to replicate Samsung, it will also be targeting Samsung’s customers because there isn’t anyone who can steal customers from Apple.

“Samsung users are not as loyal as Apple’s and Huawei will be looking to attract those those that are looking for something a bit different.

“The strong operator support shows they are definitely now among the tier- one vendors and a top priority. The operators are spending money to really get behind the device to make it a big success.

“The reason Samsung has grown so quickly is because of the investment they have made here. That is essential. You can have all the adverts you want but if you go to a store and don’t understand anything about the device, then it is a difficult sale. That’s what Huawei plans to change and follow the same steps as Samsung has.”