Huawei Smashes Samsung-Apple Smartphone Duopoly, but Does It Have Longer-Term Legs?
A major milestone was quietly passed last week when China’s Huawei Technologies overtook global tech giant Apple to become the world’s second largest smartphone maker during this year’s first quarter. The event didn’t register too much attention, except perhaps from industry watchers, since it wasn’t the first time Huawei had passed Apple on the global smartphone charts.
The fact is that Apple lost the No. 2 spot twice last year to Huawei, at least on a quarterly basis, even though the U.S. giant managed to win the No. 2 spot for the entire year, behind only longtime champion Samsung. Data tracker IDC does see Huawei ultimately taking the No. 2 spot from Apple for the first time on an annual basis for all of 2019. But that said, the trends behind this changing of the guard have been going on for quite some time now, with Apple on a steady downward trajectory and Huawei moving in the opposite direction.
So what’s the bigger significance here, and what does it mean for the future in this lucrative but also extremely competitive and fast-changing sector?
As a longtime watcher of the space, I can remember how duopolies like the Samsung-Apple combination have prevailed in the mobile communications world for quite some time now. Sector historians will know I’m referring to the earlier duopoly of Nokia and Motorola, which dominated the space for years before being relegated to oblivion about a decade ago.
I checked with my contacts at IDC, which tracks the market, and confirmed that Samsung and Apple have occupied the No. 1 and No. 2 positions since 2011, which roughly tracks to the advent of smartphones. Apple revolutionized the space with its introduction of touch screens and a highly intuitive operating system, which was then quickly imitated and embraced by Samsung using Google’s Android operating system.
Before that, Nokia and Motorola were leaders for a roughly similar period, known more for their innovative forms in an age where cellphones were newer and almost as much fashion accessory as practical communications device. I still remember all the various types of phones that the pair developed in their heyday, with such colorful descriptions as “clamshell” for phones that flipped open, and “candy bar” for more block-shaped models.
All those creative shapes and sizes gave way to the pretty standard form you see now in the smartphone era, where the screen takes up pretty much entire surface of flat, rectangular-shaped models of various sizes.
Functionality has become king in the current era, overtaking fashion and customization. Gone are the days when everyone individualized their phones with special ringtones, wallpaper and other personal touches. Instead, now it’s all about connectivity, which includes how well your phone does things like streaming and storage. Cameras are also increasingly important, not only for taking snapshots, but also taking over many of the functions previously done by faxes, for anyone who remembers those.
With all that background in mind, we’ll return to Huawei and more broadly the bumper crop of Chinese smartphone-makers that are now crowding Apple and Samsung out from the top of the global smartphone leader board. Huawei is really just at the vanguard of a younger generation of smartphone-makers that were able to play quicker catch-up with the likes of Samsung and Apple by seizing on the rapid maturing of most of the key technology that goes into a smartphone.
The latest IDC numbers that showed Huawei overtaking Apple also revealed that Chinese firms accounted for four of the top six players in this year’s first quarter, with local players Xiaomi, Vivo and Oppo also making it onto the leader board. The fact is that most of these companies lack the history or pedigree of names like Apple and Samsung, and were basically able to rise so quickly by seizing on off-the-shelf, mature technologies.
The one exception was Huawei, whose history actually does date back to the 1990s when China was just embarking on its drive to build up private enterprises and market economics. From its roots as a reseller of telecom networking equipment, Huawei would go on to develop its own products that now power many of the world’s major wired and wireless networks.
From that base, Huawei used its deep resources and experience to get into cellphones and eventually smartphones in a far more sophisticated way than any of its Chinese peers. Its phones are generally considered quite solid, and I’ll admit that I’ve become a convert to the brand over the last two years. Cameras are one area where Huawei is said to be quite advanced, and the company has smartly signed up a partnership with German expert Leica to promote that part of the business.
But the thing that really sets Huawei apart from Apple isn’t product, but price. For too long Apple relied on its name to charge huge premiums for its iPhones, even as Huawei and others had to settle for far more modest margins. Apple could do that because it really was the leader for a long time in terms of quality. But that’s no longer the case, and Apple has finally woken up to the new reality and begun slashing its prices in China to fend off the local brands.
That brings us to the bottom line, which is whether Huawei is part of the next duopoly that could dominate wireless devices for the next decade. Frankly speaking, I think the answer is “no,” at least based on what we’ve seen so far. Or perhaps “maybe” is better.
Price doesn’t really count as innovation, which is what kept Motorola and Nokia at the top during their heyday, and Samsung and Apple as well. But high quality at lower prices is really the main thing that Huawei is bringing to the table right now. For it to truly find a place in the duopoly of the next 10 years, Huawei or someone else will have to come up with something truly new and unique. That could be coming soon in a new generation of phones that take advantage of multiple and flexible screens, though it’s far from clear just yet who will find the winning formula in that space.
Doug Young has lived in Greater China for two decades, including a 10-year stint at Reuters, where he led China corporate news coverage. Send your questions or comments to DougYoung@caixin.com
Jan 29 17:18
Jan 29 12:38
Jan 29 10:20
Jan 29 06:38
Jan 28 11:53
Jan 28 11:38
Jan 28 11:31
Jan 27 14:25
Jan 27 14:09
Jan 27 13:57
Jan 24 06:56
Jan 24 06:01
Jan 24 02:16
Jan 23 18:30
Jan 23 16:00
- 1Wuhan Virus Latest: Beijing Warns of Person-to-Person Spread
- 2Reporter’s Notebook: We Stayed in Wuhan as the Last Trains Pulled Out
- 3Travel Warnings Issued as Coronavirus Cases Confirmed on Four Continents
- 4Wuhan Mayor Offers to Resign Over Coronavirus Response
- 5Beijing, Shanghai and Other Cities Enact Highest Level Emergency in Response to Coronavirus
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas