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Huawei’s flagship Mate 30 device has taken centre stage as the Chinese giant battles the U.S. sanctions put into effect by President Trump back in May. The device was the first to be launched by Huawei under the restrictions, and ships without the standard suite of Google software and services. In its first 60 days, the Mate 30 posted strong sales figures, shipping 7 million units according to the company’s smartphone boss Richard Yu. But that, it seems, was as nothing compared to the device’s performance the following month. According to a new Chinese report, Huawei shipped a further 5 million Mate 30 devices in December—a 40% jump over the average of the two prior months. But, behind the good news headlines, the reality is less encouraging. And that could spell bad news for the forthcoming P40, expected to launch in March.
According to Sina Mobile, Mate 30 sales “have exceeded everyone's imagination—the reason it is so popular is because it is so perfect.” Perfect in form, perhaps, but not in function. The device has been described as “the best smartphone you shouldn’t buy,” with its lack of full-fat Android killing its mainstream prospects outside China, where Google is already prohibited. And this is the crux. the reality is that most of those Mate 30 devices have sold in China, where Huawei has built an unassailable position. The company has secured a 42% share of its domestic market, beating out its domestic rivals as well as Apple and Samsung. But there’s a limit. China is a vast market, but it’s broadly flat and it’s not limitless. It’s also more price sensitive than key markets in the west. Sales volumes and sales margins are very different metrics.
According to one Chinese analyst report, Huawei is targeting a fanciful 75% share of the Chinese market in 2020. That won’t happen—it’s inconceivable that Xiaomi, Oppo, Vivo (and Apple) will share less than 25% of the market. But the shape of the analysis is critical because it underlines the need for China to keep pulling hard for Huawei in order to support its position as the world’s number two smartphone maker, holding off Apple. Huawei shipped 240 million smartphones in 2019, a (relatively) pedestrian 15% increase on 2018, given its growth rates of recent years. Discounting down from the 75% mark, behind the analysis is the suggestion that Huawei will need to sell more than 200 million of China’s 400 million devices to shore up its overall smartphone sales. And that brings us to the forthcoming P40.
We now know that the P40 will launch at the end of March, we also know that in lieu of a major change in the U.S. position, it will launch without Google onboard. The device is expected to carry all manner of technical innovations and improvements, as reported for Forbes by David Phelan, but from a sales perspective only one thing will matter—how that Google-shaped void is filled. Huawei execs have suggested that the company aims to launch its Google alternative Huawei Mobile Services in time for the P40 release, but that means seamlessly replacing core apps and services and encouraging millions to shift—it’s a hellishly ambitious ask. But, unless something of that order does happen, then it’s difficult to see how the P40 will fare differently to the Mate 30—selling in high volumes at home, falling much flatter abroad.
In his end of 2019 internal announcement, Huawei Rotating Chairman Eric Xu warned that Trump’s blacklist was starting to hit the company hard, “survival will be our first priority,” he said, signalling a move to “optimise” the organisation, rooting out poorly performing employees “to fight inertia and rid ourselves of complacency.” Huawei’s smartphone sales numbers fell short of expectations for 2019, a shortfall attributed to the U.S. blacklist. “We must increase supply chain diversity,” Xu said, “any risk that undermines business continuity is as a matter of life-and-death.”
There is something of a disconnect in the corporate messages from Huawei—a difficult 2020 ahead, staff cuts, a race to replace the U.S. supply chain, with the more positive consumer messages—a seamless shift from Google’s GMS to the in-house HMS, the P40 expected to sell through all the usual international sales channels. In reality there are no magic fixes—“at Huawei, we don't believe in miracles,” Xu acknowledged, “the U.S. will continue to suppress the development of [our] leading technology, a challenging environment for Huawei to survive and thrive.”
There’s much at stake, it’s difficult to overstate the importance of the P40 launch and meeting some of the expectations set for a Google resolution to meet the demands of the international market. The downbeat end of year announcement was the most brutal admission yet from Huawei as to the impact the U.S. campaign is having on the company and the position it has built for itself around the world. If the P40 does fall flat outside China, resulting in downwards pricing pressure inside China to maintain sales numbers, then Huawei will not be chasing down Samsung for the coveted number one slot, it may not even hold off Apple’s recapture of its long held second place. It will also put pressure on the company’s balance sheet as it looks to fund the staggering investment required to build a third-way alternative to full-fat Android.
It is now January, expect more news and analysis on the progress of HMS and the app developer community being fostered around the world. You can also expect the rhetoric to increase as Huawei’s CFO Meng Wanzhou fights extradition to the U.S. following her arrest in Canada in late 2018. Meng argues her arrest abused Canadian immigration laws to collect evidence for U.S. law enforcement. Meng is the daughter of Huawei’s founder Ren Zhengfei. Her arrest and extradition is highly symbolic.
China is flexing its muscles in support of its wounded tech champion. We have seen reports off pressure being put on key European markets to “discourage” any lockout of Huawei from their markets. We can expect to see something similar now in the U.K., as Washington’s key ally makes a decision that is seen as more linked to politics than security. If 2019 was something of failure on the part of the U.S. to curtail Huawei’s ambitions, it is beginning to look as though 2020 could be very different. And the end of March launch of the new flagship P40 will be hugely significant for both sides.
"mate" - Google News
January 03, 2020 at 03:15AM
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Huawei Mate 30 Sales Jump 40% Despite Trump’s Blacklist—This Is What It Means For New P40: Report - Forbes
"mate" - Google News
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