Huawei defeats Apple and targets Samsung? The winner will be decided in the 5G arena

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Recently, Samsung announced that it will launch its first foldable phone in early 2019. Given that its recently launched Galaxy Note 9 has been accused of lack of innovation, and Huawei, which ranked second in global sales in Q2 this year, is also eyeing it, Samsung may hope to use this foldable phone to consolidate its global market position.

However, it is reported that Huawei's first foldable screen mobile phone will be released in November this year. If this phone is successful, Huawei will surely maintain its second place in the world. Who will eventually sit on the throne of global smartphones may have to wait until the 5G competition to see the result.

Huawei defeats Apple and targets Samsung

"Huawei has never defeated Apple. Although Huawei's mobile phone sales in third world countries exceed Apple's, from a global market perspective, Apple has grabbed more than 80% of the profits." A foreign netizen commented on Huawei's mobile phone sales surpassing Apple for the first time in the second quarter.

This is the first time since 2010 that Apple's mobile phone sales have fallen out of the top two in the world. While this has caused a lot of excitement in China, it has also sparked heated discussions overseas. Analysts from many international research institutions believe that this matter should not be underestimated. Tarun Pathak, a global market analyst at Counterpoint, said, "Huawei's corporate image and brand awareness are gradually improving in all markets and regions around the world."

Due to the obstacles in entering the US market, Huawei has to make more efforts in the Asian and European markets. From Indonesia to Saudi Arabia, from South Africa to Europe, Huawei has conquered many price-sensitive markets and made great strides. However, as the above netizens said, from the perspective of mobile phone profits, Apple's position in the global market is currently unshakable. But one thing to note is that high sales means high coverage. As the markets in these regions gradually mature, consumers will gradually transition to high-end phones, and by then, these consumers will find themselves in Huawei's ecosystem. Therefore, what Huawei won is not just a number, but a huge business opportunity.

IDC analyst Ryan Reith said, "Huawei's continued growth is admirable, after all, in the markets it has entered, its brand awareness is mostly low." In Tarun Pathak's view, Huawei's success is due to its two-pronged strategy: using the fast-growing Honor sub-brand to target the mid-range market, while high-quality Huawei phones such as the P20 and P20 Pro focus on the high-end market. Public data shows that Huawei's mobile phone shipments accounted for 11% of the world's total in the first quarter, of which more than one-third of sales came from Honor.

Nowadays, some configurations of many mid-range models are comparable to Apple's high-end models. This is why even in many developed cities, many people are starting to choose mid-range models.

However, dethroning Apple is only the first step. Huawei's ultimate goal is to be the world's number one. Huawei Consumer Business CEO Richard Yu predicts that Huawei's mobile phone shipments will exceed 200 million units this year, and it is expected to remain the second largest in 2019. In the fourth quarter of 2019, it will have the opportunity to surpass Samsung and become the world's largest mobile phone manufacturer. From a global perspective, only Apple and Samsung can currently reach 200 million shipments. In order to achieve this goal, Huawei needs to continue to exert its strength in already very crowded markets such as Europe and China to attract more customers from competitors.

If Huawei can hold its second place in the world, the next battle of global smartphone giants will focus on Huawei and Samsung. In 2016, Richard Yu said that he would surpass Apple in two years, and it seems that Huawei has completed the task ahead of schedule. So, can Huawei fulfill its promise again this time and dethrone Samsung? Let's see what overseas netizens and analysts think.

On the BGR website, many netizens expressed their opinions on this matter:

• "Isn't it an established fact that it is easy for Huawei to defeat Samsung?"
• "I agree with the above comment, but Huawei beat Samsung not only because Samsung's price is high, but because Huawei's performance is much better than Samsung's at the same price. But for Huawei, the biggest obstacle still comes from the US market."
• "The worst thing about Samsung is that it seems to have no clue how to build a competitive mid-range phone. I mean, Samsung's low-end and mid-range phones are garbage!"

However, BGR has always been hostile to Samsung, so we can just take these comments for granted. Mo Jia, a smartphone market analyst at Canalys in Shanghai, said, "Given the sluggish development of the global smartphone market and the increasingly fierce competition in the industry, it will be "very challenging" for Huawei to achieve its goal of surpassing Samsung next year. "After all, Huawei's inability to enter the world's third largest smartphone market, the United States, is an obvious shortcoming. As for whether it can surpass Samsung, it depends on whether Huawei can continue to stick to its current strategy of pursuing low-end product sales."

In China, Huawei continues to lead the smartphone industry with a market share of nearly one-third, while Samsung's market share in China has fallen below 1% in the second quarter (Strategy Analytics); in India, Huawei's business in the region has also seen positive growth due to the strong performance of its Honor brand. So, how is Huawei performing in Europe and Africa?

Behind Huawei's foray into the European and African markets

According to Canalys, smartphone shipments in Europe in the first quarter were 46 million units, the largest drop in history (6.3%). Although the Central and Eastern European markets grew 12.3% year-on-year to 15.9 million units, Western Europe fell 13.9% to only 30.1 million units.

Looking at the top five smartphone brands in terms of sales, despite a 15.4% drop, Samsung is still the top brand in the European market, with a 33.1% market share; Apple's market share is 22.2%, with a 5.4% drop in sales; and Huawei, which only entered the European market with its Honor series in 2015, saw an increase of 38.6% and a market share of 16.1%, catching up with Apple.

Overall, Samsung, Apple and Huawei are the three major players, accounting for 71.4% of the entire European market, an increase of 61% over the same period last year. It is worth noting that Xiaomi, which joined the European smartphone market in 2016, has entered the top four with a strong growth momentum, with a market share of 5.3%, a growth rate of nearly 1000%. Analysts predict that in the next few years, some small brands will gradually be squeezed out of the European market.

Europe is crucial to Huawei due to the pain of the US market. We have also seen that when the overall European smartphone market is declining, Huawei has successfully snatched food from Samsung and Apple in the face of the blockade of Xiaomi, OnePlus and Nokia. At the same time, Huawei and Xiaomi are constantly eroding the market share of small brands such as TCL's Alcatel, Sony and LG in Europe.

However, since Samsung is not very active in the mid-range phone market, the competition Huawei faces in the European market is not that fierce.

So, what is the situation in the African market?

Although the African smartphone market still has a lot of room for growth, most manufacturers have not yet focused their development efforts here. According to Canalys data, Samsung still tops the smartphone sales charts in the region, with a 42% increase in the first quarter of this year and a 23% market share; Huawei, on the other hand, seems to be somewhat absent-minded in Africa, with a 3% drop in sales in the first quarter and a 7% market share.

However, it is interesting that the second, third and fifth ranked mobile phone brands TECNO, Itel and Infinix all come from the same company, Shenzhen Transsion Holdings, and their combined market share is 38%, far exceeding Samsung. Therefore, although Huawei's performance in the African market is not satisfactory at present, Chinese brands have already taken the lead in this market.

The battle for 5G is over

Samsung and Apple will not sit idly by in the face of Huawei's all-out attack. A large number of market studies predict that Apple will return to the second place in the world after launching a new phone later this year. In addition, Apple is reportedly going to launch a new mid-range model to replace the iPhone SE. At the same time, as customers gradually transition to higher-end (over $600) models, Huawei needs to compete head-on with Apple in terms of quality and performance.

Of course, Samsung's counterattack is also brewing. Samsung CEO DJ Koh said that they do not want to lose the title of "world's number one". In response, Samsung is investing heavily in the development of new hardware and technologies to consolidate its position in the global smartphone market, and Samsung's folding screen mobile phone is also planned to be launched next year. However, it is reported that Huawei's folding screen mobile phone will be launched first in November this year. If the folding screen mobile phone can get a good market response, then Apple is likely to take the third place.

However, I believe that in the future, the second place in the global smartphone market will still be full of variables, and as for the competition for the top spot, perhaps the result will be seen in the new round of product reshuffle brought by 5G. Analysts said that if Huawei wants to become the world's number one, its smartphone shipment growth rate should be 30% to 40%, and the rapid development of 5G in China will help it; at the same time, Samsung's shipments need to drop by 10-15%, which seems to have become a major trend. Samsung's recently launched Galaxy Note 9 has also been ridiculed by consumers and competitors for its lack of innovation.

In the next two years, 5G systems will be available, and how these giants embrace 5G technology with their product innovations will become one of the criteria for consumers to judge them. Obviously, Huawei has already taken a head-on approach to the challenge. Last year, Huawei's R&D expenditure increased by 17% from the previous year to US$13.8 billion, on par with Samsung, Amazon and Google's parent company Alphabet.

Pathak, an analyst at Counterpoint, believes that "how Huawei improves the performance of cameras and other aspects and achieves comprehensive upgrades to meet the 5G era determines whether it can stand on the same level as Apple and Samsung. In my opinion, Huawei is fine."

Huawei plans to launch its first 5G mobile phone in mid-2019 using its own chips. Meanwhile, its cooperation with China Mobile is becoming increasingly close. China Mobile has built 7,100 5G base stations in five cities in China and plans to launch 5G pilot services in 2018.

【Conclusion】

As the global smartphone industry continues to develop, Huawei, Apple, and Samsung will have fewer and fewer competitors, but people's expectations for mobile phone performance and design innovation will also rise. These are issues that the three companies need to think about further. However, in the long run, Huawei still needs to find a sense of presence in the United States. It is worth noting that Xiaomi has already received support from Qualcomm, and perhaps there will be fewer obstacles to its development in the United States.