updated 07:50 am EST, Wed March 7, 2012
Huawei guns for lead spot in phones
Huawei's device chairman Richard Yu in an interview set out high ambitions for the company. In a chat with Engadget, the executive wanted the Chinese cellphone designer to be the "industry's top brand" in three years. To him, it was less a matter of ambition and more basic survival, as companies that didn't aim to be large risked disappearing entirely.
"I have a strong feeling that the industry is consolidating," Yu said. "Seven years ago, the telecommunication industry had many suppliers but now they're all consolidating, one by one they're combining or dying. The mobile phone industry, I strongly believe, will become a matter of survive or die."
He noted the disproportionate level of profit from companies focusing on smartphones. Over 70 percent of the profit came from the biggest companies, he said, alluding to Apple's dominance of phone profits. Samsung by itself was 20 percent. Aiming for the top entered that group and prevented a vicious circle where smaller companies couldn't afford to research high-end devices and wouldn't get the profit they needed to invest in themselves.
For Huawei, this meant both escaping its roots as an ODM (original design manufacturer), building devices to be rebranded by others, and targeting the high end. Devices like the Ascend D quad had to be the "best in class" not just to sell well, but to redefine Huawei's image. "In this industry, nobody remembers number two, just number one," Yu explained.
Huawei is still significantly smaller than many of its peers. It may have a potential role model in HTC, which while currently struggling made a leap from no-name contractor to the second-largest Android manufacturer and one of the top positions in smartphones as a whole.