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2020 to be another challenging year for Huawei's smartphone business

(Image credit: Future)

2019 was a record year for Huawei smartphone sales despite Trump administration’s effort to weaken the Chinese technology group.

Gene Jiao, President of Huawei Consumer Business Group for the Middle East and Africa, said at the launch of Mate 30 Pro 5G that the company had shipped 240m devices last year and revenues surged 18% year on year.

The second-largest smartphone vendor had shipped 206m units in 2018.

Industry analysts said that the company faced its toughest challenge in the overseas smartphone market, outside of China, last year due to lack of Google Mobile Services and it is in a similar situation this year also.

Huawei’s strong home-field performance more than compensated for its overseas sales, Shobhit Srivastava, Research Analyst at Counterpoint Research, said the smartphone market in China is saturated but Huawei is pushing its shipments to distributors in China and a lot of the Chinese players have become sentimental and patriotic about Huawei.

Because of these factors, he said that Huawei is growing and other Chinese players are taking a hit.

According to Counterpoint Research stats for the third quarter of 2019, Huawei had a 63% year-on-year growth in China when other Chinese makers such as Vivo fell by 17%, Oppo fell by 20% and Xiaomi fell by 38% and Apple fell by 14%.

In the second quarter, Huawei had a 23% year-on-year growth in China when other Chinese makers such as Vivo fell 5%, Oppo fell by 7% and Xiaomi fell by 15% and Apple fell by 29%.

Research firms will be releasing shipments for the fourth quarter soon.

More competition from other Chinese players 

In the Gulf Cooperation Council (GCC) countries, the situation is no different and Huawei has been losing market share from the second quarter of last year.

Nabila Popal, Senior Research Manager at International Data Corporation (IDC), said that it is unfortunate for the brand to face this decline after so much success in the region and achieving continuous growth in share to almost reach neck to neck with Samsung in the first quarter of last year. 

According to IDC, in the first quarter of last year, Samsung had a market share of 32.6% while Huawei accounted for 25.7% and Apple with a 19.7% share.

In the second quarter, Samsung had 41%, followed by Huawei at 21% and Apple at 19%.

In the third quarter of last year, Samsung had a 45.7% smartphone share, followed by Apple at 18% and Huawei at 17%.

“Huawei is likely to continue to lose market share in the GCC in 2020 as well since there is no resolution in sight for the Huawei-Google issue. Although Huawei plans to release its OS – in the form of Harmony OS, it will take a considerable time for consumers to regain confidence in the brand (and in the new OS) in the GCC,” she said.  

Moreover, she said that Huawei is due to face even more competition in the year, with Samsung’s recent rampant growth, a significant refresh due for Apple devices in 2020 and launch of 5G devices by Apple, and also from other Chinese brands like Xiaomi and Vivo, which are making inroads into this market.  

Srivastava said that 5G devices will rejuvenate the global smartphone market this year as consumers are holding on to their devices without replacing while Akash Balachandran, senior research analyst at IDC, said that 5G will undoubtedly be something vendors will focus more in 2020.

5G to grow after 2023

However, Balachandran said that 5G’s share is expected to remain small in 2020 at 2.7% of the total shipments to just over 500,000 units in the GCC compared to 0.1% unit share in 2019.

“5G smartphones are expected to grow significantly as prices drop and 5G becomes available in mid-range devices, which currently make up the bulk of the smartphone shipments in GCC,” he said.

By the end of 2023, he said that 5G devices are expected to grow to make up over 38% unit share in the GCC smartphone market.

Even though Huawei launched only a 5G smartphone – Mate 20X - in the region last year, it is expected to become the biggest 5G smartphone player this year globally (along with its sub-brand Honor), fuelled mainly by China sales.

“China is increasing its rollout of 5G in the country while Samsung, which already has a head start on its rival when it comes to 5G devices, is expected to introduce more mainstream 5G devices that would be more affordable,” Srivastava said.

He added that 5G will become mainstream in South Korea, the US and China.

China contributes about 30% of the global smartphone industry while the US about 15%.

“Since we expect China to be the biggest smartphone market and Apple to launch its main 5G devices by the end of third-quarter apart from the likely SE 5G phone launch in the first quarter, Huawei will have the advantage and a dominant position in China,” he said.

Where Samsung caters 5G is mainly in South Korea but in China, they are not strong and has less than 1% market share, he said and added that the rollout of 5G services is not high in Europe and so the volumes will be low.

In the Middle East, he said that Samsung will hold the dominant position in the 5G space until Apple launches its new devices.

Samsung sold 6.7m 5G devices globally last year, according to industry reports.

“5G device shipments are expected to account for nearly 15% of all smartphone shipments and attain more than 50% market share by 2023,” Srivastava said.

Moreover, with Qualcomm and MediaTek launching new 5G processors, he said that prices for 5G devices will fall further as many OEMs will start delivering 5G devices this year.

“We could see 5G devices in the $300 price range,” he said.