I've recently been to the Huawei Analyst Summit held in China with colleagues and as a device analyst the biggest news for me was that Huawei had decided to promote its brand this year. It's official now. Huawei is growing out of the ODM vendor business.
We've been tracking Huawei for quite some time and ever since they had entered the ranks of the top 10 manufacturers I had been expecting them to think about their brand. It's quite obvious as handsets are part of consumer electronics and without brand you can't grow beyond a certain point. It seems Huawei has reached that point. Huawei shipped 29 million units in 2009 and 30 million units in 2010 so they have actually hit a wall. In my view they should've made the decision a bit earlier, perhaps Q2 last year.
It's interesting to see how vendors shift strategies during their stages of growth. If you don't do at the right time and don't do it the right way you lose momentum and start falling so this is an important moment for Huawei.
Samsung and LG were success stories as they quickly grew out of an ODM for operators like Sprint and Orange. Sharp was once a larger ODM for operators in Europe than Samsung but they failed to promote their own brand and are now completely dwarfed in the Western markets. Companies like Compal Communications once shipped more than 50 million units a year as an ODM but stayed there and now they barely ship 15 to 20 million units a year.
Huawei is a bit late to this game but better late than never. If they start brand promoting now it will be mostly building brand awareness and finding a position in the market and a place in the consumers mind. Getting associated with the emerging mid tier smartphone category will be the best option for now but they'll have to work diligently before bigger players enter the segment. By the end of the year the results will show and it will define next years growth. I have a good feeling at this point as Huawei has always excelled on speed while maintaining quality in the past and that is a very important quality to seize a niche in the market.