November 9, 2011
During its European Analyst Summit in London, Huawei provided details regarding two crucial elements of its expanding market positioning: It outlined its intention to launch mobile devices and enterprise solutions. Although Huawei has been engaged in these activities in China for some time, it is a new and exciting step for its European strategy. Competitors should not underestimate Huawei’s ability to take business away from them in these areas.
Huawei’s mobile device range for Europe is small, but very effective. The company targets the low-end smartphone segment with a €100 device (Blaze), the mid-market (Vision), and high-end (Honour), in addition to a tablet (Media Pad). The marketing strategy is to position these devices as affordable, easy-to-use, and reliable (i.e., the “Volkswagen of the mobile devices”). All devices are touch, have fast processors, crisp screens, and retail at about €100 below competitors’ offerings. Timing is good for Huawei, given the relative weakness of the competitive landscape, especially RIM and Sony Ericsson. Initial customer feedback on sites such as Amazon.com reflects positive customer experiences.
The fact that Huawei has no consumer brand in many European countries should not be a great obstacle. Rather, Huawei could use this factor in order to involve its emerging customer base to build a brand using social networking and viral marketing. Traditional big-board advertising campaigns would be pointless: Nokia will dominate the traditional channels with its Lumia campaign in the coming months. The main channels for Huawei will be MVNOs like Fonic, consumer electronics outlets like Phone4U, as well as selected larger operators.
Huawei’s push into the enterprise space is equally straightforward. It will make available its equipment to enterprise customers, using its telco clients as sell-through channels. Huawei will refrain from selling directly to enterprises to avoid upsetting its telco clients. In order to ramp up its channel partnerships, Huawei plans to offer higher margins to its channel partners. Cisco sits decidedly in the cross-hairs of Huawei’s new enterprise push.
Huawei’s enterprise portfolio is structured along both horizontal and vertical lines. Horizontally, the offering ranges from connectivity (e.g., routers, switches, and transport), to software (e.g., UCC, telepresence, and IP-PBX) and hardware (e.g., blades and servers). The vertical positioning targets manufacturing, public, transport, life sciences, utilities, finance, retail, and media. It works with expert partners to address sector-specific needs.
Huawei aims to take the individual horizontal and vertical elements, package them, and sell them through its channels — potentially as a managed service. Huawei needs to remain careful not to interfere too much in similar plans that telcos are developing in the smart energy or online health spaces. Upsetting its telco customers would stop the enterprise's ambitions short and would seriously undermine the role of trusted partner that Huawei has managed to build up over the year.
Huawei remains a refreshingly dynamic and determined company — and true to its company motto, "fen dou" ("struggle and strife"). The company has matured significantly but has retained its common-sense approach to strategy. The level of local expertise is noticeable everywhere now. Of its staff of 6,000 in Europe, 4,000 are locals. Huawei’s commitment to Europe is reflected in its plans to invest €5 billion and hire an additional 5,000 locals in Europe in the coming five years. Given Huawei’s track record in Europe to date, there is every reason to believe that it will see its latest plans through.