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MWC 2012: Huawei – A Chinese Marketing Strategy

Chinese manufacturers act very aggressively on the phone market even though regular users don't see it. There are not many fans of the Huawei brand so far but I am quite sure this will change soon. A few years ago when I was browsing the Huawei showroom at the Barcelona expo and saw innumerate inexpensive phones I was amazed at how well they were built. They did not feel like they were assembled in a shack – they felt like the company cared about the production culture. However, those phones had nothing to boast of and the only market advantage they could offer was the low price as any other Chinese phone back then. The Korean manufacturers blasted onto the market with the same motto: more features for less cash. It worked for them and later they learned other tricks too. So the Chinese manufacturers are following a well-trodden path.

During the presentation the Huawei reps were shooting words like 'the best' and 'excellent'. The quantity of appraisals was inundating and a bit appalling. Especially since they were comparing (objectively I might add) their new quad core flagship smartphone to phones of the previous generation. This year the Barcelona expo has NVidia Tegra 3 written all over it. And it is with this processor Huawei is going to take on major players. Firstly, Huawei just like Samsung believe that own component production is crucial. The new flagship is using the K3V2 processor with 1.2/1.5 GHz clock and a number of special features possible because of own component production like the A.I. chip presented with great pomp: it manages battery use and can save up to 30% of the battery charge the press release claims (the reps mentioned 50% at the presentation).

Secondly, they will have to come up with new benchmarks after HTC and Sony presentations. Anyway, Huawei were the first to claim they have the fastest phone. It reminds me of the old days when manufacturers were in the good old performance race.

Sitting there and watching the presentation I was thinking that Huawei is a quick learner. Despite the presentation being far from perfect: the highlights were wrong and they left many questions unanswered. But the product itself was impressing and just a year ago I could not have imagined something like this under the Huawei brand. The company jumped over several generations with this phone and no one should underestimate the capabilities of this manufacturer. Later during the questions and answers session the reps said that the company is planning to sell 60 million handsets in 2012 – the audience and me took very skeptically. I don't think that the company will be able to reach this 60 million bar but it is impressive how high the company is aiming at. They don't seem to be afraid of big challenges. However, Huawei is not capable to handle this kind of sales: they don't have enough engineers or support specialists etc. The very structure of the company is unable to cope with such quantities. But their strategy aims at this goal and it is not any worse than the strategies of HTC or LG. It is even better in some aspects.

Naturally the company will be focusing on smartphones which they divide into four categories: Youth (Y), Gold (G), Platinum (P), Diamond (D). This division is artificial and pretty much pointless. It is an example of a company looking for an image. The 'Y' products are the cheapest ones, the 'D' category are the most expensive phones. This year's flagship is called Ascend D Quad. Then we see that Huawei is copying Samsung and presents several versions of their flagship: Quad XL with a bigger battery and D1, a dual core version. This similar to Samsung's approach to the Galaxy family. The D Quad XL model's goal is simply to occupy a place in this concept. It is the same D Quad with a 2500mAh battery instead of the 1800mAh one. Son the only difference between these two are the battery and the battery lid. Is it enough to present it as a different model? I think not but it is a part of the company's diversity policy. The XL model will be released a month later than the main one which also proves my point.

There is nothing wrong in copying someone others work, even Apple are not shy to admit that they would copy anything if it works. Besides, it is not plain plagiarism but creative rethinking. It is very hard and often unnecessary to come up with something really new on the market.

As far as positioning is concerned Huawei aim at obtaining the best price to quality ratio that is why they put so much effort at pointing out the technical strengths of their phones like performance. The company is focusing our attention on details that are very important for a certain group of people but it is not the mass market. They are sticking to a very smart strategy of striking in one spot. Do Samsung devices belong to the mass market? Definitely. The specs of Samsung phones are important but users will easily overlook an absence of certain features in their products. It is even more true for Apple iPhone. However, smaller manufacturers can only make it big by being more flexible and by offering more interesting solutions. Today HTC is trying to make their phones interesting for mass market as opposed to the tech enthusiasts, their current audience. Meanwhile, Huawei is trying to take the market niche HTC is leaving. It is a sort of a creative swap that will take a few years.

It is also important to remember that today the Android smartphone market is a site of a battle for survival with Samsung leading in the battle. Motorola, Sony and HTC are among those trying to survive and they all have very interesting products and they are a lot bigger than the mobile phone division of Huawei. It will be fascinating to watch how the newcomer is going to act. By entering the Android market Huawei are also driving their old rival ZTE to enter the race. This means the struggle is going to be very intense. And this is all happening just when the Japanese manufacturers decide to enter the market in 2012. This year sure is promising to be interesting.

You will be able to read about the Huawei flagship in the dedicated article – here I wanted to contemplate a little on the company's market strategy, give you some food for thought and try to see where the company is headed and why this manufacturer should not be underestimated. I think I managed to highlight the main points of Huawei strategy 2012 and I hope you find this topic worthy of discussion.

For dessert, I want to tell you what I know about the prices and dates: D Quad is expected to be released in April for 25.000RUB (approx. $800). I don't know yet anything about the release or its price. D1 is going to be cheaper at about 20.000RUB (approx. $650) which makes it very attractive for those who is not after ultimate performance. I want to show you a few benchmarks so that you can compare the performance of D Quad with other popular phones.