Phonemakers with market share over 15% may survive in long-run: Huawei

The smartphone industry is bound to consolidate as the heavy investments required to remain competitive mean that, in the long-run, only a handful of firms can make money, the consumer chief of China’s Huawei said on Sunday. 

Richard Yu, chief executive of Huawei’s consumer business group, said anyone at this stage in the decade-old industry’s history that had less than 10 per cent market share was losing money. Huawei is the world’s third-biggest smartphone maker, trailing leaders Samsung and Apple, with a 10.2 per cent market share in the fourth quarter, according to market surveys from IDC and Strategy Analytics. “In the future, only three to four vendors can survive, maybe only less than four,” Yu told reporters following a product launch event held ahead of the Mobile World Congress.
 

He said other, smaller Chinese vendors were consolidating, and most would disappear, as they did not have enough resources to invest in the same levels of research and development, marketing and branding needed to gain global scale. “If your market share is less than 10 per cent you cannot be profitable. Over at 10 per cent, at least, you can break even (and) over 15 per cent you can make money,” he said. He said Huawei’s smartphone business grew by around 30 per cent in the last year, and would grow even faster this year, with strong growth in both January and so far this month. 
 

The chief executive of Huawei said on Monday the pace of commercialisation for next-generation 5G wireless network is picking up pace as the Chinese telecom equipment giant has begun pre-commercial development with more than 30 network operators.
 

Speaking to reporters at the annual Mobile World Congress in Barcelona, CEO Ken Hu also said he welcomed "factual debate" about any security concerns governments or network operators may have about security threats arising from its products.
 

Huawei is forging closer commercial ties with big telecom operators across Asia, the Americas and Europe, putting the company in prime position to lead the global race for future 5G networks, despite US allegations it poses a security threat.

Meanwhile, Sweden’s Ericsson, the world’s No 2 maker of mobile network equipment, said on Monday the company had signed a Memorandum Of Understanding (MoU) with world’s biggest network operator, China Mobile, over the weekend.

Ericsson Chief Executive Börje Ekholm said at the event that the new pact with China Mobile covers Internet of Things testing and field trials, with a focus on factory automation.