Dan Bieler; Bryan Wang; Henry Dewing; Katyayan Gupta; Tirthankar Sen
Huawei hosted about 160 industry and financial analysts at its annual analyst summit in Shenzhen, China in April 2012. The main take-aways from the event are:
Huawei continues its drive for more financial openness and transparency. Huawei provided detailed information about its financial and operational performance. In 2011 Huawei grew revenues by 12% to reach US$32.4bn and EBIT by 9% to US$3bn. The main regional growth was registered in Latin America, up 40%. Although due to higher capex cash from operating activities declined, the cash margin stood at 9%. Huawei is easily able to fund its expansion and innovation activities. In 2011, Huawei hired 30,000 new staff, bringing the total to 140,000 globally. For 2012 Huawei targets between 15-20% sales growth.
Huawei places main growth emphasis on enterprise services and consumer devices. These market segments represent a potential target market with a combined value of about US$1.7 trillion, compared with the carrier equipment market value of about US$150 billion. Huawei repeatedly pointed out the early-stage nature of its activities in these areas. It even felt as if Huawei consciously played down its ambitions in order to downplay expectations.
Huawei must strengthen its go-to-market strategy for its enterprise business. With more than 40% of Huawei’s current business coming from China, Huawei has to continue to fine tune its go-to-market model and penetrate markets other than China in a swift manner. Huawei also has to push for stronger relationship with their partners and increase their share in the total revenue.
Around 60,000 global movers and shakers of all things mobile once again descended upon Barcelona to attend the leading annual mobility event, the Mobile World Congress (MWC). This year’s main themes centered on metadata analytics, the customer experience, and over-the top business models:
The big data opportunity fueled the fantasies of almost all MWC attendees. In the case of telcos, data analytics is seen as the driver for improving the customer experience and developing new markets. Telcos talked a lot about the opportunities of analysing user behavior and turning user data into the new operator currency. The context- and location-aware nature of mobile solutions makes the big data opportunity particularly attractive. However, despite the talk, there were practically no case studies of operators that have succeeded in monetizing data on a large scale. Progress regarding data monetization is slowed down by a lack of clear business models, but also by an OSS/BSS infrastructure that does not support real-time or near real-time analytics. Moreover, privacy concerns also act as a drag on the uptake of data analytics. Equipment vendors such as Nokia Siemens Networks, meanwhile, showcased their customer experience management and analytics solutions for telcos. The solution combines analytics and the actions that operators must take to correct or improve the end user experience, such as a level one call handler pushing the correct settings to a phone or a marketing manager setting up a marketing campaign.
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.