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The smartphone industry could eventually have just three major players competing against one other, Huawei believes. Speaking at MWC 2018, the chief executive of Huawei’s consumer business group, Richard Yu, claimed that the economics of the smartphone industry could force many smartphone OEMs out of the market, leaving only a few major players left.
Huawei is currently the world’s third largest smartphone manufacturer, with a global market share of over ten-percent in the fourth quarter of 2017, with only Apple and Samsung surpassing the company in terms of sales volume, according to most industry trackers. Behind Huawei are a number of other manufacturers such as Xiaomi, OPPO, Lenovo, Sony, HTC, and LG. But according to Mr. Yu, the room for these other brands could potentially disappear, forcing many companies out of the smartphone market altogether, or reducing their competitiveness down to very small niches. Mr. Yu stated that “only three to four vendors can survive” and stay relevant in the industry in the long term, partially due to a lack of resources. After all, a number of Chinese brands such as OPPO or OnePlus operate on very minimal profit margins, forcing them to concentrate on only the minimum requirements at a given time, while the likes of Huawei, Samsung, and Apple heavily invest in R&D. In addition to this, the marketing budget of Chinese brands pales in comparison to those of other global brands, reducing their competitiveness even further, while allowing major players to continue growing their sales. It is because of this that Mr. Yu expects smaller brands to exit the smartphone market eventually. After all, the executive claims that a vendor can break even at a ten-percent market share, while true profitability begins once 15-percent of the global market has been captured.
When it comes to Huawei’s prospects, the executive is unsurprisingly full of optimism. Last year, the Chinese company grew its smartphone business by 30-percent, and Mr. Yu expects growth to be even stronger this year, anticipating that it could overtake Apple within the next two years. This extreme growth is expected to be enabled by the increased competitiveness in both the mid-range and high-end smartphone segments, with the company’s upcoming Huawei P20 line being set to launch on March 27, placing a heavy focus on mobile photography and AI.