Much has been mentioned about the increasingly severe situation surrounding smartphone sellers. Companies like HTC and Sony have been feeling the crunch for years with respect to their profit pictures, and now so too, is LG feeling the fire with analysts predicting Q2 2016 will see its forth consecutive quarter of losses with respect to mobile. Even Samsung, the largest OEM, has acknowledged the changing landscape and has begun to restructure accordingly, seeking to plan for the post-smartphone era.
Huawei, on the other hand, is readily viewed as one of the contributors to the cause, owing in no small part to the business model it, and virtually every other Chinese OEM operate on: less mark-up, more manageable MSRPs, and increasingly competitive products thanks to high build quality and internal components. In fact, in many cases Chinese OEMs manage to offer far more for less money than their overseas rivals.
And yet. Today a new report has emerged from China that purports even Huawei itself may be facing a bit of a slow spot as the company may have revised down it’s smartphone sales predictions for the fiscal year. Specifically, the source alleges 2016’s sales target was originally set at an optimistic 160 million devices, however the new number is only 120 million.
The cause, ironically enough, is that Huawei’s high-end devices may actually be too expensive.
Analysis
First and foremost, it should be pointed out that, even if this latest leak is true, that Huawei may be able to sell 120 million devices is still a major success. This would be all the more true given that it “only” managed 108 million last year, which was, in and of itself, a major accomplishment. Still, there is a valid point in the premise that the OEM’s products are too pricey.
Consider, for example, the Huawei P9 and Huawei P9 Plus, which are priced around €599/€649 depending on the configuration of the former, and at €749 for the latter. Or, to put in dollar digits, $679/$735 and $849 respectively. These are phones every bit as costly as those made by Samsung, HTC, and LG.
That is not to say they are undesirable however, as according to data from a recent sale among all Chinese OEMs on JD.com, these high-end products were actually the top selling devices for their price ranges. As GizmoChina explains,
For example, in the 2500-2999 Yuan segment, Huawei Mate 8 as well as Honor V8 were the top three phones, and in the 3000-3999 Yuan segment as well, Huawei P9 and Huawei P9 Plus made it to the top three.
In addition, Huawei has already sold 2.9 million units of the P9 and P9 Plus as of last week, with Huawei itself indicating that P9 sales are an impressive 130% higher than last year’s P8. More specifically, in France there is a 1000% increase, a 400% increase in Poland and Finland, and a 300% increase in the UK. These figures clearly indicate the Huawei P9 is more popular than the P8. As the devices have not launched in the USA yet, the numbers are likely to climb even higher.
What do you think? Should Huawei concentrate more on the mid-range, lower priced market, or is it better to focus equally on premium products? While they are apparently selling well, Samsung and other “legacy” OEMs may still have a tight grip on the latter, and changing the practices or perceptions of consumers is a tricky task.
Source: ANDRIOD AUTHORITY