By Michael Ouma
Here's some news, in just the first week of the New Year, which may not be very exciting to most people keen to buy new but low-cost smartphones.
Huawei - the Chinese firm known to
have introduced most people to their first smartphone experience with the low-priced Huawei IDEOS phone - now says that it's not keen on this market segment going forward.
Most Kenyans were ushered into the smartphone arena after purchasing the Huawei IDEOS (U8150), launched in Kenya in January, 2011 at a subsidised cost price of Kshs 8,500 (about US $ 93 at current exchange rates) in partnership with Safaricom. After its launch, the IDEOS phone sold over 300,000 units, leading it to account for 45 per cent of the country's smartphone market.
But now, Huawei is not keen on such partnerships, more so not for joint launch of low-priced devices.
In an interview conducted at the firm's Shenzhen headquarters recently, Roland Sladek, Huawei's VP for International Media Affairs said that Huawei's focus for the future will be on the middle- to high-end segment of the market both for 'products and image.'
Some of Huawei's recent product launches have also been high-end, examples here being the Ascend P7 and Mate 7 which both retail for above US $600.
And for those who hoped to see 4G-enabled devices from Huawei, retailing at below US $100 in Kenya following the deployment of Safaricom's 4G network by the Chinese firm, the response is not positive either.
"Honestly I wouldn't be able to be so specific on sub US $100 LTE-enabled devices for Kenya. If the network is there it'll certainly make sense to have devices but then we need to see an appetite for the devices in the market. Is there a strong middle class who've the purchasing power? Remember the high-end devices are quite expensive, retailing for upto US $600 and we need to find out if there are people ready to pay that amount to acquire the devices," stated Sladek. "Huawei doesn't really have very many models of low-end devices. We're going for middle- to high-end market."
"Overall, globally we're now focused on middle- to high-end segment. We don't do feature phones, we don't focus on the low-end market as our global strategy. In Africa, it depends on the specific country. For example the Ascend P7 sold very well in South Africa while the Ascend Mate which was launched there recently as well was also well received by the market. Africa's middle class is growing but overall, we've different categories of phones for different markets."
Among the categories is the 'Y series' which is known for coming up with relatively low-cost phones for young population, mostly students.
"We've the whole spectrum of phones from low-end, middle-end and high-end of the market, meaning that we cover everything. But globally - I'm not just talking about Kenya or African market - there's a clear focus by the company to go for mid- and high-end segment both in terms of devices and image," he added.
To enhance its image globally, the employee-owned firm currently has ongoing partnerships with leading global soccer clubs including Borussia Dortmund and Paris-Saint Germain (PSG).
Huawei's decision to focus on the mid- to high-end market comes at a time when sales of feature phones has stagnated globally. "Sales of feature phones declined 25 percent in the third quarter of 2014 because the difference in price between feature phones and low-cost Android smartphones is reducing further," states Roberta Cozza, research director, Gartner in its third quarter industry report for 2014.
In the third quarter of 2014, states Gartner, smartphones accounted for 66 percent of the total mobile phone market, and Gartner estimates that by 2018, nine out of 10 phones will be smartphones.
From a regional perspective, emerging markets exhibited some of the highest growths ever recorded with Eastern Europe and the Middle East and Africa achieving the highest increase in the third quarter of 2014, with sales of smartphones growing almost 50 per cent year-over-year.
"Africa is a good example. When you look at the growth rates of consumer segments by analysts, you find that Africa will record the highest growth in 2014 and 2015. Gartner for example projected a 30 per cent growth in Africa and Middle East on mobile phones only and remember Huawei has always been number two in Africa in terms of market share. We have a very strong position there to grow with the market," noted Sladek.
The latest Gartner report further states: "In the third quarter of 2014, three of the top five smartphone vendors were Chinese. Huawei, Xiaomi and Lenovo grew their collective market share by 4.1 percentage points."
In 2013, Huawei sold about 52 million smartphones globally and targets to increase this to 80 in 2014.
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