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“RIP, Huawei”? Not a chance!

Trumping the US…so far

by: - Last updated on: November 28th, 2019

When US President Donald Trump announced earlier this year that US companies would not be allowed to have any dealings with Chinese phone manufacturer Huawei, a common refrain in tech circles was that the fate of the Chinese brand had been sealed. After all, Trump’s decision closed Huawei’s access to Google’s version of Android, which many – very logically – assumed would restrict Huawei’s ability to sell devices running Android, as the brand would not be able to offer Google services and apps on them. It seemed like a dark time for the brand – no access to Android, and possible lack of support from other US-based companies as well, was a bad combination.

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It was the equivalent of tech doomsday for many, and the air (in India at least) was rife with predictions that Huawei was in big trouble. Yes, Huawei did have massive resources in software and hardware, but even then, how on earth could the brand survive in the smartphone market with a cloud hovering over the very OS on which its phones were running? The company did talk of working on its own OS, which would not need Google’s apps, but the broad consensus across most tech quarters was that Huawei was in big trouble in the smartphone business. “RIP, Huawei, outside of China,” went one very famous tweet.

Fast forward to Gartner’s report on the global smartphone market for Q3 2019, and only one brand in the top five registered double-digit growth year on year.

Huawei.

The Chinese brand had an exceptional Q3 2019, finishing second to Samsung, and running up global sales of 65.8 million units, more than Xiaomi and Oppo (numbers four and five in the list) sold put together. This was compared to 52.8 million units in the same quarter last year. When the smartphone market was bigger (it has actually shrunk a little this year). And when the US had placed no restrictions whatsoever on it. Referring to the ban (which has again been postponed by three months), Gartner stated that it “brought negativity around Huawei’s brand in the international market,” but explained the brand’s growth thus:

Huawei’s strong ecosystem in China continued to show growth. The current situation with the U.S. has also fostered patriotism among Huawei’s partners, which are now keener to promote its smartphones in China — a development that makes it difficult for local competitors to compete aggressively against Huawei.

As per the report, Huawei sold a staggering 40.5 million units in China in the quarter, outstripping the local competition by a huge margin. Of course, some would say that the threat of an Android ban would not affect its sales in China as Google services do not work in that country and are therefore not a factor in phone purchases. Fair point indeed.

But what is interesting is that it sold another 25.3 million units OUTSIDE China. After all, these were the markets that the brand was supposed to lose after the ban. And actually, this had seemed to happen initially in Q2 2019, as the brand’s sales outside China (about 21 million units) were lower than in Q1 2019. Q3 2019 has seen that trend change. Yes, of course, there’s no doubt that the “patriotism” and “nationalism” factor has contributed to Huawei’s growth in China, but as those statistics show, the brand is actually not doing too badly outside the nation as well. This in spite of no spectacular releases in the period, a time marked by a lot of negotiations and low profile product launches – even the Mate 30 Pro was launched in October without the Play Store, which many had predicted would be fatal for the brand.

So, basically, Q3 2019 has seen Huawei increase its sales not just in China, but also globally. This, in a period that has seen no real resolution of the US ban crisis, with three-month extensions merely being seen as prolonging uncertainty. Yes, the crisis might have boosted the brand’s sales in China, with people rallying around the besieged brand, but its sales success outside China is difficult to explain, and even more so when you consider that the brand is not available for sale in the US and has actually dropped out of the top five in another huge market, India.

In the absence of concrete data and analysis, one cannot be really sure of the reason for Huawei’s surge outside China (and even in China, the “patriotism” rationale seems too pat), but it certainly buries rumors (and rumor mongers) who had confidently trumpeted the brand’s imminent death in early 2019. It is abundantly clear far too many totally underestimated Huawei. Seldom has tech punditry been taken to the cleaners in this manner.

As we enter the last month of the year, far from fading out, Huawei is not only the second-largest brand in the global market but seems to have renewed its pursuit of Samsung, and has also managed to increase sales outside China, notwithstanding a drop in sales in India and total absence in the US. What’s more, the brand is also readying its own Harmony OS, which is now appearing to be a much more formidable proposition than the scrappily put together emergency alternative that many had assumed it to be earlier in the year. And of course, there is a reason to believe that the arrival of 5G will further strengthen the brand, given Huawei’s expertise in the field.

RIP, Huawei? Not a chance. The brand is alive.

And kicking!

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