Huawei rides Google coat­tails into new mar­kets

The China Post - - WORLD BUSINESS - BY ROB LEVER

With a part­ner­ship to make one of Google’s flag­ship Nexus smart­phones, main­land Chi­nese tech gi­ant Huawei is gain­ing new promi­nence which could help its ef­forts to win broader global con­sumer ap­peal.

Huawei was tapped this week to pro­duce the Nexus 6P, one of two hand­sets un­veiled this week by Google to show­case its An­droid mo­bile op­er­at­ing sys­tem.

The large-screen “ph­ablet” was un­veiled as a ri­val to the iPhone 6s Plus and Sam­sung Gal­axy Note. A sec­ond Google phone, the Nexus 5X, will be made by South Korea’s LG.

At a time when Chi­nese firms are strug­gling to break the dom­i­nance of Ap­ple and Sam­sung on the high end of the smart­phone mar­ket, the part­ner­ship is a mile­stone for Huawei.

“Clearly, work­ing with Google is vote of con­fi­dence in the tech­nol­ogy of the prod­uct,” said Ian Fogg, se­nior di­rec­tor at the con­sul­tancy IHS Tech­nol­ogy.

Fogg said the Nexus de­vices “are in­tended to be show­cases of the best of An­droid tech­nol­ogy, and are de­signed to be seen as in­no­va­tion lead­ers. That’s an in­cred­i­bly valu­able as­so­ci­a­tion to have.”

The deal with Google “opens up a route into the U.S. mar­ket to raise vis­i­bil­ity for Huawei smart­phones,” Fogg noted.

“Huawei will be par­tic­u­larly pleased if this can be a bridge­head into the U.S. mar­ket.”

Fogg said that this also helps Google, which is largely ab­sent from main­land China, should the U.S. com­pany de­cide to dive back into the large mar­ket.

“In its home mar­ket of China, Huawei has both mo­bile op­er­a­tor re­la­tion­ships as well as its own ex­per­tise in selling smart­phones di­rect to con­sumers,” Fogg said.

Huawei has been selling some un­locked high-end de­vices di­rect to U.S. and Euro­pean con­sumers, and has a share of the pre­paid, low-end smart­phone mar­ket along with Chi­nese ri­val ZTE.

But Huawei and other Chi­nese mak­ers have gen­er­ally lacked the ap­peal of Ap­ple and Sam­sung for high-end smart­phone cus­tomers.

The as­so­ci­a­tion with Google “pro­vides a brand boost for Huawei,” noted Avi Green­gart, who fol­lows mo­bile tech­nol­ogy at the re­search firm Cur­rent Anal­y­sis.

“If you are buy­ing a Nexus phone and it has a Chi­nese brand promi­nently dis­played, that’s def­i­nitely a pos­i­tive.”

Green­gart noted that con­sumers will be look­ing at more op­tions now that many U.S. car­ri­ers and “un­bundling” the ser­vice from the de­vice.

The Nexus 6P, which starts at US$499 for U.S. cus­tomers, is be­ing sold for less than the ri­val Ap­ple 6S Plus and Sam­sung Gal­axy Note 5, which cost at least US$700.

“Once you break the di­rect con­nec­tion be­tween the ser­vice and the hard­ware it be­comes eas­ier for con­sumers to buy their de­vice sep­a­rately, and it makes a Nexus more at­trac­tive,” Green­gart said.

The part­ner­ship could boost the promi­nence of Huawei, which has re­ceived media at­ten­tion from U.S. gov­ern­ment al­le­ga­tions that the com­pany is a se­cu­rity threat be­cause of per­ceived close links to the main­land Chi­nese gov­ern­ment. The com­pany de­nies the al­le­ga­tions.

Last year, news re­ports said the U.S. Na­tional Se­cu­rity Agency had been se­cretly tap­ping the com­pany’s net­works for years.

Huawei is one of the largest providers of net­work in­fra­struc­ture glob­ally, but its con­sumer prod­ucts are less well-known out­side China.

Some an­a­lysts say it re­mains ques­tion­able whether Huawei can par­lay the Google deal into a stronger po­si­tion in the smart­phone mar­ket.

“I think peo­ple grav­i­tate to­ward Nexus be­cause it is a Google de­vice,” said Ra­mon Lla­mas, who fol­lows mo­bile tech­nol­ogy for re­search firm IDC.

Lla­mas said other man­u­fac­tur­ers part­ner­ing with Google on Nexus — HTC, LG and Mo­torola, for ex­am­ple — have failed to get a ma­jor boost for their brands from the deals.

“Huawei could see some boost in sales but not enough to cat­a­pult them to a chal­lenge of Sam­sung or Ap­ple,” he told AFP.

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