Huawei ships 32M smartphones in 2012, misses its expectations

Huawei revealed in its annual report for 2012 that it shipped 32 million smartphones last year, which, while up 60 percent from 2011, was well below the company's own prior forecasts for 2012 smartphone shipments.

Ascend P1 S

"In 2012, with the rapidly growing popularity of smart devices, Huawei's consumer business increased steadily, earning global sales revenue of CNY48,376 million ($7.79 billion)--an increase of 8.4% year-on-year," the Chinese vendor noted. "Annual shipments totaled 127 million units, including 32 million smartphones--an increase of 60% year-on-year."

However, Huawei executives had said multiple times in 2012 that the company was expecting smartphone shipments of 50 to 60 million units. That was the target Huawei Device Wan Biao gave to Dow Jones Newswires in an interview at the Mobile World Congress in February 2012. The upper limit of that forecast was also confirmed by Huawei Device Chairman Richard Yu around the same time. In September 2012 Wan reiterated the forecast of 60 million smartphone shipments for 2012. "It will be very challenging, but that target remains intact," he told Reuters.

In a statement, Huawei said it faced the "challenges of a global economic downturn and a highly competitive marketplace," but still managed to grow smartphone shipments last year by 60 percent. The company did not directly address missing its forecast for last year in terms of smartphone shipments.

"In 2012, we achieved steady growth and grew distribution channels as we transformed from an ODM business to developing, producing and selling our own brand of consumer products, including smartphones and feature phones," Huawei said. "With industry trends showing more consumers are choosing smartphones over feature phones, as well as a large untapped opportunity of first-time mobile phone users in emerging markets such as the Middle East, South America and Africa, we stay committed to a target of 60 million smartphone shipments for 2013.  We continue to aim to be a leading global consumer brand and to introduce 'best-in-class' top quality products in a full range from entry to high-end categories."

Industry analyst Ken Hyers said that the 60 million figure for 2012 was "aspirational" and that "I didn't really anticipate them hitting that." He said that Huawei struggled last year in its home market against Samsung Electronics and Lenovo and also did not have as much success with its "hero" smartphones at the high end of the market as perhaps it had anticipated.

"I think that they had anticipated that they would make a bigger play in the higher-end device market with their Ascend series," he told FierceWireless. "And, like many other vendors, they didn't anticipate what Samsung would do in the high end of the market with their Galaxy products."

Samsung become the world's largest smartphone and overall handset maker last year in large part because of its Galaxy line of Android smartphones. Huawei's major flagship models from 2012, the Ascend P1 and Ascend D1 Quad, were not released by U.S. carriers, but Hyers said Huawei's miss had less to do with that than with its struggles in China and other emerging markets. 

Overall in 2012 Huawei reported a 32 percent increase in net profit to $2.5 billion, while revenue jumped 8 percent to $35.47 billion. Huawei said it expects to grow overall revenue this year by 10 percent and that it also expects a 10 percent compound annual growth in revenue over the next five years.

"Information and communications technology will continue to grow, with new opportunities coming from cloud computing, BYOD (Bring Your Own Device), and big data, and feature phones being replaced by smartphones at a faster rate," the company said in a statement.

Separately, Huawei's Chinese rival ZTE said it had exceeded its target by more than doubling its smartphone shipments in 2012. The company did not provide specific unit shipments, however.

For more:
- see this Huawei annual report (PDF)
- see this WSJ article (sub. req.)
- see this Reuters article
- see this Bloomberg article

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Article updated April 9 with a statement from Huawei.