Huawei wants to maintain profitability in smartphones as it preps U.S. expansion

Huawei has officially stated it wants to grow smartphone shipments to 100 million units in 2015, up from 75 million last year. But according to the company's CEO, the Chinese firm doesn't want to sacrifice profitability for the sake of volume growth.

"We don't expect our consumer business to grow too fast. We want every step they make to be very stable," Eric Xu, deputy chairman and rotating CEO of Huawei, said at the company's global analyst summit, according to Mobile World Live.

Xu said that Huawei's devices business has seen "considerable improvement" recently, and the company expects the consumer business to continue to grow. "But our requirements of the consumer business continue to hold: it has to be profitable," he said.

Those comments echo what Richard Yu, the CEO of Huawei's consumer business group, said in late January. "If we sold more low-end phones, we could even double our shipments … but in the low-end market there is no margin," he said.

Huawei aims to expand its business beyond Asia and Europe and truly crack the U.S. smartphone market this year. Zhiqiang Xu, president of Huawei Device USA, aims to eventually be the No 3 smartphone player in the U.S.

"We made fundamental changes last year--I wanted to change the Huawei model and catch up with the rest of the world," he said. "But this change requires a huge amount of work to make it happen. Last year, we spent a lot of time preparing for [the U.S.], and this year you're definitely going to see some real Huawei product launch in the U.S. market--not just the smart watch you saw in Barcelona. You can expect us to launch our flagship phones here in the States."

Earlier this month Huawei unveiled two new flagship smartphones, the Ascend P8 and P8max. The Ascend P8 has not been officially announced as a U.S. device, though according to PCMag it has radios to support LTE bands from AT&T Mobility (NYSE: T) and T-Mobile US (NYSE:TMUS). According to the blog Android Community, a variant of the Ascend P8 recently passed through the FCC for certification. Getting those phones into U.S. consumers' hands would definitely help Huawei make the case that it is a premium smartphone player.

Zhiqiang Xu said Huawei will sell its phones in the U.S. both directly to consumers online and through carriers. "We're going to merge the U.S. portfolio with our global portfolio," he said. "That means, in the next several years, you're going to see us launch our flagship phones like the M7 and P7 in other regions, and here in the U.S. as well. We're investing hugely to make this happen."

Huawei faces an uphill battle to expand its brand awareness in the U.S. smartphone market, which is largely dominated by Apple (NASDAQ: AAPL) and Samsung Electronics. "If you look at the whole picture, you'll find that everybody is here," Xu said. "The phone brands that have disappeared in other regions are here in the States--the Japanese, Korean, Chinese, and Taiwanese brands--everyone is here. It's the second largest market in the world, after China, and it's the one country where over 80 percent of phones are premium, so there's a huge opportunity here."

The company said its global device shipments grew by 7.8 percent to 138 million in 2014, including 75 million smartphones, which represented a 45 percent increase in smartphone shipments. According to research firm Gartner, Huawei was the No. 4 global smartphone player in 2014 after Apple, Samsung and Lenovo/Motorola.

For more:
- see this Mobile World Live article
- see this Greenbot article
- see this ZDNet article

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