Is Huawei a Threat to Apple’s Well-Being?
Huawei sees itself toppling Apple
The company shipped 108 million Smartphones in 2015, and it’s aiming to ship 140 million Smartphones in 2017. Apple shipped 231.2 million iPhones in 2015, but in 4Q16, Apple’s 45.5 million iPhone shipment exceeded Huawei’s Smartphone shipments by only 10 million units.
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Huawei is banking on a strategy shift to push to the top.
These days, Huawei is using its networking equipment accounts to sell its handset products. It gives vouchers to carriers who buy its networking gears, and in most cases, those carriers redeem the vouchers for Huawei Smartphones that they in turn sell to their subscribers. This strategy leads to more sales of Huawei brand handsets.
The other strategy Huawei is employing to make its Smartphones more popular and increase its sales is the opening of physical stores. The company has expanded its retail footprint multifold in recent years, allowing it to increase contact with potential customers.
Cracking the US market
Huawei has struggled to crack the US market, but that could soon change. The company has begun to court AT&T (T), Verizon (VZ), T-Mobile (TMUS), and Sprint (S) to distribute its handsets. It recently hired a former Verizon executive, Michelle Xiong, to help it penetrate the US market.
Growth at a cost
However, Huawei faces a challenge even as it pushes for more market share. The company is sacrificing its margins on the altar of growth. Its aggressive push for more market share could leave it largely in the red.