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Huawei Bets on Google Brand, Low-End Smartphone in Europe Push
Huawei Technologies Co., China’s largest phone-equipment maker, is betting Google Inc. branding and smartphones targeting the lower end of the market will build its sales in Europe.
Huawei’s unveiling yesterday of a 99 pound ($152) Google- branded smartphone will help the company grab market share in Europe, Tim Watkins, the company’s western Europe vice president, said in an interview in London. Huawei hasn’t yet named the operators who will first offer the Ideos phone, which carries a Google logo and doubles as a portable wireless Internet hotspot.
The Chinese phone-equipment maker is trying to build market share and revenue outside of its home region while overcoming security concerns. The Shenzhen-based company, founded by a former Chinese military official, failed in talks to buy two U.S. assets in July on sellers’ doubts about regulatory approval, two people familiar with the matter said in August.
“This kind of device brings the price down and increases the adoption of smartphones, especially in Europe,” Francisco Jeronimo, an analyst at IDC in London, said by phone. “Other companies like Samsung and LG will have to follow this price trend.”
Google’s Android operating system became the third-best- selling operating system in the second quarter, with 17.2 percent of sales compared with 1.8 percent a year earlier, according to researcher Gartner Inc. Apple’s iOS dropped to fourth place. Nokia Oyj’s Symbian and Research In Motion Ltd. ranked first and second.
Android Growth
“We think the big growth is going to be in the Android, affordable end of the smartphone market,” Watkins said. “Huawei has established a very good brand on the infrastructure side,” and is looking to extend that success to the device market, he added.
Apple, Taiwan’s HTC Corp., and Research in Motion Ltd. are competing for high-end customers with phones that cost as much as 599 pounds without a contract. Android phones will outnumber Apple units by 2012, according to researcher iSuppli Corp.
On the network infrastructure side of Huawei’s business, “there are various options available,” including setting up separate local subsidiaries, to allay government security concerns, Watkins said. “The political stuff is clearly a challenge, but actually in many countries we can point to success,” especially in emerging markets like Africa, he said.
In addition to fellow Chinese companies like China Unicom, Huawei has won contracts to supply equipment to operators including Telstra Corp. and Vodafone Group Plc.
Security Concerns
In 2008, Huawei dropped a bid for computer-equipment supplier 3Com Corp. after the U.S. began investigating whether the deal could give China access to anti-hacking technology used by the Defense Department.
In April, India’s government blocked Huawei and ZTE Corp. from selling network equipment to domestic phone carriers because of security concerns, according to two people with knowledge of the matter.
“The situation in India is changing on a daily basis, and all of our competitors are struggling with that,” Watkins said. “Business is now flowing in India.”
To contact the reporter on this story: Matthew Campbell in London at mcampbell39@bloomberg.net.
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