Huawei

The silent cold war between the US and China has found a new victim. Huawei, the Chinese mobile tech giant, was negotiating for over two years with US AT&T a deal to sell its handsets in the US due to trust and security issues. AT&T, as well as Huawei, have been promoting the new Mate 10 all around the US, and the AT&T’s abrupt reverse took Huawei by surprise.

Huawei is a Chinese mobile tech company, owned by its employees and originally founded by a former People’s Liberation Army officer. In fact, Huawei was founded in Shenzhen in 1987 by Ren Zhengfei, a former deputy director of the People’s Liberation Army engineering corp. It now generates sales of over $92 billion and dominates the UK and EU $160 billion market. Huawei is the third largest handset provider after Apple and Samsung. However, with such an impressive marketing pedigree, Huawei remains anonymous in the US.

What concerned AT&T was more of an internal security issue than a commercial one, where a select committee to the US made a report in 2002 stating “Based on available classified and unclassified information, Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems,” as well as “[The US] should view with suspicion the continued penetration of the US telecoms market by Chinese telecom companies”.

Sales of mobile phones are made through carriers, where the price of the handset is part of the deal. Since the AT&T deal fell through, Huawei is now starting a face paced deal with Verizon and hopes that this time they will succeed in penetrating the US market.

Huawei’s penetration of the US market will not hit Apple’s iPhone market; it will hit Android-based smartphones only.

The current picture in the US for 2017, is:

  1. Android: 62%
  2. Apple: 35%
  3. Windows: 1.3%
  4. Blackberry: 0.3%
  5. Other: 0.2%

Since Huawei uses Android as well as its own Android based operating system (EMUI), and since Apple iOS users tend to be loyal to their brand. It is Samsung that will feel the full force of Huawei’s entrance into the US market. In fact, this will go hand in hand with Huawei’s control over the UK and European market, where they trounce Samsung and Ericsson in 2017. However, Samsung still remains the world leading brand, Samsung sales still remain significantly higher of Apple and Huawei.

There is a forecast that if Huawei penetrates the US market, Samsung’s US market share will drop by 50% within two years.

AT&T was unavailable to comment on this issue.