Honor, the Huawei-owned smartphone brand targeting “digital natives”, raised eyebrows late last year when it outlined some lofty goals for growth. But early figures for its latest smartphones indicate it has some momentum on its side.
The company has touted its objective to be a top five smartphone brand in three years, and a top three brand in five years. While the first of these is ambitious, the second seems very challenging: the current top three are Samsung, Apple, and Honor’s own parent, Huawei – who does it intend to displace?
At the launch of its latest flagship device, Honor 10, its president George Zhao wouldn’t be drawn on the question, instead focusing on its three-year ambitions, including the fact that in 2017 it ranked seventh in the market. In 2018, Honor is looking at more than doubling its international market size (in fact, 150 per cent to 200 per cent growth was mooted).
“Today, the American market for Honor is scratch, zero. The African market for Honor is almost nothing. And for the Asia Pacific market, we’ve just entered four to five countries. So, we have a huge space to grow our business, and step-by-step we will grow our capabilities,” Zhao said.
The inclusion of America on the list was particularly striking. While Latin America may indeed prove attractive for a youth-oriented brand such as Honor, it wasn’t long before the executive was questioned about the US. Its parent, Huawei, has struggled gaining traction in the market, particularly with regard to generating operator support for its devices.
Honor does currently offer some devices in the country, including Honor View 10 and Honor 7X. But when it comes to future plans (and Honor 10), Zhao responded with a “no comment”.
Certainly the company seems to be picking up momentum: Honor 10 doubled the sales of Honor 9 in the first week after their respective international launches, and Honor 10 sales worldwide (including China) exceeded 1 million in the month after first availability. And launches in more markets are planned for the coming weeks.
But it is not alone in looking to build its position, and has some tough rivals moving in on its space. Xiaomi, in particular, is ramping its Western European presence, with launches in France and Italy, having built a strong base in China and India (among other markets), and will make available its latest flagship imminently.
Zhao pointed to Xiaomi’s crowded portfolio – “which product can you remember?” – before stating that his company’s biggest limitation is its own capabilities. While the vendor offers a much wider range of devices in its home market, including wearables, tablet, and adding recently the Magic Book laptop, “in the global market we have resources that are limited, the human resources, the channels, retail resources”.
“In the UK we just have two Honor guys working, but already we have more than 200 per cent growth; in France, we have more or less five headcount. You can see that Honor is a very efficient organisation and business model: we use our products to talk with customers, and then our customers become Honor ambassadors,” he said.
International product line expansion, he said, will come “step by step”, with its wearables already seeing wider availability.
Huawei views its dual-brand strategy as a long-term play, and from a product side Honor appears to have been given some space to differentiate. Certainly in other markets, vendors use different badges to differentiate mass market and high-end products, while making the most of scale benefits across the range.
If Zhao is able to maintain Honor’s momentum, it will be interesting to see how parent Huawei plays its hand as the two lines become closer in size. But having two strongly-performing brands is a problem other vendors would be happy to face.
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