Huawei Faces Impending Doom on a Nokia-like Scale

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Hauwei Faces Doom – It will go the way of Nokia

According to Counterpoint, Huawei’s Q1.2021 share of the smartPHONE market is crashing. From a high of 20% in Q2.2020 the company now stares disaster in the face as it collapses to 4%.

I don’t want to dwell on the many reasons for this performance, no doubt Covid 19 and animosity from Western governments have played a part.

In a mature market like smartphones, market share is key to survival and success on many levels. Huawei’s cost base will be geared up to higher levels of absolute profit, cash flow will probably be falling and R&D cut as the company eyes an uncertain future.

This impacts the smartWATCH market as many smartwatch purchases are of companion watches that link to same-branded phones, Samsung and Apple are prominent examples.

Huawei has some nice smartwatches namely, Watch GT2, GT2 PRO Watch FIT, and BAND 6. I’m guessing we’re going to see heavier discounting on those soon.

 

What will happen?

Well, Huawei is unlikely to go bankrupt and vanish in a conventional sense. It has many technologies and assets that are of value.

The most likely future is a dismembered organization, picked apart by the competition as evidenced by the impending Honor sale. Perhaps their smartwatch tech is less ground-breaking and perhaps that will fall by the wayside. Perhaps they could exit the smartphone/watch markets entirely and focus on other aspects of the business that support mobile networks? Massive state support could be an option but I doubt it.

Looking at the wider smartphone market, Realme/OPPO (BBK), Xiaomi (Huami/Zepp), and Apple are still ones to watch as they will grow further still.

This will hopefully focus minds in the non-Android/non-WearOS space with the simple understanding that you need a meaningfully populated app store to survive and prosper, although even that is no guarantee of survival. Having a superior but proprietary OS that is super-battery friendly (Zepp) just won’t work.

Other Fallout?

All the smartphone competitors face similar pressures. Perhaps one safety net is Android/Wear OS although it’s somewhat of a double-edged sword that both reduces costs, increases competencies but simultaneously opens up much easier competition.

Expect to see Samsung support Wear OS this year in at least one watch. Expect to see more in the Wear OS world this year and next.

 

 

 

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