Huawei forecasts its smartphones will overtake Apple and Samsung in market share in coming years
Huawei Technologies, China’s largest manufacturer of telecommunications equipment says it is not planning any mergers in the near future and will instead focus on lifting its annual revenue to US$100 billion in revenue by 2020 by building a top-tier smartphone brand worldwide and leading digital transformation across industries.
Huawei is not interested in seeking any large-scale merger-related integration to drive business expansion, the company’s rotating CEO Eric Xu said on the sidelines of Huawei’s annual global analyst summit on Monday in Shenzhen.
Xu said the company would focus on early stage acquisitions for startups. “We have already been doing this [acquiring small companies] over couple of years and will keep on doing so,” Xu said.
His comments came amid a wave of consolidation in the industry recently as Finnish major Nokia had earlier acquired Alcatel-Lucent, while Cisco announced the Jasper acquisition.
But Xu welcomes direct rivals like Cisco and Dell to China, which is the fastest growing ICT (information and communications technology) market in the world.
He said China offers many opportunities as it pushes to transform into a digital economy led by services and software.
Richard Yu, chief executive of Huawei’s consumer business group made a bold prediction early this year, saying Huawei plans to surpass Apple as the second-biggest smartphone player in the world in three years and leapfrog Samsung by 2021.
Xu clarified the goal was actually to be reached in the mainland market by 2021.
“We are certainly carrying out the strategy to forge a premium, high end brand [of smartphones] in the consumer market.” Xu said.
“China has not produced a high-end brand yet, therefore one can see that’s a target we’re reaching and in the next five-to-ten years we can possibly [overtake Samsung and Apple], but we are not sure whether that can be achieved.”
Xu said he’s looking for Huawei to reach its aggressive target in revenue by 2020, and remain profitable as well.
The company posted a 32 per cent increase in net profit to 36.9 billion yuan (HK$44.22 billion) last year, up from 27.9 billion yuan in 2014, on the back of strong sales at its enterprise and consumer businesses, with 108 million smartphones shipped around the world.
In the coming years, Xu said Huawei will strive to accelerate its digital transformation and make the world more connected.
The company plans to promote a full “cloudification” strategy to enable digital transformation across industries, Xu said, saying it will fully “cloudify” all of its products and services.
“Our strategy is to fully ‘cloudify’ all our products and solutions,” Xu said. “It’s just like what we’ve done in the past years to drive all our portfolio to IP. We’re going to do it again for the cloud, and ultimately to support the digital transformation and operation of our telco and enterprise customers.”
During the summit, Huawei also released its third annual Global Connectivity Index (GCI) on Monday, ranking 50 nations across the world in terms of connectivity, information and communications technology usage and digital transformation. It says the 50 nations are making headway with cloud, big data and Internet of Things technologies.
The index reveals that global connectivity improved by 5 per cent in 2015.The US ranked highest among the surveyed countries, with Singapore and Sweden making up the top three. China ranked 23rd, keeping the same ranking as last year.
According to the company, China is one of the largest ICT markets in the world, but its annual ICT spending is only 2 per cent of its GDP.
According to the company, the index measures the progress of the countries in investing in and deploying information and communications technology (ICT) to achieve economic digitization.
The index shows countries with higher scores are also those with higher per capita GDP. According to the Huawei study, a country’s GDP will increase 1 per cent after a 20 per cent growth in ICT investment.
According to the index, those adopters in the middle range, like China, experience the greatest GDP gains per GCI point increase.
Huawei expects a total of 100 billion connections, both human and machine, by 2025, a figure that includes 8 billion smartphones, with 45 per cent of those connections from smart and wearable devices.