Can Huawei build a $14bn devices business by 2017?
Huawei's consumer device business is small in comparison to networks business today, but unlike its main Nordic rivals, the company is hoping to see smartphones play a larger role in its bottom line within five years.
Today, carrier network equipment accounts for 73 percent of the $35.4 billion Huawei says it made in 2012, but by 2017 it's projecting networks will account for just 60 percent of revenues, sidelined by consumer device and enterprise sales, which today account for 22 percent and five percent, respectively.
Speaking to media at Huawei’s R&D facility in Stockholm's Kista technology park on Wednesday, Huawei vice president of Western Europe sales Gaston Khoury said that its consumer devices and enterprise businesses would drive the company's projected 10 percent growth in revenue each year over the coming five years.
By then, he said that Huawei's consumer devices unit, which include its new smartphones and established routers buinesses, would account for 25 percent of revenue, while enterprise is expected to have grown to 15 percent. Despite a small rise in consumer share of revenues, the projected overall growth means its devices revenues are expected to double from today's $7.8bn a year to $14.2bn.
The Chinese company's push to have its own-branded smartphones brand comes as its main rivals in mobile networks, Nokia and Ericsson, withdraw from the mobile phone business.
Previously a manufacturing (ODM) supplier to other brands, since 2012 Huawei has released several of its own smartphones under the Ascend brand, the most recent being its mid-range Android Ascend P6 which retails in the UK for around £310. There's even a Windows Phone Ascend W1, but like most other hardware makers on that platform besides Nokia, it barely sells any.
The bulk of Huawei's devices are of course Android, and according to Khoury, Huawei sold 32 million smartphones in 2012 — the year it launched the Ascend P1 and Ascend D1 Quad and shipped between five and six million smartphones each quarter by IDC's numbers.
And while still well behind Korean smartphone king Samsung, it looks set to hit 40 device shipments million this year, having sold 20 million in the first half of 2013, according to the analyst firm.
Like Samsung, Huawei has also tapped the Nordics to spur better software and performance of its devices, late last year opening its an R&D facility in Nokia's hometown, Helsinki. Meanwhile, its R&D facilities in Sweden's capital and Lund in the south also contribute to its smartphone developments.