Hundreds of analysts and media gathered from the world in Shenzhen, China, attending Huawei Global Analyst Summit (HAS) 2019 from April 16-18th. Our analysts from Wireless Smartphone Strategies (WSS) services are attending the event.
Huawei started the summit with a brief review on its financial performance in 2018: strong growth both in revenue and profit. Huawei’s corporate revenue reached RMB 721 billion (~US$ 107 billion) last year, up +26% YoY. For the first time ever, Consumer business surpassed Carrier business being the biggest revenue generator. Consumer BG contributed to over 48% of Huawei’s total revenue in 2018, up from 39% in 2017. Consumer BG total revenue grew +45% YoY, reaching RMB 349 billion (~US$ 52 billion). Smartphones become the cash cow for Huawei overall business.
Smartphone business is the key driver behind the robust growth of Consumer BG. According to our latest report from WSS service, Huawei outgrew all major rivals in 2018 with 205.8 million units of smartphone shipments. It is now just a whisker behind Apple, which shipped 206.3 million iPhones last year. We believe Huawei will overtake Apple in 2019 by global shipments. Huawei will benefit from its comprehensive product portfolio, favoured leading position in China, as well as growth potential in overseas markets, such as India, Central Latin America, Central Eastern Europe, and in Africa and Middle East.
In addition to the revenue generator, smartphones will play a key role in Huawei’s AI and ecosystem strategy. In the breakout session, Consumer BG laid out its flywheel model for “seamless AI” strategy: use AI platform (HIAI) to connect Device Ecosystem and Service Ecosystem. As the primary portal that connects end-users, smartphone is the core in the device ecosystem of Huawei’s AI strategy.
In its flywheel model, Huawei’s success in smartphone business drives its development of 8 selected portals (Tablet, PC, Earbuds, Telematics, Watch, Glasses, Speaker, and HDTV). Then, the “1+8” in-house device portfolio (most of 8 products will be in-house) will drive the growth of a broader IoT hardware ecosystem connected by Huawei’s HiLink IoT platform. To avoid potential competition, Huawei confirmed that it will focus on the development of smartphone and the 8 selected portals (except auto telematics), and it will never step into smart home and IoT partner’s business.
AI has been an important ingredient in Huawei’s vision for a while. We still remember when Huawei showcased its AI deployment at HAS 2018 last year: it was mainly on-the-smartphone-device AI, like AI-enhanced camera performance and AI-enhanced battery optimization. This year, we are glad to see a more systematic and broader AI strategy / ecosystem from Huawei which crosses multiple devices and services / sectors. We believe this is the critical step for Huawei to secure the success in AI and 5G era.
Looking forward, the key question is about how to bring and implement AI and ecosystem strategy, especially in overseas markets. Huawei need to ensure significant and consistent investment. After all, AI is not a temporary marketing hype but a mid- to long-term technology trend. Meanwhile, Huawei need to pay more attention when expanding the AI and ecosystem strategy in more overseas markets. Different regulation regimes and insufficient local partners could cast shadow to the execution of the strategy.