Apple Inc.’s (NASDAQ:AAPL) iPhone X, Alphabet Inc’s (NASDAQ:GOOGL) Google Pixel 2 and the Galaxy S8 were the smartphone releases that got the spotlight in 2017. But Chinese smartphone manufacturers Huawei, OPPO and Xiaomi are the companies that have made the big gains.
A report that the Huawei Mate 10 may be getting a U.S. carrier launch — complete with a big, $100 million marketing push — should have the established smartphone leaders worried. And Samsung may be in the worst position of all.
Report: Huawei Mate 10 to Get U.S. Carrier Launch
Rumors that China’s Huawei was preparing an assault on the U.S. smartphone market began to pick up steam in December. Before Christmas, Bloomberg published a report that Huawei and Xiaomi were in negotiations with both Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) to bring the Huawei Mate 10 and Xiaomi smartphones to the U.S. in 2018.
As the year closed out, The Information wrote that a deal with AT&T for a Huawei U.S. launch had been reached and that Huawei was planning a $100 million advertising push to go along with it.
If true, this is not good news for Apple, Google or Samsung. And of the three, it may be Samsung — poised to launch the Galaxy S9 — that takes the brunt of the damage, although Apple’s iPhone X sales could also be in jeopardy.
Chinese Smartphone Makers on the Rise
China’s smartphone manufacturers have been a growing threat for years. Starting out selling cheap devices, they began to move into mid-range, then flagship-class smartphones. They now dominate the Chinese market, which has led to a rapid rise in their global standing.
In Q3 2017, Huawei, OPPO and Xiaomi held the third, fourth and fifth places, respectively, in global smartphone sales. Samsung was number one and Apple number two. However, while Apple and Samsung eked out single-digit year-over-year growth, the Chinese companies were growing market share at a rapid clip. Third place Huawei notched 16.1% growth year-over-year, while hitting 10.5% market share.
Apple, in comparison, saw 2.6% growth with 12.5% market share.
Huawei Mate 10 Could Disrupt U.S. Market
Huawei has a compelling new flagship smartphone in the Huawei Mate 10. The new Android 8.0-powered flagship sports minimal bezels on its 5.9-inch display, a super-sized battery, Huawei’s own Kirin AI processor and a dual-camera setup from Leica.
Priced at $825, the Huawei Mate 10 is a flagship smartphone in every way. A Huawei U.S. launch at major carriers, combined with a $100 million marketing push is not good news for Apple, Google or Samsung. Apple’s iPhone X sales haven’t hit the hoped for blockbuster levels and Google remains a relative bit player that’s vulnerable to more Android competition. The real loser if the Huawei Mate 10 gets a big U.S. launch is likely to Samsung, though.
The company is due to release the Galaxy S9 in the next few months, and early leaks suggest the Galaxy S9 pretty much looks like the Galaxy S8. That’s not a bad thing — the Galaxy S8 is a good smartphone — but a similar design does tend to result in reduced excitement.
The Huawei Mate 10 is aimed at the same people who would buy a Galaxy S9. And Huawei is really pushing features like those Leica cameras and the AI-optimized CPU. Apple fans tend to not switch platforms, so it seems unlikely that iPhone X sales would take a real hit from a Huawei U.S. launch, at least in the short term.
Convincing new smartphone buyers to choose the $999 iPhone X will get tougher, though … Selling Pixel phones will be more challenging for Google. But the Huawei Mate 10 is designed to take on the Galaxy S9 head-to-head.
With carrier support, excitement over the long-awaited Huawei U.S. launch and a big marketing budget, Samsung should be nervous about 2018.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.