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Can Huawei change the PC game?

Chris Player | June 14, 2017
Tech giant aims to be market leader in five years.

And the final piece of the PC puzzle for Huawei comes from the company's research division. In 2016, approximately 80,000 employees, or about 45 per cent of the vendor's total were engaged in research and development (R&D).

This is coupled with the fact that each year Huawei typically invests 10 per cent or more of its overall annual revenue in R&D, providing a big boost in developing new technologies and features.

However, the more the company diversifies its product offering, the more spread its R&D will become and the vendor will need to maintain, or perhaps even increase, the level of R&D to achieve its ambitious goals.

"Success in the smartphone market - the number of smartphones shipped by the company in calendar 2016 was up almost 30 per cent year-to-year, to 140 million, trailing only Samsung and Apple - has transformed Huawei into a consumer device powerhouse, and Huawei is fixated on extending its consumer brand into adjacent markets," Narcotta added.

"Huawei has likely been waiting for an opportunity in the PC market to present itself, whether through shifts in consumer PC market pricing and form-factor trends, partnerships and alliances with OEMs, or vendors exiting the market."

The premium PC market may be an attractive option for Huawei given its recent uptick. Research analyst firm Gartner 2016 would be the last year of decline for the struggling market, before returning to growth in 2017.

"The biggest challenge, and potential benefit for the PC market, is the integration of Windows 10 with Intel's Skylake architecture," Gartner research analyst Ranjit Atwal added.

TBR said recent recovery in the PC segment globally from late calendar 2016 into mid-2017 and the segment's improved long-term prognosis were the likely catalysts for Huawei's all-in push into PCs.

Further the firm said Huawei's PC business strategy will mirror the multi-stage approach the vendor employed in its smartphone business: explore, land and then expand. 

The company seeks to expand its ecosystem of devices sold to its massive global consumer addressable market and mine new (to Huawei) device markets for revenue and profits, TBR said.

In its 2016 annual report, the company reported its consumer revenue grew more than 35 per cent year-to-year to US$27 billion, or 34.5 per cent of its total revenue in 2016. TBR said expanding into the PC market will help sustain this momentum.

The firm suggested Huawei would prioritise PC market share over profits, targeting APAC - especially China - and utilising lower-priced PCs to raise brand awareness.

This will mirror the company's smartphone business, according to TBR and Huawei's scale will allow it to endure less profit per device sold and tolerate operating this new line of business at a loss for an extended period.

 

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