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Briefing Sep 10, 2020 05:26 pm EqualOcean

Huawei to Roll Out HarmonyOS-Powered Smartphones in 2021

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Sep 24, 2020 09:50 am ·

Huawei Would "Rather Fight and Die than Surrender and Live"

► The impact of chip supply interruption is very significant. ► The enterprise business is likely to become the focus of Huawei in the future. ► HMS, the company's home-grown operating system, has made progress since it was established in 2019. In May 2019, Google (GOOG:NASDAQ) stopped providing GMS authorization certification to Huawei mobile phones, negatively impacting Huawei's consumer business in Europe. At the end of 2019, Charles Peng, CEO, Huawei and Honor India, Consumer BG, said that "Huawei has its own HMS and is trying to build a mobile ecosystem. Most of the key apps such as navigation, payments, gaming and messaging will be ready." One year later, the United States government announced that companies containing American technology cannot ship to Huawei without permission after a 120-day transition period. The sanction is equivalent to cutting off Huawei's sources of chips. On August 7, 2020, CEO of Huawei Consumer Business Group, Yu Chengdong, said (in Chinese) that due to US sanctions, Huawei's Kirin series chips will not be able to be manufactured after September 15. By now, only Intel (INTC:NASDAQ) and AMD (AMD:NASDAQ) are allowed to supply chips to Huawei. It is reported that semiconductor companies, including Qualcomm (QCOM:NASDAQ) and SMIC (688981:SH, 00981:HK), are also applying for permission.  Between two waves of bans across two axes, namely software and semiconductors, the smartphone business is impacted the most. On the chip side, the company is connecting Chinese companies in different areas of the semiconductor industry and helping them improve their technologies based on its own experience in this field. However, after so many years of development, the global semiconductor industry has been formed. The difficulties in the semiconductor industry don't make the software field easier to enter; the two are not linked that tightly. From speeches and interview content on Huawei Connect 2020, we conclude that Huawei is likely to put more effort into enterprise business, forming a full-industry ecosystem by HMS, just what it has been doing since last May. "Chip reserves for business partners are full. Huawei is still looking for solutions for mobile phone chips," Guo Ping said. In May 2020, it was reported that Huawei had stockpiled chips as the United States government tightened sanctions. There are two key insights from what Mr. Guo stated during the media press conference after his speech at the conference: • The smartphone business is indeed blocked because of chip restrictions. As we analyzed in the former paras, on the one hand, it is hard to form a totally domestic semiconductor supply chain in the short term. For instance, the most advanced processing techniques are owned by TSMC (TSM:NYSE, 2330:TW) and ASML (AMSL:NASDAQ), which is the developer of 7nm EUV machines, whose techniques both contain American technologies and have a narrow supply chain problem as some raw materials for manufacturing chips are monopolized by overseas companies. On the other hand, it is not the most cost-effective option. Chips manufactured by this supply chain are not competitive in the market in terms of price. • The enterprise sector (so-called '2B') is likely to be the focus in the future. According to Huawei's annual report in 2019, the enterprise business contributed 10.45% of total revenues while 54.41% of revenues come from consumer business. As a solution provider for companies in different areas, Huawei provides software and hardware for their customers at the same time. Considering the difficulty in making revenues from smartphones sales in the future and the high demands from enterprises' business transformation, turning focus to the enterprise service segment is a highly logical choice. Huawei enterprise BG president, Peng Zhongyang: “Business in the digital age is a positive-sum game, not a zero-sum game.” There are three key elements for realizing scene digitization. The first is 'technical' – and Huawei must be good at integrating multiple ICT technologies with core business. The second is to 'know the industry,' 'revere the industry,' gain insight into the industry, and understand industry know-how. Finally, 'true practice.' The digitization of the scene is not achieved by talking about it on paper, but by combining knowledge and action, exploring and creating in practice. Huawei proposes to build a 'digital ecological cube' in three dimensions. Firstly, Huawei aims at the digital future and deeply explores the unsatisfied demands of various ('N') types of sub-scenarios in various industries, which is the prerequisite for making the cake bigger. Secondly, N capabilities need to be aggregated. Each partner will give full play to their expertise, the basis for making a bigger cake. Finally, companies must create N cooperation methods and business models to achieve symbiosis, co-creation and sharing. This is the source of power to make the cake bigger. “Huawei would rather die one step forward than live half a step backward”: Zhang Pingan, Huawei consumer cloud service president. From the performance of HMS presented by Mr. Zhang, we can see that it has attracted a bunch of developers to join its ecosystem. In one year, Huawei opened five engines including payment, advertising, browsing, map and search to developers and partners around the world. By now, there are 96,000 applications integrating HMS Core. The monthly active users of Huawei's application market have reached 490 million. The number of applications distributed from January to August this year exceeded 261 billion. Judging from what HMS has achieved in one year, we expect Huawei to dive deeper into the enterprise business in the near future. Read more about the challenges facing Huawei in our previous article.

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Sep 22, 2020 03:39 pm ·

Huawei Starts Selling New FusionServer V6 Server

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Sep 20, 2020 03:27 pm ·

China's Smart TV: IoT, 5G and Smartphone Vendors Revitalizing 'Old' Market [2/2]

► Smartphone vendors, such as Huawei and Xiaomi, consider TVs as control centers in their smart home ecosystems.  ► Xiaomi TV, as the current market leader in China, is expected to drive the revenue of other IoT products and the TV Internet services. ► The relatively large overseas customer base of Xiaomi makes it the fifth TV shipper globally with its current prevalence in India and the strategic focus in Europe.  ► Huawei's TV products are strongly bonded to its 'smart home' and 'mobile office' application scenarios; however, the well-positioned TV products still need time to gain user recognition.  ► OPPO has also started to build its IoT products through earbuds, smart wearables and the upcoming TV products.  ► OnePlus and realme have chosen the Indian market as a start point to promote their smart TV products, where OnePlus focuses more on the high-end and realme sticks to its young and innovatively affordable product positioning.  As discussed in the previous article, the Chinese TV industry is embracing growth space squeezed by the transition from cable TVs to Internet connected ones. The appearance and functions are also evolving to the next stage. With the better capacity of content presenting and interaction with users, the new entrants, exemplified by smartphone vendors Huawei and Xiaomi (01810:HK), in the TV industry, are attaching more meanings to their TV products for better market positioning and cracking the big brand advantage of traditional TV brands such as Skyworth (000810:SZ) and Hisense (000921:SZ). The following will touch upon the TV strategies of 'newcomers' of the Chinese TV industry, namely Xiaomi, Huawei, OPPO-affiliated companies who actually revitalized the declining market. Xiaomi TV – Beyond TV: Planning big for the IoT and Internet services Xiaomi, the smartphone vendor who markets itself as a software and IoT company, considers the TV product as a crucial portal to the all-connected and smartly controlled home appliances blueprint made by the company in 2017. (For more insights on Xiaomi IoT products and strategies, please check EqualOcean's upcoming case study report on Xiaomi Technology) The reason for the electronics leaders like Xiaomi and Huawei choosing TV products as their IoT strategy focus is that televisions could function as an interface portal, or a command center at home, with their embedded display features and some ready-to-be-added complex input functions such as operating systems and speech recognitions. Besides, as mentioned in the first part of our TV series, the replacement period of TVs can be as long as ten years, which the user stickiness is inherent. And if the Xiaomi TV, which could control other appliances and be connected to other appliances with a shorter replacement cycle, is dominating in users' homes, it will reasonably increase the sales of other Xiaomi smart home products such as air conditioners and acoustic equipment. Except for the IoT planning, Xiaomi also intends to drive the Internet services revenue through the TV sales, as the Internet service such as the content subscription, TV applications and advertisement revenues. The revenue from Internet service enjoys higher profit margin and better sustainability, thus Xiaomi emphasizes on this part of revenue. Besides, it is likely that the quick movers could possibly enjoy a larger market in the future when it gains popularity, since the TV-based software ecosystem, which includes the operating system and the applications related, is hardly catching up with the rapid development of the 5G technology and the corresponding display industry upgrade. Partly as a duplicate of the company's smartphones, the TV products also aim for the overseas markets, especially the Indian and the European. The company first entered the Indian smart TV market in 2018 with its high-end 55'' TV with the lowest price of the same size in the market at that time. One year after its landing in India in 2019, the Xiaomi TV replaced LG Electronics (066570:KR), becoming the second largest vendor in terms of LCD TV shipments. Xiaomi in the European market is one to two years behind the Indian market in terms of entrance and market occupation. It first landed in the Eastern Europe in June 2019 and the Western Europe in November of the same year. As Omdia estimated, Xiaomi's TV shipments will reach 1.67 million units in the European market in 2020, which is approximately 60% of its Asia Pacific market (excluding China).  Following the development path of the smartphones, the company also envisions its TV products to be listed on the world's tops. According to AVC, as of the second quarter of 2020, the company ranked in the top five globally in terms of smart TV shipments. Apart from the actual shipments and the revenue generated, Xiaomi's TV products also serve a marketing purpose. Having long struggled with the brand image of low price and low quality, Xiaomi intends to enhance its brand image of 'cool products' and 'cutting-edge technologies' through TV innovations. In August 2020, the company launched the world's first mass-produced transparent TV – Mi TV LUX Transparent Edition – priced at approximately USD 7,000. The ultra-high-end TV with either screen quality innovations or the screen size enlargement up to 98 inches efficiently featured the 'Xiaomi' brand as highly innovative without interfering with the sales of its low-end and cost-efficient products. Huawei:  What's the next after its possible smartphone setback? In May 2019, the US government put Huawei and 70 affiliates in the US trade blacklist, which resulted in a key components supply shortage for its smartphones. One month later, at the Mobile World Conference (MWC), Huawei refreshed its mobile strategy to '1+8+N,' in which 1 refers to smartphones, 8 represents business lines of PC, tablets, TV, speakers, glasses, watches, autos and hearables, and 'N' indicates the unspecified products covering mobile office, smart home, fitness and health, media entertainment and smart travel. Though the smartphone accounts for the largest part of its consumer business (54% of its total revenue in 2019), Huawei by the '1+8+N' strategy showed its backups for the sanctioned smartphone segment, which is more or less in line with Xiaomi's IoT strategies. Thus, Huawei also attaches importance to its TV products. In August 2019, the company released its first TV products Honor Smart Screen in 55'' and 65'', which were installed with the company's Android substitute operating system HarmonyOS. Besides, Huawei's smart screen series are equipped with pop-up cameras. The two features mentioned turned Huawei's TV products into a huge 'smartphone' which could satisfy two biggest needs – video calls and content browsing. Currently the prices of Huawei TVs range from CNY 2,000 to 10,000 and the products are well-positioned both in smart home and mobile office scenarios. However, even with its strong branding, unique marketing position and the relatively large customer base (as Huawei's smartphone shipment in the first half of 2020 accounted for 43% in the Chinese market), the company as a latecomer in the Chinese TV market still needs more time to gain prevalence. According to Omdia, Huawei TV's 2020 shipments target is 1.5 million, which is miniscule compared with Xiaomi's 10 million shipments in 2019. OPPO 'family' – the trend follower in China and the trendsetter in SEA OPPO, as one of the top five smartphone vendors in China, will definitely strive to find a foothold in the Chinese IoT hype. After Huawei and Xiaomi made themselves the global top five wearable device companies with Huawei GT series and Xiaomi wristbands, OPPO finally joined the wearable device feast by releasing OPPO Watch in March 2020 and the OPPO wristband in June 2020. After the strong smartphone-related devices ready in the market, OPPO's TV products closely follow the steps and was reported in early September 2020 that the OPPO smart screen will face the market soon in China. Though OPPO's smartphone shipments surpassed those of Xiaomi, taking the second position in the Chinese market, the company has not yet marched into the smart home appliances arena, while many other electronics vendors have become hands on. However, the OPPO 'family' realized the importance of home appliance connections earlier than its TV product release in the Chinese market. OPPO's subsidiary company OnePlus released its first smart TV product in India in 2019, which was in line with its smartphone positioning; it targeted the high-end market, using Quantum Dot Light Emitting Diodes (QLED) and 55-inch screens. Realme, another OPPO-related company which targets the young consumer group, has been growing aggressively in the South Eastern Asian smartphone market to the top five shippers during the second quarter of 2020 and the top 3 in the Indian market. As a business expansion, realme launched smart TV products in India during the second quarter of 2020. The display sizes of 32'' and 43'' and the price – around USD 300 – suited realme's young and affordable brand image and the consumption level of the Indian market. To find more about key trends in the Chinese TV industry, click to check previous analysis of Chinese TV market recap.

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Sep 23, 2020 02:56 pm ·

Xiaomi to Release Its First '8K + 5G' TV Series

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