Huawei, the Chinese telecoms group, is expanding in the beleaguered PC market, undeterred by slumping sales and the demise of smaller players.
The company, which has revved up sales of handsets and network gear in Asia and Europe but failed to win over Americans due to concerns over national security, is expected to bring out a fully fledged laptop this May.
It will also bring out a new version of the hybrid MateBook introduced last year. That device, with a detachable keyboard, is similar to Microsoft’s Surface PC/tablet – sales of which slumped 25 per cent year-on-year in the latest quarter, partly on the back of stronger competition.
“The smartphone business was tough. Getting into this is going to be even more tough,” said one analyst of Huawei’s diversification.
Huawei is pitching its new laptop at the high end, and is targeting consumers rather than businesses. "They are looking to compete with Apple on looks and features," said one person who had a sneak preview, referring to the MacBook line.
Worldwide PC and laptop shipments in 2016 fell 6.2 per cent year-on-year, totalling 269 million units, according to research groups Gartner and International Data Corporation. It was the first time since 2008 – soon after Apple launched the iPhone and smartphone adoption began to rise – that annual PC shipments fell below 300 million units.
Rate of decline
However, the rate of decline has slowed, and there are pockets of modest growth, including notebook sales in North America and gaming PCs, according to research consultancy Canalys.
"Expanding their PC business is probably the next logical step," said Ben Stanton, analyst at Canalys. "It's probably the only hole in their portfolio."
Winning business customers’ trust in the device would be key, he added, noting that industry veterans Dell and HP spent decades building up reputations for trust and reliability. Huawei, by contrast, lacked a wealth of partners and distribution channels “so is at a huge disadvantage in that respect”.
Loizos Heracleous, professor of strategy and organisation at Warwick Business School, pointed to minimal customer loyalty, intense competition and low barriers to entry in the field. "It's not an industry where high returns can be made unless a company has real differentiation and can charge a premium price, like Apple."
Resources
Huawei will sell the devices online and offline, but analysts said it may struggle to break into corporate resellers, which sell to businesses.
However, Mr Stanton pointed to the hefty resources of the group, which is privately owned. "They have astronomical budgets for business expansion and marketing. So I would not bet against them pouring a lot of money into this type of expansion.The question is if they spend that money wisely, and go after the hotspots in the market." – Copyright The Financial Times Limited 2017
