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China’s Huawei to Tap Into U.S. Market With New Mate 9 Smartphone
Company to sell flagship smartphone in the U.S. for the first time
By JURO OSAWA in Hong Kong and ARCHIBALD PREUSCHAT in Munich
Nov. 3, 2016 9:30 a.m. ET
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China’s Huawei Technologies Co. plans to sell its new high-end flagship phone in the U.S.—a first for the world’s third-largest smartphone maker as the company tries to grab a bigger piece of the premium-handset market.
On Thursday, Huawei unveiled the Mate 9, its latest flagship smartphone, with a 699 euros (775 dollars) price tag in Germany. The company said the new phone will initially be sold in 12 countries in Asia, Europe and the Middle East, and be available in the U.S. later.
The U.S. release date is expected to be in January, a person familiar with the matter said. In the U.S., the Mate 9 will likely be sold online, not through carriers, the person added.
The launch of the Mate 9 is part of the Chinese technology giant’s effort to sell more high-end devices to take on Samsung Electronics Co. and Apple Inc. in the global smartphone market. The new flagship phone comes with Huawei’s own interface software, which uses artificial intelligence to automatically keep applications, photos and videos organized. That feature helps prevent the handset’s speed and performance from slowing, the company said. In April, Huawei launched its high-end P9 smartphone, which features a dual-lens camera.
Huawei has set an ambitious goal of becoming the world’s biggest smartphone maker within five years, but it has some catching up to do. It held a 9.3% share of the global smartphone market in the third quarter, behind Samsung’s 20% and Apple’s 13%, according to research firm International Data Corp.
As the world’s biggest market for high-end smartphones, the U.S. is crucial for premium-handset makers. But Huawei faces challenges there as its telecommunications networking equipment has been effectively banned due to security concerns. While Alphabet Inc.’s Google Nexus 6P, manufactured by Huawei, was sold in the U.S. last year, the Chinese company hasn’t released its own flagship model in the U.S. until now.
It is an opportune time for the Chinese smartphone vendor: Rival Samsung Electronics Co. has been struggling with a global recall of its latest high-end phone, the Galaxy Note 7, after reports that the phones caught fire. Samsung was forced last month to halt shipments of the Note 7 ahead of the peak holiday season.
“Huawei would happily encourage consumers looking for a premium device to consider options like our Huawei P9 and Huawei Mate 9,” a company spokesman said. “Both phones give consumers the variety and options to address their specific needs while providing the latest technological advancements like the Leica dual-lens camera.”
Huawei, already one of the world’s biggest suppliers of telecommunications networking equipment, initially focused on inexpensive handsets in China, but over the past few years it has expanded in overseas markets such as Europe, the Middle East, Africa and Latin America. The company has also been selling more-expensive phones to boost margins. In 2013, 3.5% of Huawei phones cost more than 400 dollars, but in the first half of this year, that portion rose to 13%, according to IDC.
To justify the high price tags on its flagship models, Huawei has touted features such as processor chips designed in-house and cameras developed in collaboration with German optics company Leica Camera AG.
On Thursday, Huawei also unveiled a limited edition of the Mate 9 designed by Porsche Design Group, a unit of German luxury car maker Porsche AG. The standard Mate 9 comes with a 5.9-inch display, while the Porsche Design version has a 5.5-inch curved display and will cost more than 1,500 dollars. The phones also come with longer battery life and fast charging, which Huawei says delivers in 20 minutes enough of a charge to last a full day.
At the Converge tech conference in Hong Kong in June, Huawei’s Richard Yu discusses how the company managed to grow so rapidly in China amid a slower-growing economy. Photo: Kenny Lim for The Wall Street Journal
Analysts expect the discontinuation of the Galaxy Note 7 to boost sales of other high-end phones from Samsung’s rivals such as Apple and Huawei.
After Samsung stumbled with the Note 7 recall, Huawei executives said internally that the Chinese company needs to be extra cautious about the quality and safety of its own phones, according to Huawei employees. In September, Richard Yu, head of Huawei’s smartphone business sent an email to his staff saying that Samsung’s recall was “a very big lesson” for Huawei.
“This is a rare opportunity for other market players to have an advantage over the incumbent Samsung,” IDC analyst Melissa Chau said.
Some of the consumers who would have bought the Note 7 are expected to seek other high-end options. While the main beneficiary will likely be Apple, whose iPhones are priced similarly to the Note 7, “There is definitely some room for Huawei,” she said.
Like Samsung, Huawei mainly sells phones powered by Google’s Android operating system.
But Huawei’s success is far from guaranteed, as the company also faces tougher competition in China, the world’s biggest smartphone market, from domestic rivals who are growing much faster.
While it was the top smartphone vendor in China in the first half of this year, it fell to third place in the third quarter, overtaken by Oppo Mobile Telecommunications Corp. and Vivo Electronics Corp., according to IDC. Shipments at both Oppo and Vivo roughly doubled from a year earlier, while Huawei’s shipments rose 5.1%.
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