Published on October 18th, 2015 | by Varuna Singh2
Understanding Huawei and Honor’s strategy – #Honor7ME
Huawei is a massive company. A multi-billion dollar technology company of over $46b in revenue -with products and services from networking, silicon fab and smart phones. Huawei as the consumer knows would be from their latest push in smart phones and modems.
Honor is Huawei’s sister company
Huawei has an entirely owned sister company called Honor. What Honor has been doing ever since it launched the Honor 6 plus is make it an online brand only. That means your only direct means to get the Honor phone should you choose to buy, is going to be through its partnerships with e-commerce vendors across the region. Souq.com started its exclusive sale for the Honor 6 plus which was heavily advertised.
The other bit is if you would want an Honor phone. Are they any good? Why have honor while you have Huawei’s P8, Ascend and the newly announced Mate S series? According to Huawei, it’s all about the brand and target audience.
“Brand and target audience”
Last week, Honor launched their Honor 7. It’s not the 7th in its series, but in-fact it’s just the second version. The 6 and 7 is just playing catchup in nomenclature with the competition from the likes of Samsung and Apple. Starting from its name, Honor is positioning itself directly as an alternative.
— TechView.me (@TechViewME) October 12, 2015
Chris Sun Baigong Vice President of Huawei Honor in the Middle East commented, “The Honor 7 clearly demonstrates our capability to offer young tech savvy consumers in the Middle East, a smart phone that far exceeds their expectations. Not only that, but due to our unique factory to consumer business model which eliminates the need for bricks and mortar stores, we can offer a phone that inspires action and creativity at a surprisingly accessible price.”
“Honor’s unique business model”
Honor is a sub brand of Huawei and right now it’s already the world’s number 1 smart e-brand. By nature, it is for “digital natives” – a term that Mr. Chris Sun VP of Honor Middle East said. It has a unique business model – it sells its products online only. Honor is deeply rooted to the internet and it knows majority of internet users are young by mindset. That saves Honor’s the cost of mid-man and it benefits by then serving their users in the best way, directly. Synonymous to your Jumbo’s and SharafDGs of the world, Honor’s partners are e-commerce websites around the world. The new age retailers like Souq.com that Honor has given exclusivity to. Globally, Honor reached 18 countries, targeting over 3.2billion people. In a single day, Honor sold 2 million units that contributes over US$300 million in revenue. That’s quite smart. Honor also has some key partnerships with apps and consumer services like Gameloft and MixRadio that may be bundled with the device it-self.
“Souq.com gets exclusive sale rights once again”
As a brand, I see Honor as the One Plus. The target audience is a younger mindset of customers. The kind of people who want more out in specs and design at a healthy and strong price-point. It’s kind of the essence Android famously put by the Nexus series and as an entry point to anyone that loves Android for what it is. On more than one occasion you find software in the high-end cheap phones flaky but it’s slowly coming to a point where differentiation is making sense. The thing that makes Honor on the right path to success is that it looks at itself as a young company. It likes to think of itself as an inspiration to other brands and is constantly being inspired by others and its customers. It’s the kind of bold move that needs to go deep in its bigger brother organization, Huawei.
The Honor 7 is really THAT kind of phone. It comes out with Huawei’s latest flagship – the Mate S. But when I talked with an Honor representative the reason for the differentiation was more based on target audiences. Let’s look at those two phones.
The Honor 7 is a metallic air brushed 5.2” encased phone that’s at that size to be comfortable in your hand. The P8 had a 5.2” screen and the Mate S has a 5.5” screen. It has a self-learning fingerprint reader and scanner that also acts as a gesture pad that can be triggered to bring the notification, swipe through the gallery, etc. You can even talk aloud to the Honor 7 and say “Where are you?” and it would reply by saying out loud “Here.”. Yep.
— TechView.me (@TechViewME) October 12, 2015
It is powered by a HiSilicon octa-core Kirin 935 processor with its A53 and an apt 3GB RAM. This is the same as the Mate S. The phones comes in 16GB with a microSD card for expansion. It has dual antennas with Huawei’s Signal+ technology for better signal reception and call quality.
The Honor 7 uses a f/2.0 Sony 20 MP IMX 230 ExMOR sensor that is industry top and is covered by a sapphire glass. There are new tricks by Honor including a new Food mode filter. It also has a 8MP front facing camera with a warm light for dark selfies (low light selfies, not depressing dark).
The battery is rated at 3,100 mAh that should go for over a day with heavy use. It supports quick charging capabilities as well.
The Honor 7 is 30% cheaper than the Mate S
What you get with the Honor 7 is an equally good phone. The Mate S does have a larger and better screen and a Force Touch display, but not much more has changed on paper between the two. What is more alarming is the price difference. The Mate S retails for AED 1999 and the Honor 7 retails for AED 1399. That’s a big AED 500 in difference. The lines get more clear here.
You can’t really compare the Mate S and the Honor 7 like any other big brand’s line up. You could argue as to why the Mate S exists if the Honor 7 is only slightly worse but over 30% cheaper. According to Honor, this strategy has worked well for them.
“Honor phones have more self components than any other phone”
Then there is the question of how Huawei is able to do this in the first place. Honor would not have existed without its parent Huawei’s assets. Honor has the ability to make and take bold steps and try things out as Huawei continues to push time and resources in the sub brand. The answer is clear – Huawei has a lot more control on their own phones than anyone. A good example of that is its Kirin processors that are in all Huawei smartphones. Not Qualcomm or Nvidia, its Huawei’s semiconductor subsidiary HiSense and Kirin, its processor does a comparable job against Qualcomm’s Snapdragon.
“Honor is set to become the fastest growing smart phone brand”
The numbers show it well. In 2014, Honor sold 20 million units worldwide which contributed to US$2.4 billion. In the first half of this year in 2015, Honor has already reached 20 million units sold globally with a revenue of US$2.6 billion. Honor believes that by end of 2015, it will reach 40 million units with USD$5 billion in revenue. This is clearly the fastest growing online brand in smartphones.
So how does that strategy and reach look specifically to the Middle East ?
Honor is focused on “Internet developed” countries. The kind of countries where the Internet and nation as a whole is developing at a high rate. Not entirely the next billion but the kind of nations that have a higher purchasing power than ever. These are Europe, China, Japan, India, Mexico and Brazil.
“If the channel here sounds awfully familiar, it’s because it is!”
This sounds awfully similar. Obi mobiles is trying to target the exact audience and have a considerably bolder advertisement campaign. Head by former Apple and Pepsi CEO John Sculley, Obi mobile phones have been plenty and plenty disappointing. Their latest push with their SF and SJ phones look promising as Honor is concentrating only on a select few hard moonshot devices.
“Honor expects 10% market share in the Middle East”
Honor’s proposed inventory sold out in Europe, Russia, Malaysia and China. As we reported earlier, the previous model Honor 6 Plus also went on sale exclusively at souq.com and it sold over 5000 in pre-orders with over US$300 million in the first month worldwide. Margins are lower yet sales are higher on mid-range devices and in 2014 Huawei Honor’s global revenue increased 24 times as it entered 57 global markets in just six months.
“Honor is a psychological brand”
I can imagine the variables Huawei needed to consider from brand perception, their hard to pronounce name to the massive growth in internet enabled developing countries. The Honor brand is a psychological brand with some deep and tight hardware integration. Their software has come to a point where it is getting slightly useful and their phones perform comparable to the previous gen Snapdragons and Exynoses of the world. The UI is still a mess and just not clear and its something Huawei needs to work on.
“Available today exclusively at Souq.com”
The GCC is set to be bench-marked by Honor and Huawei. The Honor 7 will be available on today October 18th for AED1399 (16 GB) exclusively in souq.com and you can pre-register at HonorArabia.com and get AED150 off.
Honor expects to get 10% market share in the Middle-East and to sell over 15,000 units in just one week.