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Samsung focuses on profitability, while Huawei seeks to get bigger
By Baek Byung-yeul
The world's top three smartphone makers ― Samsung Electronics, Apple and Huawei Technologies ― have been pursuing different strategies to deal with the COVID-19 pandemic.
According to market tracker Canalys, the global smartphone market in terms of overall size plummeted to 285 million devices in the second quarter, down 14 percent compared to the same period in 2019.
All three companies have struggled with the falling demand due to the pandemic, but their measures to cope with the chilled market situation differ.
Industry officials and analysts said Samsung, the world's top phone maker by market share, is focusing on improving profitability by selling more high-priced smartphones such as the Galaxy Note20 series and what it calls the "super-premium" Galaxy Z Fold2 and the Z Flip 5G devices, while maintaining market share with its budget phones in emerging markets.
Apple, the only company to see sales growth in the April-June period, has initiated a plan to strengthen the ecosystem of its devices by producing its own chips for Mac computers.
By using chips produced based on its Silicon chip architecture design, replacing Intel chips, the IT titan said it can offer a more streamlined user interface experience between its Mac computers and other smart devices such as the iPhone and the Apple Watch.
Huawei, which has been struggling with U.S. sanctions since 2019, is in desperate need of a larger market share as it thinks this is the only way to convince its investors that it has a clear plan to reach a higher level.
Creating 'Galaxy ecosystem'
Learning from market setter Apple, Samsung announced it had created a "Galaxy ecosystem" during a recent Unpacked event held online, Aug. 5.
During the event, the Korean tech giant, which has been a leader by market share since 2012, introduced five devices for the ecosystem ― the Galaxy Note20, the Galaxy Z Fold2 foldable smartphone, the Galaxy Tab S7 tablet PC, the Galaxy Watch and Galaxy Buds Live wireless earbuds.
Roh Tae-moon, head of Samsung's mobile communications business, said these five devices are designed to help users maximize work and play because they are seamlessly integrated with each other.
"Technology must make life easier, not more complex. That's why we have introduced five new power devices. Alone, these devices are powerful tools to help you maximize work and play. Together, as part of a Galaxy ecosystem, they work together seamlessly so you can spend your time focused on what matters most," Roh said.
Samsung told investors during an earnings call that it will focus on improving profitability with the new high-priced devices, despite competition in the smartphone and other smart gadget markets which is expected to intensify.
Huawei's rapid growth in sales
On July 30, market tracker Canalys released a stunning list showing Chinese phone maker Huawei surpassing Samsung in terms of smartphone shipments in the second quarter.
According to the market researcher, Huawei shipped more smartphones worldwide than other manufacturers during the April-June period, marking the first quarter in nine years that a company other than Samsung or Apple has led the market.
In the second quarter, Huawei sold 55.8 million phones, down 5 percent year-on-year; but Samsung experienced a steeper fall, selling 53.7 million phones, a whopping 30 percent drop.
Of course, this doesn't mean Huawei is expected to surpass Samsung in terms of annual sales. The figure the Chinese maker accomplished was possible due to the Chinese government's agile efforts to contain the spread of the coronavirus.
During the same period, Samsung struggled with its phone sales in key markets such as North America and Europe where it experienced fallout from the strict lockdown measures employed there to slow the pandemic.
Industry analysts presume that Huawei will keep trying to improve its market share to top Samsung, Apple and its fellow Chinese rivals Xiaomi, Oppo and Vivo, taking advantage of its dominant position in China, the world's largest phone market.
"This is a remarkable result that few people would have predicted a year ago," said Ben Stanton, a senior analyst at Canalys. "If it wasn't for COVID-19, it wouldn't have happened. Huawei has taken full advantage of the Chinese economic recovery to reignite its smartphone business."
"Taking first place is very important for Huawei," said Mo Jia, another Canalys analyst. "It is desperate to showcase its brand strength to domestic consumers, component suppliers and developers. It needs to convince them to invest, and will broadcast this message of success far and wide in the coming months."
But the analyst predicted that Huawei's lead will be short-lived.
"It will be hard for Huawei to maintain its lead in the long term. Its major channel partners in key regions, such as Europe, are increasingly wary of Huawei devices, taking on fewer models, and bringing in new brands to reduce risk. Strength in China alone will not be enough to sustain Huawei at the top once the global economy starts to recover," he said.
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