George Zhao, Honor's CEO, has a simple philosophy - make the best products, and sales numbers will follow.
Zhao spoke to global media in a wide-ranging and rare interview that discussed the company's strategy to compete with Apple and Samsung and hinted at the possibility of a new foldable smartphone to come.
Honor, which was spun off from Huawei, might also face U.S. sanctions similar to those that crippled its former parent company.
Honor takes aim at Apple and Samsung
Honor has launched the Magic Vs foldable phone outside of China this week, with a price tag of nearly $1,700. In addition, the company unveiled its high-end flagship phone, the Honor Magic5 Pro, at the event.
Honor was one of Huawei's mid-tier smartphone brands that focused on mid-range smartphones. In spite of this, the company is now looking to enter the high-end market, a market dominated by companies like Apple and Samsung.
Despite Honor's challenges in pursuit of growth, Zhao is aware that the company is taking a careful approach to growth as it strives to meet its goals.
"[We] want to do things better for our customers today and in the future, our goal is to ensure our customers are satisfied with the service we provide. In addition to that, we need to know how to build trust and relationships with our partners. As long as we are able to make these two things work and are able to make them healthy, then the number of sales, the target number, and the growth number will come to us automatically," Zhao said.
“The more volume you pursue, the more likely you are to lose it.”
Since being sold off from Huawei in 2020, Honor is just launching its first phones outside of China for the first time last year. The time is not right for Honor to jump into the market at the moment. It has been reported that smartphone shipments have fallen to their lowest level since 2013 in 2022. Data from Canalys shows that in 2022, high-end smartphones, those with a price tag of over $800, will account for 18% of the total market for smartphones, up from 11% in 2020.
It is for this reason that Honor is pursuing this category. However, Honor continues to lag behind Apple and Samsung in terms of market share.
As per Counterpoint Research data, Samsung's global market share will be 21.2% in 2022, while Apple's will be 18.3%, according to the company's share of the worldwide market.
More foldables ahead
Taking part in the Mobile World Congress in Barcelona this week, Honor had a huge stand that showcased its latest devices, underlining its ambition to be a global brand. This exhibition was right next to Samsung's exhibition, highlighting Samsung's desire for its products to be seen in the same vein as the South Korean giant's.
In honor of Magic Vs. Honor had a large poster featuring the tagline: “Unfold your magic.”
In Honor's show, the foldable was the star of the show. The first foldable devices were developed by Samsung, which released its first smartphone of this type in 2019 which is the first of its kind. It has been followed by other companies, mainly Chinese, in recent years. These products are now being released on the global stage and they have started releasing them at a rapid pace. One of the features of these smartphones is that their screens can be bent.
It was just last month that Oppo launched their Find N2 Flip phone. Lenovo, the company that owns Motorola, recently told Trade Algo that another razor foldable phone would be launched this year.
In 2022, foldables were responsible for just 1.1% of total smartphone shipments, according to research firm IDC, and are only expected to increase to 2.8% in 2026, according to IDC. Zhao, however, believes there is a future for these devices, even though he is aware of various challenges, such as the weight and battery life that these smartphones currently have.
There wasn't any discussion of sales targets between Zhao and the media, but he did say he was focused on making the best foldable products to help the company grow in the future.
“Ultimately, we want to be the number one technology for foldable phones, so we want to develop the best foldable phone possible. It is my conviction that if we do this, then the market will continue to grow, and we will be able to build the brand, and all these things can grow based on this product," Zhao told Trade Algo.
As of right now, the Magic Vs can be folded like a book. Other companies such as Samsung and Oppo have also come out with phones that fold upward to resemble a traditional flip phone. While Honor does not have a smartphone like this, Zhao said that the company is considering making one in the near future.
As a matter of fact, we are taking this into consideration. As to when and how I am unable to reveal too much information at this time. “In any case, we are seriously considering that direction,” he said.
Honor’s Huawei history
Honor was a brand that was part of the Chinese telecommunications giant Huawei. It is only after U.S. sanctions were imposed in 2020 that Huawei was deprived of critical chips and access to Google's Android software, which crippled Huawei's mobile business. At one point in time, Huawei ranked as the world's number-one company.
As part of Huawei's effort to keep the Honor brand alive, the company 2020 sold off the brand to a consortium of buyers that included the government of Shenzhen, where Huawei is headquartered.
In this way, Honor was able to regain access to the critical chips and software that it needs to operate. In January 2021, Honor launched its first phone as an independent brand.
Honor has so far remained out of the geopolitical tussle between the United States and China regarding technology and geopolitics. As for CEO Zhao, he is not concerned about sanctions similar to those put on Huawei being imposed on an independent Honor company in the future.
“Is there a reason why we need to worry about this? 'Our business model is similar to that of Oppo, Vivo, and Xiaomi," Zhao said, referring to other Chinese smartphone makers which have not received any sanctions imposed against them as well.
“We provide value to the industry, to the end consumer, and also to the market, to our partners, in terms of the value we provide to them. Moreover, you are aware that this is an open market and an open competition. We follow all the policies of the country and we develop our business in that country."
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