You ain’t seen nothing yet

Huawei seemingly dropped two smartphone bombs on the industry in the past few weeks. First was the Nova 3i and by extension, the Nova 3, which delivered great bang-for-the-buck hardware, and recently with their sub-brand’s offering, the Honor Play. The latter announcement is extremely interesting and telling though, as the phone has all the hallmarks of a flagship phone at just slightly more than the offering of the main brand’s new mid-range darling.

Questions about Honor’s potential of cannibalizing Huawei’s market share are inevitable at this point. Shouldn’t Huawei be concerned about their sub-brand showing up their main smartphone line considering the pricing of the new device?

The answer is simple: yes, they should be concerned, and no, they don’t care, not at this point really. Huawei’s aggressive pricing strategy for their main and sub-brand, as well as the recently announced price cut for their new flagships, underlines the company’s goal in the Philippines this year: become the top dog in the market.

It’s a goal that has been relayed to me by multiple sources within and people closely working with the company. The best case scenario obviously is for Huawei to topple the current top player, which is Samsung, but that’s probably not a realistic goal. It’s much more realistic for Huawei to try for #2, which, the last time we checked, is occupied by local brand Cherry Mobile.

The high level of autonomy that Honor business unit enjoys within Huawei CBG is in a way giving the brand a lot of energy to fight for its survival. Now ‘Honor’ brand has finally surpassed ‘Huawei’ brand in China, with unit shipments already overtaking Xiaomi. https://t.co/arN1xsFXeT

— Nicole Peng (@N_Peng) July 25, 2018

Market cannibalization was previously Huawei’s concern when Honor silently pulled out of the country two years ago, but apparently, Honor managed to sell so many phones in China that they now enjoy a large degree of autonomy and independence from Huawei that that’s no longer an issue. This is evident even in China, where Huawei is currently the number one player ahead of OPPO, vivo, and Xiaomi. According to a recent Canalys report, the brand accounts for 55 percent of all Huawei shipments in their home country, up from 33 percent a year ago. If market cannibalization was an issue for Huawei, they would have adjusted their strategy in China even before the sub-brand’s expansion in other territories.

Huawei is in for a fight if it really is serious about taking the number 2 spot, but they are in a unique position compared to their competitors. Huawei’s brand equity is almost up there alongside Samsung and Apple, and their Honor sub-brand can start chipping away at their mid-range competitors without eroding their positioning as a premium brand.

Even if Honor overtakes Huawei as the company’s main sales driver, it’s all going in the same pocket anyway. Like the saying goes – out the left pocket into the right – it really doesn’t matter anyway, as long as Huawei gets what they want