Credit: Patrick McFall/Flickr

Buoyant Huawei is taking a bite out of Apple

The Chinese firm's profit jump isn't good news for smartphone titans Samsung and Apple.

by Rebecca Smith
Last Updated: 07 Apr 2016

Apple has officially reached its 40th birthday today, but it has received an unwelcome present in the form of Huawei's latest results, which showed its biggest annual the revenue growth since 2008. 

The Chinese electronics maker’s sales were up 37% to 395bn yuan (£42.3bn) while net profit rose 32% to 36.9bn. As a smartphone seller, Huawei trails Samsung and Apple, but it's sitting pretty in third place; becoming popular for its low-cost devices.

It has though outlined ambitions to move away from its (relatively) cheap and cheerful image to focus on creating high-margin premium devices. That’s posing a direct challenge to Samsung and Apple – the latter has around one seventh of the global market for smartphones and while Samsung’s still ahead of the rest, its world market share has fallen from a third to a fifth in three years.

The next three biggest smartphone makers all hail from China. Other than Huawei, Xiaomi and Lenovo are jostling for position in the rear-view mirrors of Apple and Samsung. Perhaps ominously for Samsung and Apple, Huawei’s acting CEO said, ‘We still see a lot of room for growth.’

Research firm IDC said Huawei recorded the fastest growth among the top five players in the smartphone market last year. Sometimes it's easier being the firm doing the chasing when it comes to market share - Samsung recently said it was aiming to be more like a nimble start-up to try and improve innovation, but it remains to be seen how that will pan out.

And while Apple is still the tech giant many high-growth firms aspire to, it has slowed down in rolling genuinely world-changing products off its conveyor belt. It hasn’t had a hit new innovation since the iPad in 2010; Apple won’t release sales figures on the Apple Watch but it clearly hasn’t gained mainstream appeal yet.

It also seems to be going in the opposite direction of Huawei with its downsized iPhone SE. As a firm well-known for its sleek, high-end products, lowering its price range might bring in more customers, but there’ll need to be a cautious balance to maintain Apple's brand. And with much of its growth relying on the iPhone, question marks have been looming over how (or how long...) it can maintain its position at the top of the tech tree.

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