An unknown handset brand with an unusual name, striking out for the big time -- Colin Giles has been here before.
The Executive Vice President, Marketing, Retail and Open Channel Development at Huawei Technologies Co. Ltd. isn't thinking of his current employer, but his old firm, Nokia Corp. (NYSE: NOK). (See Huawei Snaps Up Ex-Nokia Exec.)
Giles spent most of the past decade running Nokia's northeast Asia and China businesses, becoming possibly the best-known foreign national in the Chinese telecom industry. (See Nokia Streamlines Sales Management.)
Back in 1994, he set up Nokia's first Asia-Pacific regional marketing team in Hong Kong. "In those days, Nokia was not very well-known and there wasn't a great awareness of the company or the brand name -- all the same challenges we [Huawei] face now," Giles says.
"What I have learnt is that if you consistently invest and build great products and bring them to market through all the right channels over time, it's possible to build the brand."
It's not the only thing Giles learnt from Nokia. As EVP for global sales until his departure in 18 months ago, he had a box seat view on the decline and fall of the former titan. (See Nokia: It's Really Happening and Nokia Sells Devices Business to Microsoft .)
Looking back at Nokia's dramatic exit, Giles notes that the handset sector has always been highly competitive, with market leaders turning over every few years.
In his current job, the biggest task is to build the Huawei brand. "What's holding us back is the brand. We need to be able to price our products at premium level," Giles told Light Reading during an interview in Hong Kong. "Because the brand today is not seen to be in that segment of the market -- that makes it very difficult to build in the cost."
He points out that Huawei's western competitors started pricing at the top of the market "and have gone down. We have no choice but to start at the bottom and go up, step-by-step."
Huawei began its push into branded consumer devices just three years ago, after years of supplying white-label products to operators. Giles cites the confidence of the carrier customers as affirmation of quality.
But operators are acutely aware the market is dominated by just two heavyweight brands. "There will be a third and they believe that will be a Chinese vendor," Giles said. "Operators have consistently said to me that they see a China brand is going to be a strong number three. The market will become more and more cost-sensitive, and Chinese companies will be able to have the ability to drive the cost down," Giles said. (See Asia Strengthens Its Grip on Smartphone Market.)
The manufacturing scale of Chinese vendors will allow them to take advantage of emerging markets such as Indonesia, India, Vietnam, and Thailand. Those are strategically important because of their large populations and, with smartphone demand levelling off even in China, they are becoming sources of growth.
But those markets won't be won with low-price, low-functionality handsets. Giles observes that price-sensitive consumers are in fact often more demanding than high-end customers. (See Huawei Unveils 6.1-Inch 4G Smartphone.)
With 50% of device group employees working in R&D, Giles believes Huawei has the technical smarts to make the transition to the mobile phone major league. The company aims to gradually build more innovation into products and move up the price chain.
A big part of the transition is to cultivate a B2C culture inside a B2B company. "We do recognize that we need to be consumer-focused and not just customer-focused. To do good products you must have consumer insight, not just operator [insights]."
For now, Giles says it's significant that Huawei has maintained its place at the number three position in the smartphone market, behind Samsung Corp. and Apple Inc. (Nasdaq: AAPL), in the two most recent quarterly handset sales reports from Strategy Analytics Inc. "That demonstrates stability and consistency," he claims. (See Global Smartphone Shipments Reach a Record 990 Million Units in 2013.)
— Robert Clark, contributing editor, special to Light Reading