Apple, Samsung and Huawei: clash of the titans

Huawei catches up, Apple trembles, Samsung hesitates.

In 2013, the iPhone 5S revolutionized the way to unlock the screen with its TouchID technology, and no competitor was able to reach out such innovation at that time. With the iPhone X armed with the FaceID technology, Apple tried to innovate again. But the difference is that competition within the industry is much higher. Concretely, the Huawei Mate 10, released in November 2017, is an impressive device equipped with Artificial Intelligence abilities. In the middle of this technological battle between Apple and Huawei, Samsung is hesitating on the way it should react.

Huawei booms, Apple shrinks

With over 132 million smartphones shipped at the end of 2016, the Chinese company Huawei is currently the world’s third largest smartphone manufacturer, after Apple and Samsung. Huawei, which was founded in 1988 and is based in Shenzhen, will soon be able to catch up with its competitor Apple and eventually reach the second position. In terms of market shares for mobile phones, the gap between Huawei and Apple had never been this tight: In 2016, the Chinese tech firm managed to hold about 9-10% of the global market, as compared to Apple with only 13% (Samsung maintains the lead with 20% of total market shares). Furthermore, Huawei has recently experienced a tremendous growth in Europe, now holding a market share of over 15% in France (which the company had entered in 2003, but only started to flourish only in 2013).

As Apple is losing market shares in Europe, it was relying on Asia to generate big sales of its iPhone 8. Yet, as recent studies have shown, Chinese consumers will be more likely to purchase a Huawei phone rather than an iPhone. [1] In fact, Huawei has significantly improved its service offering, as it made a significant progress in terms of design and innovation, while maintaining an affordable price. Apple’s iPhone 8, on the contrary, does not offer considerably new features, as it for instance shares the same ergonomic characteristics with the iPhone 7, and is sold at a relatively high price (around $850). The studies have further revealed that the shift in preference partly originates from the fact that fewer Chinese consumers are willing to pay more than $450 for a smartphone. Apple’s ongoing enfeeblement could thus be further worsened by the consistent price increases: even now, it is unbelievable that the new iPhone X costs more than $1300!

From a duopoly to a three-competitors model

Until 2013, the market was solely dominated by Apple and Samsung. Indeed, Samsung owned 29% of global market shares in 2012, and Apple 23%, while the other tech firms (Nokia, HTC, LG…) accounted all together for less than 50% of the market. At that time, Huawei had held a market share of only 3%. It then progressively pursued its conquest of the mid-to-high end devices by imitating features found in the iPhone and Samsung Galaxy. With the launch of its line of ‘P’ phones in 2013, and more specifically with the P6, Huawei has introduced the first real smartphone that was able to compete with the iPhone 5 and the Samsung Galaxy Note 3 at that time.

What are Huawei’s main assets?

What has helped Huawei to its surprising success? The strong skills in respect to innovation and research and a lean cost structure. The Huawei Mate 10, released in November 2017, seems utterly able to compete with Apple’s iPhone 8/ iPhone X and Samsung’s Galaxy S8/ Note 8. The model is being sold at $749, and differentiates itself from other competing products through its impressive battery (50 hours of autonomy), dual cameras, its elegant design (the screen covers almost all the device surface) and its strong processor with Artificial Intelligence abilities (“Kirin 970” embodies the beginning of the “next-generation devices” according to Huawei). Even more so, Huawei became a leader in 5G wireless technology, and announced a partnership with the French telecom company Orange in order to further drive the development of new technology. Such high levels of innovation are funded by a resource allocation of almost 15% of global sales dedicated to R&D. However, as its market positioning improves in the Europe, Huawei still needs to improve its image in China and needs to conquest the American market next (currently only 8.5% of its revenues in 2016).

Global Market Shares by Smartphone constructor[2]

Global Market Shares by Smartphone constructor

Samsung’s uncertainty

The Korean tech-firm Samsung is undoubtedly leading on the market for smartphones: in 2016, 1 out of 5 phones sold worldwide was a Samsung. Nevertheless, the company has recently faced some issues, which raises doubts about its current strategy. Firstly, the innovation seems to have slowed down: customers accuse Samsung of not bringing significant improvements to its “Galaxy” line – while the S7, for instance, is now waterproof, it lacks a stronger battery empowerment. Similar to Apple, Samsung does not seem immune to the increasing competition from Chinese firms. In fact, the mobile communications segment of Samsung has already declined by an average of 10% last year. Despite these issues, one of the most sensible topics remains the deficiency of the products. In August 2016, several Samsung Galaxy Note 7 had caught fire, which raised a strong controversy and seriously damaged the brand’s image.

Patently, there is no mercy over the control of the smartphone market, especially now that, 10 years after the commercialization of the first iPhone, the business is progressively maturing. Global demand tends to lower and Apple and Huawei struggle to offer the best innovative features for both iPhone X and Mate 10. Samsung would better respond aggressively with its next and highly-anticipated Galaxy S9 in March 2018, in order to continue to compete with Apple and Huawei in an innovative point of view.

Illustration: Montage made by Hugo Sallé for KIP.

Sources and footnotes
[1] Financial Times, “Apple beaten by Huawei in China smartphone survey”, 10/01/2017
[2] Statista, Global Smartphone Market Share 2017
Angélique Sorba

Angélique Sorba

Étudiante française en Master in Management (H2021) à HEC Paris.

French student in Master in Management (H2021) at HEC Paris.