Huawei had the wind at their back and was planning a coup d’état of the US smartphone market with the Mate 10 Pro. It’s an excellent device, and AT&T was willing to work with the global manufacturer to strike a deal to officially bring the phone to one of the nation’s largest networks. It was the first step towards dethroning Samsung and taking on Apple in the flagship segment.
Then, CES 2018 happened. Merely a day before the availability announcement, AT&T backed out (or was pressured to back out) of their deal with Huawei, meaning they would not be officially carrying the Mate 10 Pro. We all heard the frustration from Huawei’s press conference, despite still announcing some retailer availability if anyone wants to plop down full price for a GSM-only model.
CES was Huawei’s arrow in the knee.
At least, that’s how it sounds at first glance. But you know what? Huawei was screwed well before that deal fell through. Huawei never had a chance in the US with the Mate 10 Pro.
Harsh? Sure. But look at the state of the US smartphone market. And I mean really look at it. On the Android side of things, it’s ridiculously crowded, and Samsung’s the leader by a wide margin. On the premium side of things, it’s completely dominated by Samsung, in fact.
On the other side of the fence, Apple has a nigh unbreakable hold on the flagship segment. Their total market share in the US rivals Samsung, and since Apple doesn’t really do mid-range phones outside of the iPhone SE and absolutely does not offer a budget option, it’s a safe bet that they’re holding a disproportionate amount of the $500+ segment.
Let’s do some napkin math on that one. As of last May, Samsung had reportedly sold about 55 million Galaxy S7 units between the Galaxy S7 and Galaxy S7 Edge. That was after more than a year on the market and after the Galaxy S8 had hit shelves, so it’s probably slightly higher by now, but we’ll round and say Samsung is moving 60 million flagships per year globally. For argument’s sake, let’s say 50% of those were sold in the US alone, putting Samsung at a very respectable 30 million US units in the premium market.
Now let’s do the same thing for Apple. And buckle up, because this one’s rough for everyone that’s not Tim Cook.
For the past two years, Apple has shipped roughly 210 million devices each year, rounding down a bit. Since we know Apple doesn’t offer anything like a Galaxy J3 or Galaxy Core Prime, we pretty much know those were all high-end, flagship devices. Like we did with Samsung, chop that in half for the US and we’ll use 105 million as their sales number.
Now let’s grab everyone else. Let’s bundle together HTC and LG and Motorola, and top it off with the Google Pixel. How many flagship phones would we say they sell? In the middle of last year there was a report that LG missed a sales target of just 2 million units with the G6, and HTC has been flirting with bankruptcy for years. Motorola/Lenovo have reportedly been dogged by poor sales, too. It’s hard to estimate Google’s Pixel sales, too, although there was that rumor about a million units based on the Pixel Launcher’s install count on the Play Store not too long ago. Let’s be really generous and say all of these guys ship about 10 million flagships per year.
So back to our math to figure out who is selling the most “premium” phones in the US. Apple takes the lion’s share with 105 million units, Samsung nabs second place with 30 million units, and everybody else manages to have an uncharacteristically good year and ship a combined 10 million. If those numbers are anywhere close to being accurate, that means Apple sells over 70% of the flagship devices in the US, while Samsung’s second place is only good for about 21%. And remember, that’s generously giving every other OEM some extra success and assuming Apple’s sales aren’t grossly overweighted towards the US.
Okay, so what does this have to do with Huawei? It’s to talk about the high-end Android market; or rather, that there is no high-end Android market, at least in the United States.
In the US, there is a flagship Apple market segment, and a flagship Samsung market segment. The vast majority of Android’s commanding lead in market share comes from cheaper phones that are a little more friendly on the wallet, not from devices that cost $30 a month or $700 up front.
Apple has cultivated their iPhone brand for years, and you can’t successfully argue that it’s not insanely successful. Samsung has positioned the Galaxy brand (not Android) as a compelling alternative, or as the educated consumer’s choice over the bland and boring fruity phone that your grandma uses. People want a Galaxy, not an Android phone.
LG has, uh, the G phones. And the V phones, sometimes. HTC has sixteen different flagship brands, depending on the year. Lenovo’s building something with the Moto family, but we’re seeing significantly more success there in the mid-range and budget segment. Google has Pixel, but again, it’s very new, limited to one carrier, and they’re practically giving them away with huge incentives on Verizon. What does Huawei offer?
Is it the Mate brand? Would the average consumer walk into an AT&T store and ask specifically for a Mate? Would they even be able to pronounce Huawei’s name? You could argue that it’d be on the salesperson to push the device, but that’s not going to magically turn into millions and millions of units when many people come into a store with their mind already made up.
So does Huawei have some kind of magic sauce to do what mega-corporations like LG and Google can’t seem to figure out? I’d back Huawei before LG in a US smartphone race, sure, but can a foreign company navigate the US market better than American companies like Google and Microsoft?
Let’s be honest with each other here. The answer to that is a resounding “no.” With or without AT&T, the Mate 10 Pro was doomed to miss sales expectations and leave tech pundits scratching their heads why it couldn’t do what 90% of the market has repeatedly tried and failed to do.
Android’s sweet spot isn’t in the flagship market, but that’s seriously not a bad thing. We review a ton of phones here, and there are legitimately a ton of excellent and amazing options for just a couple hundred bucks. These phones that fly under the radar are the real foundations of Android’s success, and there’s nothing wrong with that at all.
If Huawei wants to take the US seriously, it needs to act like it. Don’t drop a phone in the middle of the market with zero brand credibility to get chewed up and spit out by Apple and Samsung. Start at the bottom, build up market share and create a brand that consumers actually want, and get ready to grease the wheels of their advertising team.