Huawei announces its success in breaking the US mobile market at CTIA

Jan Dawson, Chief Telecoms Analyst, Ovum

AUSTRALIA & USA: Huawei's strategy is interesting in that they appear to be emulating the model that Taiwanese vendor HTC used early on to break into the US market, namely producing devices which the carriers sell under their own brands, rather than the OEM's (original equipment manufacturer) brand.

HTC very successfully built relationships with the major US carriers based on this white label strategy and has now become one of the most successful smartphone makers in the world under its own brand. The T-Mobile Springboard tablet, the T-Mobile Sonic 4G Hotspot and the AT&T Impulse 4G are all in reality Huawei devices, sold under the carriers' brands. This allows Huawei to get past its lack of name recognition in the US while still getting its devices onto carriers' shelves and consumers' pockets.

Meanwhile, smaller carriers Metro PCS and Cricket Wireless are willing to sell Huawei's devices under its own brand, which will start to overcome the problem of name recognition in time. In all cases, these devices are reasonably priced, and leverage Huawei's competitive advantage in low-cost production, which will be a key to its success as people buy their first smartphones and look for affordable devices. This represents huge progress since a year ago at CTIA, when Huawei really had no position in the US market at all.

Huawei, along with fellow Chinese vendor ZTE, has tried for years to break into the network infrastructure market in the US, but is constantly thwarted by concerns over Chinese companies controlling critical infrastructure. It lost out on a high profile contract at Sprint which it was widely expected to win, in part because members of Congress objected to a Chinese company running a network which carries government traffic.

This success in the device market is a sign that Huawei is finding other ways to break into the US market, where members of Congress are less likely to get involved. Both Huawei and ZTE have been very successful outside the US in the network infrastructure market and increasingly in the mobile device market too. If they are able to break into the US market, they are even more likely to break into the top tier of mobile device vendors, which has so far been dominated by companies from the US, Europe, and Korea.