Online Strategy Helps Smart Phone Reach Higher Sales
Huawei Technologies followed suit with the online only strategy of Xiaomi Inc. a small upstart and took its low price Honor brand from 1 million to 20 million in just one year. Showed with early signs, Huawei executives are hoping to follow the phenomenal growth of Xiaomi which broke the global top five in just a couple of years, a success that is not likely to be unnoticed by the growing ranks of low cost smart phone makers.
Although analyst say the low cost strategy is fanning the price wars and is setting of very thin profit margins in China and it could affect margins in all makers. Jeff Liu the Honor brand president stated that the industry transition to an online only sales is inevitable with the competitive pricing which reduced distribution expenses s that otherwise made up of 30 percent of handset costs. As e-commerce is changing the traditional channels of the smart phone industry we need to follow in that direction as well.
Honor handsets dropped the Huawei name in December and since been distributed and marketed independently from Huawei branded phones. The handsets are sold in country from Brazil to Belgium through market places such as JD.com and Flipkart Online Services Pet Ltd. The Honor brand made up a quarter of Huawe is 2014 shipments and in the third quarter and has helped the Shenzhen based telecom equipment maker to the No. 3 spot in the global market.