Huawei is the world’s 3rd largest smartphone maker. Of course, that also makes it the largest Chinese smartphone maker. The company has announced that it will no longer make low-end smartphone as part of a restructuring plan to beef up sales and profits. Yes, low-end Huawei smartphones are about to go extinct.
No More Low-end Huawei Smartphones
You probably already knew all along that margins are small on low-end phones. Huawei says it is for this reason that they will go forward with mid-range and upper-range smartphones only from now. Huawei says:
“We are giving up the very low-end devices because the margin in this is extremely low, and it’s not making enough profit for us”
Back in 2014, Huawei announced a cut in production of low-end devices. And now, the brand has followed through on the logical path following that move.
Huawei isn’t the first smartphone maker to announce an abandonment of the low-end market. The allure of becoming the Android equivalent of Apple is strong. HTC and Sony have attempted to follow through on that allure, with little success. BlackBerry also ditched budget smartphones in 2013, but that strategy hasn’t yielded much results either. These brands are still struggling.
Things might be different for Huawei though. They are the world’s 3rd largest smartphone maker afterall. That is some leverage. All the other brands that have attempted to ditch the low-end have been companies undergoing financial struggles. Though Android smartphones have not been very profitable (Apple alone makes over 90% of the smartphone industry’s profits), Huawei is not exactly in the league of struggling phone makers though, so perhaps they can pull this off.
If they do pull it off, perhaps one day, they will abandon the mid-range too and foxus only on making high-end devices. But only time will tell.
Plenty Of Options
In the meantime, there is no lack of options available in the low-end smartphone market. It is a crowded place, with every Tom, Dick and Harry stepping in to try to make a dent in the horde. It must be noted though that no matter how low-end a brand starts, they push for higher value eventually. We see how TECNO and Infinix Mobility have made that upward push in recent years. And they have good results too.
Perhaps, just perhaps, one day, we shall wake up to hear that those brands too will be abandoning low-end smartphones? Aaaaaah….. In the meantime, a 2015 article of mine on the subject is enlightening: Who exactly is making money on Android OS?
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