The overhauling of Samsung was expected due to the problems the company faced with the flagship Galaxy Note 7 devices. Samsung lost big in terms of prestige and profits.
The high-end Galaxy Note 7 was supposed to cement Samsung’s position as the number one maker of Android devices and the biggest Smartphone OEM in the world. Unfortunately, the unexpected happened and the Note 7 had to be recalled and discontinued.
But for how long would Huawei remain in that position? Samsung of course would want to get that position back. And the fact that consumers around the world still cherish Samsung products (according to this research and the fact that the value of the company still remains unchanged in spite of the Note 7 disaster) means that it is very likely they would reclaim it in at least a couple of years time.
The raw numbers show that in the area of overall smartphone profits share, Huawei’s share is about $200 million (that is about 2.4%) as of the third quarter of this year.
Two other little known companies (at least in this part of the world) are also climbing aggressively up the profits charts. They are Vivo and Oppo Electronics who collectively racked up their operating profit share to 2.2%.
Talking about Vivo and Oppo, their business model is the key behind their staggering success. Though they are mostly based in China and target Chinese buyers mostly, the fact that China is by far the world’s biggest market ensures their profitability.
Both Vivo and Oppo make high-end phones and sell them at the fraction of the price sold by the established players like Apple and Samsung.
Their marketing technique is also unique in the sense they encourage retailers in the far flung corners of the country to market their phones ahead of brands. These retailers quickly agree because their commissions from the sales of Oppo and Vivo phones are very high. It is the reason that outside of major cities, there are more Oppo and Vivo shops than Samsung and Apple stores.
The result of this strategy is that Oppo and Vivo now control more market share in China than even Apple.
For Huawei, the climb to the top is very remarkable for a company that was founded just 28 years ago. Four years ago, they overtook Ericsson as the biggest manufacturer and supplier of Telecommunications equipment in the world. Adding the title of the world’s most profitable Android Smartphone maker must mean the company has a serious vision to be the best in everything they do.
However, the point has to be reiterated again that Huawei got to the position due Note 7 fires. All things being equal though, they might maintain that position for at least a year.
Because by this time next year, Samsung would have released their new set of devices. And don’t forget that people still retain a lot of confidence in Samsung smartphones. Let’s just say Samsung customers are just waiting for the next flagship devices to buy; which would likely propel the company back to the top.
Before then though, Huawei would enjoy the limelight as the world’s most profitable makers of Android devices. And it is possible they might have a lot to say about who takes up that position in years to come.
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