Can Huawei succeed with its Honor brand?

Vanessa Zeng/Forrester Research

On June 24, I attended the launch event for the new flagship of Huawei’s Honor product family, the Honor 6, in Beijing.

As one of the world’s largest telecom equipment manufacturer, Huawei has been cultivating a mobile phone business in the past few years, and became the third largest smartphone vendor in the world at the end of 2013.

Until now, Huawei’s mobile phone business has mainly followed a B2B2C business model: selling its devices via mobile network operators. Huawei launched Honor in December 2013 as an independently operated internet brand that aims to adapt quickly to changes in the age of the mobile internet and provide high-performance products at reasonable prices.

As a former member of the mobile phone fraternity, I was impressed by Huawei’s technical leadership at the two-hour launch event — but behind the revelry, I noted that Huawei faces a few dilemmas:

  • A confused brand proposition. Huawei’s speakers spent a lot of time talking about the Honor 6’s technology framework and chipset, but didn’t mention what consumers can get from those technical advantages. The Honor 6 is a high-performance product with powerful functionality — high-speed LTE Cat6, an octacore Kirin 920 processor, long battery life, a powerful camera, innovative features, and a fancy Emotion UI — that retails for just 1,999 yuan ($322) - usually the price of a mid/low-end smartphone in China. Honor 6 is marketed as “the world’s fastest 4G smartphone”, but the promotional video suggests that the phone’s target audience is the young struggling working class. The brand message is inconsistent with the product positioning.
  • An unclear sales channel strategy. At the event, Huawei announced that Honor 6 will be available for preorder on VMALL.com (Huawei’s online store), JD.com, and WeChat. But the firm also invited China’s top major traditional mobile phone distributors to the launch event as VIP guests. Honor’s president expressed his appreciation for these partners’ support at the event. Huawei intends to sell Honor brand products through eCommerce channels as a differentiation strategy, but it looks like the company is still reluctant to give up its cooperation with traditional distributors.
  • The Ascend product line will limit Honor’s expansion. Before Huawei released the Honor brand, its Ascend brand had already become successful. Ascend has product lines covering the spectrum from low-end to high-end models; Ascend’s latest high-end flagship model, the P7, has sold more than 1 million units since it was announced on May 7. Given that the Ascend brand has already established itself, how can Honor expand its market share and coexist with Ascend? To succeed, Honor must figure out how to avoid internal competition across product portfolios.

By launching the Honor brand, Huawei has started to devote itself to the B2C channel and leverage the internet business model for smartphones with a brand that is distinct from Ascend. Given its legacy as a B2B telecom equipment manufacturer, Huawei has not had to develop the skills necessary to use marketing to turn technical features into consumer benefits — in the age of the customer, it still has a lot to learn in terms of how to operate a consumer product business.

To continue its streak of success, Huawei’s key imperatives for the Honor family are to define a clear brand positioning and channel strategy and align its internal product portfolio. For organizations in the same shoes, have a rethink on the ways of brand building with Forrester’s “The 21st Century Brand Marketing Playbook”, and navigate modern marketing with a focus on the customer.

Vanessa Zeng is a senior analyst serving e-business channel strategy professionals at Forrester Research. This article originally appeared on the Forrester Research blog.

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