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Sunday, October 31, 2010

The Past Decade for Samsung, LG, Huawei and ZTE

Samsung and LG, two Korean electronics manufacturers steeped into the mobile phone industry with a wide range of mobile phones at affordable prices. By taking advantage of the marking resources of their home appliances divisions, both companies have managed to gain a significant market share from Sony Ericsson and Motorola. On the other hand, Huawei and ZTE, two Chinese network equipment manufacturers have also made their moves into the mobile phone industry in recent years. 

All four took very aggressive approaches in creating acceptable quality products at the lowest possible prices. While it is every consumer's dream to have a wild range of mobile phones at affordable prices to choose from, the quality (use of materials, durability and overall quality) of these products are sometimes disappointing. However, manufacturers tend to roll out better quality products once they have gained enough market presence.

Samsung has been the most aggressive and the most successful Asian cellphone manufacturer in the past decade. They have produced a wild range of mobile phones with occasional surprises. They also invested so much in promoting their brand in many major cities. The user experience and quality of Samsung cellphones has certainly improved over the years. They are now the No.2 mobile phone manufacturer in the world (after Nokia, in terms of volume of sales). In addition, Samsung also produces good quality display screens which are essential to the success of any Smartphones. Their recently investment into developing Android smartphones and tablet has proven to be another wise decision.

Aggressive and yet mysterious, Samsung has certainly created shock waves in the mobile phone industry which was previously dominated by European and North American companies. After defeating several mobile phone giants with their unique approach, Samsung began to create much better quality products. Their challenge for the coming years would be to convince customers to believe in the quality of their high-end products. I believe that Samsung will continue to dominate the mobile phone and consumer electronics industry for a significant period of time.

The little Korean brother, LG (Lucky Goldstar or Life's Good), took a similar aggressive approach in launching cellphones in the global markets. LG have also invested so much in promoting their brand in major cities. Before putting their focus into the Android platform, LG has produced a wide range of smartphones at affordable prices. Interestingly, LG named almost every phone "Chocolate" at one stage. They are now sometimes No.3 or No.4 in the mobile phone industry. 

LG's technical experts were able to create phones with interesting features. However, I suspects the sales teams in LG are perhaps not as creative as their counterparts in Samsung. Although they have a certain brand awareness, LG needs to do much more to convince consumers to purchase their products. Furthermore, LG needs to protect their market share from the two Chinese manufacturers who are taking as aggressive approaches.

Huawei, a name that is well known within the industry but still rather foreign to consumers, has been producing a wide range of terminal products in the past ten years. They have also produced "budget" low-tier phones (or feature phones) for mainly mass distribution markets. While the overall quality, design and safety of Huawei's mobile phones are still questionable, they have diverted their focus into creating Android smartphones at affordable prices since 2009. Network operators loved Huawei as these products offers significant profit margins to everyone in the wholesale and retail chain. They were able to offer these ARPU generating "entry-level" smartphones to consumers who were reluctant to commit to smartphones.

This strategy of Huawei is definitely wise. Due to their brand awareness (or there lack of), the quickest way to steal market shares from Nokia and Samsung is to leverage on a well-branded mobile OS. Huawei has certainly offered consumers a choice. If user experience, material quality and durability are not the main considering factor for a certain customer, Huawei can offer an Android smartphone experience at an affordable price. (Note: Huawei Android phones are not the cheapest, as ZTE is taking an even more aggressive approach.) Rumor said Huawei will partner with better suppliers, hire designers and engineers who understands the first world country markets to deliver superb quality smartphones at reasonable prices.

For some bizarre reason, ZTE (Zhong Xing Telecommunication Equipment Company) a Hong Kong stock exchange listed company with Chinese government as its dominant share holder, sees Huawei as their arch-enemy. ZTE competes with Huawei in the network equipment, wireless terminals and mobile phone markets. If Huawei can produce a mobile phone at a low cost, ZTE can produce a similar product at a even lower cost! 

Apart from offering budget low-tier phones, ZTE also creates Android smartphone. They called their first entry-level product "smart", a name that has open themselves to criticisms. ZTE has certainly not given up the Android smartphone market. Their strategy should be welcomed by customers as they kept Huawei alert and focused; which in turn also kept Samsung and HTC alert and focused. It is hopeful that consumers will be able to purchase good quality smartphones at bargin prices in 2011.


Related blog posts:

The Past Decade of Mobile Phones

The Past Decade for Nokia, Sony Ericsson and Motorola
The Past Decade for Apple, HTC and RIM

(Read about other technologies that makes life simple under the Lifestyle tab.)