We’ve seen Plan B, but what is Huawei’s Plan A?

Huawei pushed the boat out when it announced its two new Android-based devices, the MediaPad tablet and the Vision smartphone. The Chinese firm hired out a lavish venue; a converted church in Mayfair, and dug deep into its pockets to entice Brit-winning UK act Plan B into performing, inviting an array of reality TV stars along to add an element of “exclusivity” to the event.

The company is pining for recognition with a launch that put emphasis on style over substance, but do its new devices give credence to Huawei’s ambition to become a “top three handset manufacturer within five years”?

The smartphone market is a competitive one – Samsung has 25 Android-based handsets currently on the market, as well as five tablets on the Android OS. HTC has no fewer than 15 smartphones in its portfolio, offering consumers a choice of Android or Windows Phone operating systems, in addition to its Sense and Flyer Android-based tablets. Meanwhile, Apple’s iPhone 4S broke records by selling a total of 4 million units in its first three days of availability and research firm Gartner recently said it expects the iPad to dominate tablet sales until 2015. So what is Huawei’s master plan to disrupt the industry and break into the top three?

The company’s CMO Victor Xu explained that the firm’s efforts will be targeted towards young social networkers; 18-34 year olds, who are keen to communicate and are tech-savvy. But whose target market isn’t those same young networkers? Huawei is not intimidated by the competition though, with Xu claiming that young people are “not brand loyal”, so can be easily influenced into changing handset brand.  That, of course works both ways.

The hurdle facing Huawei is that by being so late to the party, it has to take an extra step to make consumers take notice of its devices – either by offering some new, revolutionary functionality or an exceptionally compelling price point.

Competing on price would not be compromising on the Chinese vendor’s values; Huawei got its initial break on the infrastructure side by undercutting its Western competitors dramatically. It used this price penetration strategy to accumulate market share, reaching a point today where it is the number two mobile infrastructure vendor in the world; Job done. Judging by the price point Huawei is offering in the UK for its Vision handset – free on a £25 per month contract – it’s not pricing its products at a premium to rivals. But it’s not undercutting them, either.

A new, low-priced smartphone range would be welcomed by the market. Young social networkers aren’t the most affluent of market segments, and in these financially challenging times, everyone is looking for a bargain. And to add further weight to that argument, Telefonica’s Simon Lee-Smith recently told Telecoms.com that Nokia’s Lumia handsets were too expensive, adding that “customers and operators won’t pay [high] costs for a device which doesn’t differentiate sufficiently”.

So rather than focusing on price, it appears that Huawei’s strategy could be to offer differentiated products. However, one can only speculate over this, as UK executive vice president Mark Mitchinson – formerly of Samsung – kept insisting that the firm did not want to “give too much away”, which is odd given that it was an event conceived to inform the media of Huawei’s intentions in the smartphone market.

To be fair to Huawei, its new devices don’t look to compare unfavourably to the majority of devices already on retailers’ shelves, and the Vision has a very neat 3D-like interface option. Huawei also thinks it has spotted a gap in the market with the MediaPad, as it is aimed at the female market; Huawei’s market research suggests that women prefer to use smaller tablets. However, aside from the size, the tablet isn’t notably different to competitors in any way that suggests it is more female-friendly than its rivals – and it’s not clear what a more female friendly tablet would be.

So instead, it’s a story we see time and time again. Another handset manufacturer has launched another Android device, or two in this case, with similar specs to the latest one that its rivals had launched. For a journalist at the moment, attending smartphone and tablet launches feels a bit like Groundhog Day, and consumers must surely empathise – particularly when they walk into a phone shop and struggle to differentiate each handset from the next.

If Huawei is really serious about breaking into the top three handset manufacturers, it will need to start prioritising substance over style. It needs a strategy that is more than to just launch ‘me-too’ products that offer little more than the handsets already on the market.

Sure, it may benefit from strong ties with operators, after having forged a reputation by selling them its network products and solutions over recent years, but to truly win mindshare of consumers, and to become a disruptive force in the market, it’s going to need a plan – a strategy to develop functionalities that go beyond what is on the market today.

The announcement of a new design centre to be established in London early next year could reap dividends for the firm to this end, but until fresh, innovative ideas make their way into Huawei’s devices – or it bites the bullet and decides to focus on forging a reputation as a low-cost player – it may struggle to sway consumers away from the manufacturers that have already got into market leading positions.