Huawei sold more phones in 2016, but made less money

Huawei sold more phones in 2016, but made less money
If you live in the U.S., odds are that you are somewhat familiar with Huawei. You could have seen the company's brand adorning some handsets at Best Buy, Target or Walmart, but might not be able to pronounce the name (which sounds like "wha-weigh"), and you might not realize that the manufacturer is the third largest producer of smartphones in the world. But Huawei vows that you will soon know much more about the company; it promises that by 2021, it will become the top smartphone manufacturer worldwide, topping Apple and Samsung.

The company appears to be making progress toward reaching that goal as Huawei sold 30% more handsets in 2016 on a year-over-year basis. During a year when smartphone sales were tepid at best, Huawei's sales growth is quite impressive. Unfortunately though, Huawei's top line growth did not continue down to the bottom line. Profits for the firm's consumer business group, which includes smartphones, amounted to $2 billion last year. That was down 10% from the $2.2 billion it made in 2015, and failed to reach the $2.5 billion in profits that Huawei was shooting for. Revenue for the group rose last year by 42% to $26 billion.

The increase in units sold and revenue would normally produce higher profits. The fact that they didn't suggests that Huawei's margins are getting slammed by higher costs. Component prices are going up as more features are being added to Huawei's top shelf phones. And as the company gets bigger, other costs naturally rise such as those for marketing. The numbers could also mean that Huawei is focusing on growing share at the expense of profitability. That would be in line with its goal for 2021.

Reportedly, Huawei has set some tough internal targets for 2017. They include a doubling of consumer group profits to $4 billion. To achieve that kind of growth in a industry that no longer is booming, will require the company to spend its money wisely when it comes to promoting its products. It also might require Huawei to stop worrying about topping Apple and Samsung and concern itself with making a larger profit on its devices.

source: AndroidAuthority

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29 Comments

1. IAMBLCKJ3ZUS

Posts: 402; Member since: Sep 29, 2015

Only winner in Android is Google that's why I have the pixel. So Windows phone shall rise with the 4 in 1 mobile Pocket PC just like the surface and OEMs will follow. Surface phone King of all the peasant smartphones.

2. magnanimus

Posts: 565; Member since: Mar 29, 2013

When you have such high expectations for something its bound to disappoint. The surface phone (if it ever makes it to market) wont be the super computer pocket machine you're expecting bud

13. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Arent smartphones already supercomputer? MS is workimg to make Windows run on ARM and supprt X86. Continuum is going to turn into a fully capablr PC ru ni g from your phone runni g x86 apps from a phone. Of Surfa e pbone does this, gou can bet, someone is going to die. A true pocket pc right here and .MS could be the Trojan Horse no one ever expected.

21. Martin_Cooper

Posts: 1774; Member since: Jul 30, 2013

Ye my dream is to have my phone be my desktop PC too, so when I loose my phone or it breaks down I cant even have a desktop PC. That dream is bulls**t, wont work besides a tiny percentage of clueless people like you.

10. TerryTerius unregistered

I have to give you credit I guess. Some of you guys have been talking about the inevitability of Microsoft's dominance in mobile for nearly a decade now. You're optimistic & loyal, if nothing else.

12. kiko007

Posts: 7493; Member since: Feb 17, 2016

Lmao. First time I've seen you making wise cracks, but I agree. These dudes have been around since Windows 7.5M, possibly even further back than that! I wonder where they get that confidence from honestly. What has MSFT done in mobile to give them such an optimistic outlook?

14. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

How old are you? Did you see how Nintendo came from nowhere and to over thr video game industry? RIM, Apple, Google, Samsung and many others, cane out of nowhere and blo dsided every one. MS did it with Windows and Office. You think they cant do it again? You got to be to the most tech ignorant person ive ever met to be on a site loke this. Not saying the Surface Phone is going ro be some magical genie in a bottle. Am sauing Microsoft is known to do better when theu are down. Look where Xbox os now. Surface on ARM was a failure. The Surface Pro is a success. Windows started alow, it us a success. Office jad to battle Lotus Notes and WordPerfect, it was a success. Gosh dude!

15. kiko007

Posts: 7493; Member since: Feb 17, 2016

Must you constantly make an ass of yourself every time you post? "You got to be to the most tech ignorant person ive ever met to be on a site loke this." -TechieXP1969

23. Z.....

Posts: 355; Member since: Feb 01, 2017

Do you even post anything positive? Typical iFanboy...

25. kiko007

Posts: 7493; Member since: Feb 17, 2016

G.O.M.D

22. Martin_Cooper

Posts: 1774; Member since: Jul 30, 2013

Got to love MS failboys, dreaming of MS dominance for like 10 years now. Never going to happen. Surface is great, win 10 is ok, xbox is loosing badly to PS4, bing is a total failure. If anyone has any chance dominating and already is thats google. NO1 mobile os1, no1 search engine, most used email service, no1 map app, no1 no1 no1 no1, bla bla bla. Microsoft is a relic holding on with few good ideas. Google is the future making the future without holding onto relics of the past.

28. HomerS

Posts: 419; Member since: Sep 19, 2014

29. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

Huawei 2 Billion in revenue is nothing to sneeze at. If there no winner then i should not see more OEM mushroom out in the wild. Overall, i am happy with Android ecosystem. Windows Mobile 10 really in dire need for Microsoft more tender loving care. Personally, they should adopt a WM10 first approach not iOS/Android first which would ensure their mobile has no chance of success in any shape or form. Its really a short term vs long term gain. Alas, no CEO in their right mind would do long term investing with the prospect of losing their company money and their position.

3. HugoBarraCyanogenmod

Posts: 1412; Member since: Jul 06, 2014

Can't help, competition is a b**** and it's good. Smartphone is so saturated the profit will down with no surprise

16. chenski

Posts: 760; Member since: Mar 22, 2015

Competition is good for us consumers, because there are many excellent phones to choose from!

4. ryq24

Posts: 875; Member since: Oct 17, 2011

Like most chineses smartphone makers huawei sacrifice profit for bigger sales.

5. k9luvr

Posts: 122; Member since: Oct 17, 2016

Man I feel so sorry for Huawei, they only made 2 billion in profit last year. I hope they don't go under !

6. Zylam

Posts: 1813; Member since: Oct 20, 2010

It's all about profit margins. One guess who has the best profit margins of the industry?

9. mazallah

Posts: 22; Member since: Jul 29, 2016

Apple.

19. whqhdrbs

Posts: 36; Member since: Feb 12, 2017

people don't realize only winners are Apple,Google and Samsung. there's not a single Chinese phone maker that doesn't put Samsung components in their products, Samsung makes about $4 bil just out chip for 3 months, 1.5 out of display, 1 out of others like camera module, that's how Samsung makes $30 bil every year. Whereas Google controls SW, Samsung controls HW in phone market

7. markobarko

Posts: 176; Member since: Oct 09, 2016

They cover variety of world markets and have base in the biggest one. They will make it if they make the jump to VR and foldables.

8. CreeDiddy

Posts: 2146; Member since: Nov 04, 2011

What people fail to realize that companies like Huawei have smartphone sales, but their customer retention is lacking. What other existing services and product have people bought from Huawei besides a $300-$500 smartphone? That is the question to ask these companies. You can have smartphone growth, but with super low margin and profitability what other products and services are they selling to their existing customer base? This poses is a cloudy and huge issue for the long term future of Huawei...

11. TerryTerius unregistered

I'm pretty sure you're referring to building an ecosystem, not customer retention. Customer retention just refers to people continuing to buy a given company's products.

24. CreeDiddy

Posts: 2146; Member since: Nov 04, 2011

An ecosystem is a part of customer retention, but what I'm referring is much bigger than that...no other company can replicate what Apple has done.

20. Leo_MC

Posts: 7212; Member since: Dec 02, 2011

You should really look for Huawei name in tech business, you might find it is the largest telecommunications equipment manufacturer in the world.

17. Andrewtst

Posts: 696; Member since: Jan 25, 2009

Excuse to increase price later!

18. Tabby_Tiger

Posts: 305; Member since: Jan 23, 2017

All that performance increase in Kirin 960 must have came at a price that not even with the premium pricing of the Mate 9 was enough to negate.

27. HomerS

Posts: 419; Member since: Sep 19, 2014

Performance increase? The Mate 9 is slower than the Honour 8 with older and cheaper Kirin.

26. HomerS

Posts: 419; Member since: Sep 19, 2014

More expensive components and/or they had to cut the prices of their phones to get them in the hands of the customers.

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