Huawei is so big in China, it’s now competing with itself (and losing)

• Huawei's Honor brand has shipped more smartphones than Huawei itself during Q2 2018 in China, according to a new report.
• Tracking firm Canalys claims that the sub-brand accounted for 55 percent of Huawei shipments in the market.
• Huawei also broke the record for the most units shipped in a quarter, the report found.

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Huawei has gone from strength to strength when it comes to smartphone shipments, and nowhere is this more apparent than in the ultra-competitive Chinese market.

According to a Q2 2018 report by tracking firm Canalys, Huawei has the highest market share for a mobile brand in China since Q2 2011, at 27 percent. The Chinese manufacturer also broke the record for the most units shipped in a quarter (28.5 million units).

The biggest news, however, might be that its Honor sub-brand now accounts for more devices shipped than Huawei itself. The tracking firm notes that Honor now accounts for 55 percent of Huawei shipments, compared to just 33 percent a year ago.

Canalys analyst Mo Jia says the sub-brand has found success in the $500+ price bracket, while also stealing market share in the low-cost tier from Xiaomi and others. In fact, Canalys senior director Nicole Peng tweeted that Honor is overtaking Xiaomi for shipments in the market.

The high level of autonomy that Honor business unit enjoys within Huawei CBG is in a way giving the brand a lot of energy to fight for its survival. Now 'Honor' brand has finally surpassed 'Huawei' brand in China, with unit shipments already overtaking Xiaomi. https://t.co/arN1xsFXeT

— Nicole Peng (@N_Peng) July 25, 2018

Jia says Honor's increased success presents a dilemma for Huawei's main brands – the P, Mate, and Nova series. The analyst says these brands "risk losing resources to Honor" as Huawei shoots for 200 million smartphones sold in 2018. Does that mean we could see the sub-brand lead the charge with innovative features first or the lion's share of marketing dollars? That remains to be seen.

Huawei is really Honor roll

Honor has its roots as an online-only brand, delivering phones with similar specifications to Huawei's main brands. For example, the Honor 10 shares plenty in common with the Huawei P20, such as the chipset, battery, and front-facing camera. Then there's the Honor 9 Lite, which shares the same screen, chipset, battery, and rear dual-camera setup as the Huawei P Smart.

The sub-brand has also gained a reputation for cheaper prices compared to the main Huawei phones. For instance, the standard P20 is priced at 649 euros, while the Honor 10 comes in at 399 euros. The P20 offers Leica lenses, optical image stabilization, and 128GB of storage, but does that account for the 250 euro difference? The Honor 10 also has a headphone jack, for what it's worth.

What about the rest of the market?

Canalys

Oppo (21 percent market share), Vivo (21 percent) and Xiaomi (14 percent) round out the top four in China, according to Canalys. Vivo saw a ton of year-on-year growth, while Oppo saw just three percent growth and Xiaomi remained virtually unchanged. Overall shipments were down eight percent across the board, from 113 million units a year ago to 104 million in this quarter.

The big surprise, however, is that shipments from other brands were down a whopping 51 percent. It serves as more proof that the Chinese market is consolidating, as the top four continue to streak ahead.

What do you make of the Huawei sub-brand? Is the internal rivalry good for the industry? Let us know in the comments section below.

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